NOTICES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
Order
[33 Pa.B. 5485] Public Meeting held
October 16, 2003Commissioners Present: Glen R. Thomas, Chairperson; Robert K. Bloom, Vice Chairperson; Terrance J. Fitzpatrick; Kim Pizzingrilli
Joint application of Doc. Nos.: Frontier Communications of Breezewood, Inc., A-310400 F0004 Frontier Communications of Canton, Inc., A-310550 F0004 Frontier Communications of Lakewood, Inc. A-311750 F0004 Frontier Communications of Oswayo River, Inc. and A-312600 F0003 Frontier Communications of Pennsylvania, Inc. A-311250 F0004 for approval of restructurings from corporations to limited liability companies.
Order By the Commission:
On July 17, 2003, Frontier Communications of Breezewood, Inc., Frontier Communications of Canton, Inc., Frontier Communications of Lakewood, Inc., Frontier Communications of Oswayo River, Inc. and Frontier Communications of Pennsylvania, Inc. (together, the Frontier Utilities or applicants) filed jointly under Chapter 11 of the Pennsylvania Public Utility Code, 66 Pa.C.S. § 1101 et seq., an application for approvals of the applicants restructuring from business corporations to limited liability companies (LLCs). A copy of the application was served upon the Office of Consumer Advocate and the Office of Small Business Advocate. Further notice was not required and no protest period was established. No protests or comments have been received.
On September 25, 2003, the Frontier Utilities filed an amendment to their joint application clarifying the relation of the current corporate utilities to the new LLCs. Specifically, the applicants confirmed that: (a) the new LLCs will be the successor utilities to the existing corporations; and (b) that all the managerial, technical and financial resources available to each of the existing corporate utilities will be unchanged and available to the respective successor LLCs.
Each of the Frontier Utilities is an incumbent local exchange carrier (ILEC), and together they serve over 40,000 access lines in largely rural areas in eight counties of Pennsylvania. They are currently direct subsidiaries of Frontier Subsidiary Telco, LLC which, in turn, is a direct subsidiary of Citizens Communications Company (Citizens), a publicly held company.
The joint applicants propose restructurings by which each of the utilities would change its type of business entity from a Pennsylvania business corporation to a Pennsylvania LLC.1 The change will be accomplished by the merger of each corporate ILEC into its similarly-named LLC counterpart, with the LLC thereby becoming the jurisdictional ILEC. The parties have averred that the new entities will remain under the direct or indirect control of Frontier Telco and Citizens, and that there will be no adverse effect upon customers. Each successor utility will continue to provide the same services to customers under the tariff currently effective for each of the present Frontier Utilities. The parties have also pointed to the expected realization of organizational efficiencies as constituting an affirmative public benefit as required by City of York v. Pennsylvania Public Utility Commission, 446 Pa. 136, 295 A.2d 825 (1972).
In the past we have interpreted a utility's change in its type of business entity to constitute the entry into public service by the new entity and the abandonment of service by the former entity, and we have assigned a new utility code to the successor utility. With the instant changes by the Frontier Utilities, we find that a more streamlined approach to granting the authority necessary under Chapter 11 of the Code is in order. If a new business entity will indeed be the successor to a utility in good standing, succeeding to all rights and responsibilities of the incumbent utility, and if all the resources--technical, managerial and financial--of the incumbent utility will be at the disposal of the new business entity, then we can grant the appropriate authority forthwith, and the existing utility code will apply to the successor utility. It will not be necessary for the successor utility to demonstrate fitness to provide service, as for all practical purposes the entities are one and the same. Moreover, since there will be no change in control of the utility services nor any change in the resources available to the incumbent and successor utilities, it will not be necessary to demonstrate an affirmative public benefit or the promise thereof under City of York as is normally required for acquisitions and changes in control of a utility.
However, if the change in business entity is accompanied by any change in the ownership of the utility, changes in senior management or diminution of resources, a conventional application will be required and the standards of City of York will apply.
Having reviewed the instant joint application, we have determined that the proposed succession of each of the Frontier Utilities by an LLC is necessary or proper for the service, accommodation, convenience or safety of the public, and that the application should be approved; Therefore,
It Is Ordered That:
1. The application of Frontier Communications of Breezewood, Inc. concerning its succession by Frontier Communications of Breezewood, LLC is hereby approved.
2. The application of Frontier Communications of Canton, Inc. concerning its succession by Frontier Communications of Canton, LLC is hereby approved.
3. The application of Frontier Communications of Lakewood, Inc. concerning its succession by Frontier Communications of Lakewood, LLC is hereby approved.
4. The application of Frontier Communications of Oswayo River, Inc. concerning its succession by Frontier Communications of Oswayo Rover, LLC is hereby approved.
5. The application of Frontier Communications of Pennsylvania, Inc. concerning its succession by Frontier Communications of Pennsylvania, LLC is hereby approved.
6. Within 30 days of the consummation of the succession by a limited liability company, each of the successor Frontier Utilities file with this Commission notice of consummation together with: (a) a copy of the Department of State's registration of the entity's certificate of organization; and (b) a tariff adoption supplement by which the successor utility adopts as its own the tariff in effect for its predecessor utility.
7. If the parties determine that the successions by LLCs will not be implemented, the Frontier Utilities promptly file notice with this Commission of determination.
8. A copy of this order be published in the Pennsylvania Bulletin.
JAMES J. MCNULTY,
Secretary
[Pa.B. Doc. No. 03-2132. Filed for public inspection October 31, 2003, 9:00 a.m.] _______
1 The applicants have cited Delaware law as providing that a change from a corporation to an LLC results in no change in business entity. 6 Del. Code § 18-214(e)--(g). We fail, however, to recognize the relevance of Delaware law to the present situation. The cited statute three times includes the phrase ''for all purposes of the laws of the State of Delaware,'' but this application is before a Pennsylvania agency. Moreover, all of the Frontier Utilities are, and will remain, Pennsylvania business entities, not Delaware entities.
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