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US WEST SCALES BACK REQUEST BY $5 MILLION

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US WEST, the predominant telephone utility in the state, has reduced its request for a permanent rate increase in Utah by $5 million.

Carl Inouye, a director of US WEST's regulatory accounting and financing for Utah, on Tuesday told the Public Service Commission that the new request is for $26 million instead of $31.2 million. Inouye, based in Seattle, finished both his testimony and cross-examination on Tuesday.He was the first witness the utility called in rate hearings that are expected to continue through much of February.

US WEST spokesman Duane Cooke told the Deseret News that one reason for the reduction is a change in the "test year" used for projecting expenses. US WEST had proposed using 1992; the PSC asked that it be 1991 instead, since figures are already compiled for that year.

Because expenses were different in 1991 than in 1992, that means cost extrapolations should change also.

"The second reason is we were asking originally for a 13.9 percent return on equity, which is an increase from the current 12.2 percent," Cooke said.

"We've since revised that to 13.5 percent because of new information that we have access to."

Another reason for the reduction involves some technical accounting changes, he said.

Of the $26 million increase that US WEST wants, $12.5 million would be for a catch-up accrual for post-retirement benefits other than pensions, required in a new accounting system. The PSC had taken a position that US WEST could not recover these costs through rates, but US WEST asked the commissioners to reconsider.

On Tuesday, the PSC agreed to reconsider the issue.