If US WEST Communications has its way, Utah telephone customers will see an increase in their basic monthly service rate, will begin paying 35 cents every time they use directory assistance and will pay 35 cents for local pay phone calls.
The company also wants ratepayers, rather than stockholders, to bear the cost of political lobbying and contributions and for some phases of the company's advertising program.The Utah Public Service Commission will begin hearings on the requests Thursday, but the general public will not get its chance to comment until May 1. That day has been set aside as public witness day and anyone interested in commenting on the case can give testimony before the PSC commissioners in Room 426 of the Heber Wells Building, 160 E. Third South, Salt Lake City.
The remainder of the month-long hearings will be devoted to expert testimony from the company and from witnesses provided by the Utah Division of Public Utilities and the Utah Committee of Consumer Services.
This is the first major rate case involving US WEST Communications (formerly Mountain Bell) in almost four years. Since December 1987, the company has been ordered to lower rates by $35 million, but those reductions did not involve a major rate review. US WEST is asking for a $12.3 million rate increase while the Division of Public Utilities is recommending a $20 million reduction. The Utah Committee of Consumer Services would like to see a reduction of about $40 million.
The initial phase of the hearing will focus on US WEST revenue needs and the sources of those revenues. That phase will be followed by testimony concerning the way rates should be spread - how much should be borne by business customers and how much by residential customers.
Also expected to get attention during the hearings is US WEST's action over the past few years of spinning off various services once handled by the regulated company into non-regulated subsidiaries, most notably the yellow pages, which are now marketed by US WEST Direct. Similar spin-off companies were formed to handle the company's internal telephone system, operators and the company's purchasing department.
Because the spin-off companies are not regulated, profits do not count against the profit cap set by the PSC. Profits are capped because local telephone service is a monopoly involving only one provider company. Thus far there is no evidence that US WEST is abusing this practice, according to division auditors.
Critics raise two concerns over the move by US WEST. First, the action eliminates money that has traditionally helped to subsidize operations and keep basic service rates lower. Second, regulators are concerned that US WEST Communications' contracts with the spin-off companies are non-competitive and prices paid for services may be artificially higher.
There is a complicating factor in these hearings, however. The Federal Communications Commission recently changed accounting procedures for telephone utilities, making it more difficult to evaluate the current rate case in comparison with past cases. The US WEST case is believed to be one of the first in the United States involving the new procedures so the PSC will be breaking new ground as it analyzes the requests, hears testimony and finally issues a decision.