Qwest asks PSC to halt counties' tax appeals

Qwest Communications International Inc. wants the Utah Public Service Commission to stop proceedings on a property-tax appeals issue that has lingered for several years.

During a hearing Friday before commission hearing officer Sandy Mooy, Qwest attorney Gregory Monson said 27 Utah counties have failed to demonstrate that the utility was wrong in getting $16.9 million in property tax reimbursements from 1988 to 1996.

The counties allege that Qwest and its predecessor companies received the reimbursements improperly through the Utah State Tax Commission. They maintain Qwest's customers already had paid that amount because those taxes were part of the company's rate structure and that customers should get the money back.

Qwest on Friday sought summary judgment, saying the counties failed to prove their case, meaning the commission should not have an evidentiary hearing on the matter.

"When all the counties' evidence is examined, all that's left is a theory," Monson said. He characterized the theory as Qwest appealing taxes "in an effort to shift the windfall to shareholders and directors. This theory is not a matter of fact or expert opinion. It's a matter of spin, and it's a pretty poor spin, at that."

But Thomas Peters, an attorney for the counties, said the counties should be allowed to show all their evidence and present witnesses at further proceedings.

"Back when the counties first filed this case, their (Qwest's) hands were caught in the cookie jar, and we continue with this matter to resolve it with a full hearing on the merits," Peters said.

"Although Qwest may not like to hear this, utility misconduct is alive and well in this matter," he said, adding that a witness for the county has shown that "Qwest used and abused the ratemaking process, subverting the integrity of that process. . . . Qwest also used and abused the property tax appeal process as a method to shift money away from above-the-line accounting that would be considered in general ratemaking to below-the-line accounting . . . in an effort to bribe bonuses to its officers and directors and shareholders."

Monson said the counties have failed to show that Qwest misled regulators about its property tax expenses from 1988 to 1996 as a way to subvert the ratemaking process.

"So, after six years of litigation, all we're left with is illogical suspicion on the part of the counties. That does not justify a hearing," he said.

Monson added if property tax reimbursements must be given to ratepayers, utilities would lose their incentive to appeal unreasonable assessments.

"The counties have presented their evidence, and it does not justify a refund," he said. "Therefore, Qwest respectfully submits that the commission should end this ill-fated attempt to remove the incentive for public utilities to appeal unreasonable property tax assessments and enter judgment in Qwest's favor."

Mooy said the commission will decide on Qwest's motion after reviewing Friday's arguments.

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