C&P Telephone Co. yesterday asked for its first rate increase in the District in five years, but it received a negative initial response from the D.C. Public Service Commission, which said the proposal would be subjected to "very rigorous review."
Howard Davenport, the commission's general counsel, said the PSC staff already is concerned that the telephone company, in effect, makes too much money. C&P says its return was 12 percent in 1990 and could fall to 5.7 percent this year as a result of higher costs, more competition and the economic slowdown.
C&P, escalating the stakes in a three-year old battle, said it was being forced to seek the rate increase because the commission has not considered its long-pending proposal to deregulate its prices. The $43.4 million in additional revenue C&P is seeking would raise the monthly rate for area-wide service to $22.94 from $14.94.
Davenport said C&P already is free to compete in a number of markets, such as Centrex business services.
"The Public Service Commission already has deregulated a substantial portion of C&P business," Davenport said. "... . C&P has free rein to compete with unregulated equipment providers, such as AT&T."
C&P spokesman Michel Daley said the Centrex service for which C&P is allowed pricing and service flexibility covers only the largest business customers and rate increases are needed because C&P can't increase its return by offering a wider variety of services.