US WEST Communications will not be allowed to delay work on system improvements ordered by the Utah Public Service Commission while the company appeals the order to the Utah Supreme Court.
In an order issued over the weekend, the commission said it found the company's arguments for granting a stay involving the $91 million effort to be without merit.The harshly worded order is very critical of statements by Robert C. Fuehr, US WEST's Utah vice president, in support of the company's request, especially the argument that US WEST has other investment options available that could realize greater earnings than those offered by upgrading and modernizing the rural Utah system.
"The only real fault which the company (US WEST) finds with the modernization investments we have ordered is that we haven't agreed to US WEST's proposed incentive plan, which, in our judgment, would have resulted in windfall profits for US WEST," the order says. "However, at the outset of this case, US WEST pitched the very same investments ordered by the commission, claiming that these investments were necessary and would prove to be highly beneficial, and its witnesses, as well as others, justified and substantiated those investments during the hearings."
The order says that US WEST felt the upgrades were needed "only if the company were allowed to make as much money as it wants. When the commission determined that something less was appropriate, then, magically, the upgrades weren't really necessary; they were simply a luxury offered as bait for the company's incentive plan."
The order said many of the upgrades ordered were already planned by US WEST and the only impact of the order is to move up the time table for completing those improvements.
In the order commissioners also note that US WEST has earned nearly 17 percent annually on its Utah investments in recent years, substantially in excess of the allowed rate of return and the dismal earnings projections offered by the company at successive rate hearings. And the commission states that such over earnings are likely to continue.
The commissioners also argue in the order that US WEST would likely have little trouble borrowing the money needed to complete the upgrades in the private sector "on highly favorable terms."
Commissioners also cite US WEST's failure to increase local spending on improvements even though the commission allowed the company to accelerate depreciation on its existing investments over the past five years. The accelerated depreciation was intended to make new utility investment more attractive to US WEST.
"But the investments haven't been made even though the company has had the benefit of the increased revenues from the depreciation."
Commissioners say the modernization order gives US WEST 54 months to complete the project. That is more than enough time for the company to get a ruling from the Supreme Court and avoid any unnecessary expenditures contained in the order, the commissioners further contend.
The ruling by the Public Service Commission exhausts US WEST's administrative appeals and clears the way for the matter to be formally appealed to the Utah Supreme Court.