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PSC TO CONSIDER 3 INCENTIVE PLANS

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When formal hearings begin Dec. 3, the Utah Public Service Commission will have three incentive rate plans to consider as it deliberates a new rate structure for US WEST Communications.

US WEST filed an incentive rate plan in March shortly after a law passed by the Legislature went into effect allowing the commission to consider that option for regulated utilities in Utah.Friday, the Utah Division of Public Utilities and the Utah Committee of Consumer Services filed position papers stating their intent to present alternative incentive plans for consideration. And, both groups plan to argue that system modernization need not be tied to an incentive plan as suggested by US WEST.

Both the committee and the division said details of their alternative plans are not ready for release because they are awaiting responses from US WEST regarding earlier information requests. The data from those requests will determine elements of the alternative proposals.

The US WEST plan asks for revenue sharing incentives that would allow the company to retain all or some of the excess earnings above its currently approved profit margin if those excess earnings result from improved company efficiency. In return, the company is offering to freeze telephone rates for four years while it installs a fiber-optic trunk line and completes modernization of 48 central switching offices.

In the past, both the division and the committee have said that the earnings of US WEST have been sufficient to encourage investors without the need for an incentive rate plan.

Company officials say the incentive plan would induce private investors to put up the $100 million needed for the office upgrades and fiber optic installation.

The company's proposal suffered a minor setback earlier this month when the commission ordered an interim $10.6 million rate reduction. The company argued that an interim reduction was not needed since a full rate hearing was set for December.

In its position paper, the committee said incentive and modernization issues should be considered separately. The committee said it will argue in favor of a separate modernization plan even if the incentive concept is rejected by the commission.

The division said it has not decided whether to seek a separate modernization order, noting that such a request was rejected by the commission during the last general rate case.