Mountain Bell has overcharged customers by as much as $30 million in the past year, state regulators have found, and the overcharging could continue through 1988 unless rates are reduced.
"There's clearly a trend, and ratepayers should be encouraged" by the possibility that the cost of phone service could drop by the end of the year, Public Service Commissioner James M. Byrne said.Mountain Bell, which is in the process of changing its name to US WEST Communications, reduced its rates by a total of $9 million last December. But a study by the state's Committee of Consumer Services contends rates should be lowered an additional $30 million.
"We've been investigating Mountain Bell for over a year, and we are confident a $30 million rate reduction is justifiable," committee chair-man Felshaw King said.
He said the initial $9 million rate cut was the first part of a general trend toward rate reductions caused by Mountain Bell earning in excess of its state authorized rate of return.
Regulators have capped the phone company's profits at 14.2 percent of its stockholders' investment.
The estimated $30 million in overcharges was attributed to a combination of excess profits from directory listing services, overcollecting for operating costs and lower federal in
come taxes, the committee said.
Utah's Division of Public Utilities has also monitored the phone company's earnings, Byrne said, and found Mountain Bell could continue to overearn by as much as $28 million this year, based on the company's 1988 budget figures.
Mountain Bell spokesman Ken Hill said the company's projected budget figures do show earnings "coming close to our allowed rate of return."
But he said whether rates must be reduced will depend on a PSC decision, based on information from the company and regulators.
Byrne said the committee's findings and preliminary figures from the division show a trend of Mountain Bell overearning. But he declined to determine if a rate decrease is imminent.
"There's clearly a trend, and ratepayers should be encouraged," he said.
Mountain Bell could negotiate a rate reduction with regulators, or regulators could take the matter to a full hearing before the commission, King said.
The committee, which represents residential, small commercial and agricultural consumers before the PSC, will file its findings with the commission this week.
Based on its analysis, the committee wants a rate decrease of $5 a month to go entirely to residential customers.
But Hill said, "If any rate reductions should come in the future, they should be assigned to the services that are subsidizing basic residential service."
Mountain Bell contends that residential rates are priced below cost.