March 29, 2024
BANGOR DAILY NEWS (BANGOR, MAINE

NYNEX must lower its rates > Customers to gain from PUC ruling

AUGUSTA — State regulators rejected claims Wednesday that NYNEX had installed too much fiber-optic cable in Maine, but did agree that the company has been especially profitable and ordered it to pass on more than $14 million in savings to ratepayers.

Starting June 1, customers will see the separate touch-tone charges amounting to $4.5 million eliminated from their bills and in-state long-distance rates will be cut by nearly $6 million, or 3.5 percent, according to Thomas Welch, chairman of the Public Utilities Commission. NYNEX also will use about $4 million to update telephone wiring in libraries and schools.

Before the two-member Public Utilities Commission were several complex issues. The investigation into NYNEX’s installation of fiber optics had expanded a traditional rate case into a review of company operations, with public advocates and the commission’s staff advocating the slashing of phone rates by tens of millions of dollars.

At the same time, the PUC and NYNEX sought to establish a five-year less-regulated rate process that involved capping prices and giving the telephone company more flexibility in determining its rates and expanding its revenue base.

Commissioners indicated that they disagreed with charges that NYNEX had exceeded its responsibilities to ratepayers, but they did find that the telephone company’s streamlining efforts had resulted in increased profits and ordered some of those profits to go to offsetting rates to customers. The streamlining, which began in 1993 and will continue until 1996, has resulted in the elimination of 600 jobs in Maine.

Savings from the restructuring also were found by the PUC’s staff, examiners and the state’s public advocate’s office who initially recommended rate reductions in amounts ranging from $24 million to $59 million.

Breaking from those recommendations, Welch and William Nugent, the other commissioner, ordered that charges be reduced by $14.4 million.

“We certainly feel somewhat vindicated, because our concern was the fact that we had been investing in new technology in the state with the aim of helping to improve the state’s economy,” said Bruce Larsen, a NYNEX director who attended the PUC meeting. “And we don’t think it would be fair to penalize us for that.”

The $14.4 million reduction also includes a move by the PUC to step up efforts in Maine to make advanced telecommunications more available in public schools and libraries around the state. The PUC ordered NYNEX to come up with proposals to use the remaining $4 million of the rate reduction to offset costs such as toll rates to allow schools and libraries to become connected with computer networks and on-line services.

Welch explained that he felt it was a legitimate ratepayer burden to cover such efforts to “ensure libraries and schools are full participants in the information age services that are increasingly available and increasingly important.”

The PUC’s decision comes a month after NYNEX and Gov. Angus King announced an agreement to do the same thing and lawmakers pitched a $15 million bond issue to purchase the necessary equipment for such networks.

The issue that had prompted much of Wednesday’s discussion and the investigation last year were claims by a small group of customers that current ratepayers were paying for NYNEX’s future forays into advanced telecommunications fields that require fiber-optic cables.

The PUC’s opinion of the claims became clear early in the three-hour meeting Wednesday, when Commissioner Nugent stated that he found that the regional telephone company had not been imprudent in its fiber-optic investments in the state. NYNEX said it has roughly 55,000 miles of the high-capability fiber-optics lines in Maine.

After the meeting, Welch and Nugent acknowledged that NYNEX may have been aggressive in putting in fiber optics and that it now has more capacity in place than it can use. But the commissioners said it was simply a matter of replacing older copper wiring with newer equipment that just happened to be many times more efficient.

“I just don’t think that’s bad management,” Welch said. “I think I would have been quite critical of them if they had been going around and putting in copper,” he said.

Putting in more copper, while potentially less expensive now, would have been shortsighted of the company, Nugent added.

Wednesday marked a new era for NYNEX, which joined electric utilities Central Maine Power Co. and Bangor Hydro-Electric Co. in developing alternate rate plans that are supposed to allow the companies to become more competitive while not shortchanging their customers.

As part of the new rate plan, NYNEX would need to adhere to certain quality standards or face reimbursements to customers of up to $10 million a year. Ratepayers also would be reimbursed when NYNEX becomes more productive and inflation remains low. The phone company also had said that because of the recommended reductions, it would defer changing the electronic switching systems in Bangor and Lewiston to digital systems. The PUC order now requires NYNEX to make those improvements if a market demand develops in those two communities.


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