US WEST Communications has requested $27.7 million in additional revenues from the Utah Public Service Commission, meaning residential customers could see an increase of $3 to $5 on their monthly phone bills.
The company wants the rate hike to compensate for increased expenses resulting from changes in depreciation schedules of its equipment.The request, filed Friday with the Utah Public Service Commission (PSC), asks that basic residential rates be increased while rates for the following would be cut: business private branch exchange rates, US WEST long-distance rates and access charges billed by US WEST to other long-distance companies that connect to its local network.
Company spokesman Duane Cooke said the actual price increases and decreases won't be known until July 1, when the company plans to file a proposed rate rebalancing request with the PSC.
According to Cooke, the request for a revenue increase is primarily a result of a process that federal and state regulators and telephone companies go through every three years to examine and adjust the useful lives of telephone equipment. The most recent examination earlier this year resulted in a shortening of telephone equipment depreciation lives, which in turn increased depreciation expense for the company. As a result, the company believes there is a need to re-balance rates.
The request also asked the PSC to allow its rate of return to shareholders to be increased from 12 percent to 13.4 percent and that other accounting adjustments be made to raise the $27.7 million in additional revenues.
"We will ask that residential customers bear the bulk of the increase because they have received most of the benefit of rate reductions over the past eight years and because their rates are well below the cost of providing service," Cooke said.
He said that while shorter depreciation lives may mean higher rates for some customers, in the long run rates would be lower than they would be otherwise because the company saves by using internally generated funds for construction.