It appears US WEST Communications plans to continue efforts to win approval for a proposed incentive-regulation plan.
In testimony filed with the Utah Public Service Commission this week, US WEST president Mack Lawrence and Kirk R. Nelson, assistant vice president and director of external affairs, said the plan is needed if Utah's telecommunications network is to be upgraded on a timely basis.The commission has scheduled hearings on the plan for Dec. 3-19. As proposed, US WEST would freeze current telephone rates for four years. In return, the company would be allowed to keep excess profits, if any, up to a pre-determined level. If profits exceed that limit, the company would return the excess in the form of credits on monthly customer billings. Also, the company proposes to spend just over $100 million to upgrade its central switching offices and to improve its fiber optic and digital microwave relay systems.
On June 22, the commission ordered US WEST to trim its current rates by $10.6 million. In ordering the reduction, the commission cited "excessive" overearnings by the company since last October when new rates that limited the company's profit margin to 11.8 percent went into effect. The $10.6 million figure was $2 million more than the reduction requested by the Utah Division of Public Utilities during an interim rate hearing in May. In a March filing, the division asked for a $5.7 million but increased the request to $8.6 million during the hearing. The Utah Committee of Consumer Services sought a $16.9 million reduction.
Following the June 22 order, a US WEST spokesman said the company would review the order in detail before determining whether to proceed with the incentive rate proposal.
Groups opposed to the incentive plan are expected to file rebuttal testimony next month as the commission prepares for the December hearings.
US WEST officials say the incentive plan is needed to encourage investment to finance the proposed improvements. Without the incentive plan, they said, improvements would occur on a piecemeal basis and some rural areas would be left out because local demand is not sufficient to pay the cost of desired improvements. Many rural areas have voiced support for the plan as a means to speed installation of needed telecommunications improvements to spur economic development.
Opponents contend that the plan is a tool to allow US WEST to keep excess earnings that should be returned to rate payers. They believe the proposed improvements will occur with or without the plan because the company needs to provide a first-class network to remain competitive with other telecommunications companies.