Chesapeake & Potomac Telephone Co. Vice President Delano Lewis told the D.C. Public Service Commission yesterday that the utility's need for rate relief is as "desperate" as it was when it first asked for a $75.8 million rate increase in August.
The phone company has twice modified its proposal and is now requesting $54.5 million in additional revenue, most of it from residential customers, who would see rates go up nearly 100 percent for the unlimited basic calling plan.
Rising costs, the loss of the right to manufacture equipment and the absence of long-distance subsidies after the breakup of the Bell System have contributed to the need for additional revenue, Lewis said.
Under the proposal, the phone company would charge customers $13.42 just to hear a dial tone, with additional charges for usage based on the particular calling plan. The phone company has also advocated the use of a "lifeline" program for the poor and elderly who might not be able to afford rising phone rates.
"It is very clear we need rate relief," Lewis told the PSC. "We are trying to look at the rates so they are affordable," while trying to give investors an adequate return. Lewis complained the phone company is earning 9.7 percent instead of its authorized rate of return of 12.25 percent. The company has not earned its authorized rate of return in the last three rate cases, he said.
In response to cross-examination by the Office of the People's Counsel, which represents consumers, Lewis said the phone company had done no comprehensive study of how the new rates might affect universal service.
The only study the company has conducted is the impact of raising coin phone prices from 15 to 25 cents on residential customers, Lewis said. "The study showed over 90 percent of the households in D.C. have phones and coin phone rates wouldn't impact the poor," he said.
Lewis said the overall "increase "could impact universal service," and the company still supports an inexpensive "economy" plan that limits the amount of phone calls customers can make, in addition to a lifeline service.
The rates "are going to be difficult for some classes of customers -- to say they are fair and affordable is a tough question the commission will have to answer," he said.