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PSC action may lead to lower Qwest rates

SHARE PSC action may lead to lower Qwest rates

A change in a numeric factor eventually may lead to lower rates for customers of Qwest Communications International Inc.

But the amount of a possible rate decrease is unknown because the company is awaiting word on a couple of other factors that need to be set.

"We don't know what this will mean because there are other parts to the formula," said Robin Riggs, Qwest's vice president for Utah. "This one obviously will be coming down, but we're not sure what the other factors will indicate."

The Utah Public Service Commission this week changed what is known as the productivity factor used to figure Qwest rates, applicable for the year 2002. The commission's factor, 4.955 percent, is between Qwest's requested adjustment to 2 percent and the Division of Public Utilities' preference to maintain the factor at 6.2 percent.

The 6.2 percent figure was set in 2000 by a stipulation between the parties as Qwest was trying to acquire US WEST. It is not applied to the costs of service when the company provides services below its own costs.

The company, once under rate-of-return regulation, has customer rates adjusted based on a price index based on a group of economic factors. The price indices may be revised from time to time to reflect the effects of inflation, productivity and other factors.

Riggs said the inflation and "other" factors are pending.

Qwest's recommendation for 2 percent for the productivity factor was based in part on a 2.6 percent average value of the factor in states where price indices are used to adjust rates and in part on historical productivity information showing the 2 percent figure is reasonable.

The division disputed Qwest's methods used to reach the 2 percent figure. It contended that the company's operating results, in the form of overearnings in Utah since rate-of-return regulation ended in 1997, demonstrated that the 6.2 percent factor should remain in place.


E-mail: bwallace@desnews.com