The District of Columbia's Public Service Commission yesterday approved a $39.8 million increase in telephone bills, to take effect early next year.
At the same time, the commission authorized C&P and the local electric and natural gas utilities to immediately increase their bills -- by a total of $3.67 a month for the average customer -- to offset higher city taxes.
By a unanimous vote, the commission cut in half the rate increase asked by C&P, authorizing the company to collect an additional $39.8 million rather than the $82 million the company initially asked.
But over the strong objections of the chairwoman, Ruth Hankins-Nesbitt, the three-member commission decided that C&P couldn't impose the higher rates for at least three months. The delay will allow the commission to hold further hearings to decide whether consumers of businesses should bear the brunt of the increase.
Because the commission cut in half the total increase requested by C&P and has not yet decided how to allocate the increase, it is not possible to estimate how the decision will affect monthly phone bills, C&P executives said.
But as the result of a separate decision, C&P, Washington Gas Light and Potomac Electric Power Co. can add to their monthly bills the higher city utility taxes tht went in effect July 1.
Under a decision by the D.C. city council, the tax on the total receipts of utility companies was raised from 6 percent to 6.7 percent. What's more, instead of collecting that tax at the end of the fiscal year, the city is now collecting that tax each month. That means that utilities will be faced with a one-time double-whammy for the current tax year that began July 1, paying last year's tax and this year's at the same time.
The result of the switch to monthly collections is that gas bills will increase by about $18 a year, WGL officials said. The average electricity bill will rise by $1.17 a month and phone bills will climb by about $1 a month, representatives of the light and phone companies said.
These increases were justified, Commissioner Wesley H. Long said, because the tax represents the "cost of doing business for companies" located in the District.
However, on the issue of C&P rates, Long said that the company's request was not justified, even in light of the C&P's scheduled divestiture from its parent American Telephone & Telegraph Co. on Jan. 1, 1984.
Criticizing C&P's "arrogance" for providing "unverifiable numbers and unorganized statistics" to back up its rate request, Long said he wanted to cut another $9.7 million from the $39.8 million increase voted by the other two commissioners.
C&P spokesman Web Chamberlin, said he was surprised by Long's charges, saying the company "did provide what we considered very accurate information."
The decision to cut the rate request in half and delay its implementation could adversely affect future telephone service for District residents, Chamberlin said. Noting that the decision would reduce the company's present authorized rate of return on capital from 12.15 to 11.91 percent. Chamberlin said C&P would have to review its plans to modernize the local network with new technology, such as fiber optics.
PSC chairwoman Hankins-Nesbitt agreed with Chamberlin, saying that the company deserved a higher rate of return on equity than the majority approved.
Hankins-Nesbitt said the commission's refusal to allow C&P to increase rates immediately will cost the company $10 million. "To deny the immediate rate relief of this paltry sum will serve to deteriorate the financial stability of the company" and inevitably lead to even higher phone rates as the company's credit rating decreases and, therefore, its costs of borrowing increases.
In what observers said was unusually strong language, Hankins-Nesbitt added that she would urge her colleagues to reconsider, with the hope that "like Pontius PIlate, they will ask, to wash their hands of this bloody act."
Yet, Brian Lederer, D.C.'s Peoples Counsel, praised the commission for its decision yesterday, saying it will "absolutely not" hurt local telephone service.