wmartin@st-louis-emh2.army.mil (Will Martin) (06/26/89)
Reference the newspaper article I transcribed last week on the SW Bell rate cut ordered in Missouri; here is another article on Bell's response: From the Saturday, 24 June 89, St. Louis Post-Dispatch, page 11A (first page of Business section): SW BELL APPEALS RATE CUT ORDER by Jerri Stroud, of the Post-Dispatch Staff Southwestern Bell Telephone Co. asked the Public Service Commission on Friday to reconsider its order for a $101 million annual rate cut scheduled to begin July 1. The request, officially called an application for rehearing, was filed minutes before the commission's office closed for the weekend. In its 39-page application, Southwestern Bell asked the commission to accept a plan that linked modernization of its network with a new method of setting telephone rates. The petition says the order "has effectively precluded the company from proceeding with the network modernization plan." The company had proposed spending $180 million to replace 112 electromechanical switches with digital switches and to make other improvements, mostly in rural areas. In return, the company said it would freeze local rates for two years and accept a $19.8 million rate cut. After two years, the plan called for any increases in rates to be based on the Consumer Price Index offset by a 3% productivity factor. [NOTE -- The original article had cited this as being "inflation *plus* the 3% "productivity factor" -- this indicates "minus" instead, which would agree with what smb@ulysses.att.com said in an e-mail to me and which makes a lot more sense! :-) -WM] In Friday's petition, Southwestern Bell also asked the commission to reconsider the reduction in its allowable rate of return to 12.61% from 14.7%. The company says the new rate is the fourth lowest in the country. "We do not take this action lightly," sad Dan Hubbard, the telephone company's assistant vice president for comptrollers and external affairs. "After a thorough review of the ruling, we're firmly convinced this is a devastating order which will have long-term implications for our customers, the state's economic development opportunities and Missouri's telecommunications industry," said Hubbard. Martha Hogarty, the state's public counsel, said her office and the commission staff had opposed Southwestern's rate plan because they believed it "would guarantee automatic increases for local service." Hogarty also contended that using the CPI as a basis for rates was illegal and that the company had planned to modernize its network whether the new plan was accepted or not. In filing Friday, Southwestern Bell beat the deadline to apply for a rehearing by a week, said Kevin Kelly, a commission spokesman. Hubbard said the company "wanted to move very quickly because of the serious consequences of this order." Kelly said the next step would be for the commission to decide whether to grant the request for a rehearing. If the commission grants a new hearing, all or part of the rate case could be reopened. If the commission denies the request, the company may appeal the order in court, said Kelly. ***End of article*** If I see any more on this, I'll try to pass it along... Regards, Will