The Utah Public Service Commission has ordered US WEST Communications to drop rates by another $19.7 million and said if the company wants an incentive rate program, it will have to accept the commission's alternative or go without.
The order, released at a Wednesday press conference, also requires the company to invest $91 million over the next 54 months to modernize equipment, complete a fiber optic cable backbone from Logan to St. George and run fiber optic cable into every Utah high school that desires to participate in a long-distance learning program.Participating schools will have to pay for the service with a fee that is to be determined within the next three months.
The bulk of the latest rate reduction, which brings the total reductions ordered in the year-old rate case to $38.7 million, or 11.4 percent of the company's revenues, will go to reduce base rates for businesses, reduce the cost of installation for residential telephones, reduce rates paid by customers in extended area services zones and to reduce in-state long distance tolls by up to 51 percent.
Commission Chairman Ted Stewart said the order should vastly improve service to rural areas of Utah and bring the quality of rural service in line with that provided along the Wasatch Front. He also predicted the order would have a positive impact on state economic development efforts.
US WEST spokesman Gary Spendlove said the company is still reviewing the order and is reserving comment. He said the authorized profit rate of 12.2 percent is an improvement over the previous 11.8 percent but remains substantially lower than profit margins allowed in other states. He said the sharing points included in the commission's alternative incentive plan are also out of step with programs in other states and would need more scrutiny.
US WEST has 60 days to decide whether it will accept or reject the incentive plan, which would allow the company to keep a portion of any excess profits, provided the company shares some of it with customers and provided it was generated through efficient service.
It also has 20 days to contest other elements of the order and an additional 30 days to file an appeal with the Utah Supreme Court.
Stewart said the commission is convinced the modernization included in the order will give Utah the most up-to-date and future looking telecommunications base in the United States.