Phone rate cut urged by People's Counsel About $3.80 a month, if Md. panel concurs

February 16, 1996|By Michael Dresser | Michael Dresser,SUN STAFF

The Maryland Office of People's Counsel, arguing that "Maryland ratepayers are entitled to significant rate reductions," urged the state Public Service Commission yesterday to cut Bell Atlantic Corp.'s phone charges by $232 million.

If the commission agrees, the People's Counsel's motion would lead to an estimated 23 percent across-the-board cut in basic phone rates, toll calls and long-distance access charges, said Theresa Czarski, assistant to People's Counsel Michael Travieso.

But before consumers start spending the extra $3.80 or so that they would realize each month, they should realize that the PSC seldom gives the People's Counsel everything it wants.

The People's Counsel's recommendation came in a case in which the PSC will decide whether to change from traditional rate-of-return regulation to the price-cap method favored by Bell Atlantic and other utilities. Ultimately, the recommendation of the PSC's staff is likely to be more influential.

Mr. Travieso's office has taken the position that it does not object to a price cap so long as the cap is set at an appropriate level, Ms. Czarski said. But the People's Counsel's view of what is appropriate is miles from that of Bell Atlantic.

According to Ms. Czarski, an investigation by a consultant hired by the People's Counsel found $232 million in excess earnings by Bell Atlantic. That represents a five-fold increase in an estimate of overcharges released by the People's Counsel in December.

Michel Daley, a spokesman for Bell Atlantic, firmly disagreed.

"We file quarterly reports of our earnings with the Maryland Public Service Commission, and based on the data contained in those reports, we don't believe we are over-earning," he said, adding that Bell Atlantic is urging a freeze at current rates.

Maryland phone rates have not been increased since 1986. Bell Atlantic points to that fact with pride, but consumers' advocates claim that phone rates actually should be falling because of declining costs in the industry.

The People's Counsel argued in its filing that Bell Atlantic's rates should be cut to reflect lower levels of depreciation, reduced interest rates and Yellow Pages revenues that should be credited to ratepayers, among other items.

Mr. Daley said that Bell Atlantic's costs have, in fact, increased in many areas.

One of the central issues in dispute is whether Bell Atlantic should receive credit for accelerated depreciation when it replaces the existing copper infrastructure with fiber-optic cable. The People's Counsel is arguing that much of the work is being done to offer services such as video, and so part of that investment should be excluded from the rate base.

"The telephone ratepayers who just want their basic service shouldn't be compelled to pay for these competitive ventures," Ms. Czarski said.

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