Chesapeake & Potomac Telephone Co. has revised its $75.8 million rate increase request for the District of Columbia downward, the company said yesterday.
C&P said it would file a new request with the District of Columbia Public Service Commission for a $49.9 million 1985 revenue increase and a $6.8 million increase in 1986. The proposed adjustment is the second sought by the company. In November, the company dropped its request for a $69 million increase by about $8 million, asking for an increase in annual revenue of $61 million in 1985 and seeking additional $6.8 million for 1986.
"We look at revenue requirements based on actual 1984 results," said Web Chamberlin, a C&P spokesman. "And we realize that the revenue requirements change," said Chamberlin of the 30 percent reduction from the original request.
The company first filed the rate request last August based on six months of actual and six months of projected revenue requirements. Chamberlin said the company had earned more than expected in 1984 and streamlined operations, which also affected revenue projections.
Other factors include the denial by the PSC of less than $2 million of the original request connected to amortization of D.C. gross receipts tax and interest expenses associated with investment tax credits, and a $5 million downward adjustment to the request because of falling interest rates.
C&P Telephone Co. had requested the rate increase because the divestiture of American Telephone & Telegraph Co. had left C&P bereft of telephone equipment manufacturing and long-distance revenue that previously subsidized residential services, the company said.
The rate increase was also needed in the face of competition that could offer business customers -- subsidizers of local service -- a cheaper way to make long-distance calls by bypassing the local network. By moving prices for residential customers "closer to cost," the company could lower business rates and reduce the incentive to business customers to bypass the traditional telephone company, C&P said.
C&P proposed to split customers' bills into a monthly service or "dial tone" charge and additional charges for phone calls. The increase would raise residential rates an average of 153 percent and business rates an average of 12.4 percent in the District of Columbia.
C&P also had filed a rate increase proposal in Maryland to generate an additional $123 million in revenue and has not revised that request.
Meanwhile, the company has sent D.C. customers notices in their bills about a request for a rate increase, but the notices do not say how much residential bills will rise on the average if new rates are approved. The notices state phone company revenue would increase by 25 percent. But rates for unlimited local calling contained in the $61 million revenue request, for example, would rise about 122 percent.
"We are not trying to hide what the rates are," said a spokesman for the company. "The format of [the notice] is subject to approval by the PSC, and I am not aware they had any problem with it." The PSC normally approves notices.