The State Corporation Commission today granted a $40.5-million rate increase to Chesapeake and Potomac Telephone Co. of Virginia, a decision that will make Northern Virginia residential telephone service among the most expensive in the Washington area.
The increase, which will become effective March 1, will boost the average telephone bill in the state by about 12 per cent and will increase Northern Virginia residential telephone service from the current monthly charge of $9.45 to $10.80.
With the new rates only residential customers in the outer Maryland suburbs will pay more for telephone service in the Washington area, a C&P spokesman said today. Currently residential customers in the outer Maryland suburbs pay $11.15 a month and Maryland customers closer to the District pay $10.60 a month. District residential customers are charged a basic rate of $9.99 a month.
C&P had asked the commission for an increase of $80.7 million a year, twice the amount it got in today's order. David Berry, a C&P spokesman called the decision "disappointing" and said "it really means we will have to go back for furter rate increases." He said the utility has made no decision on when it would seek higher rates again or how much it would request.
In its order, the SCC said it considered directing G&P to begin offering its Northern Virginia customers a chearper residential service that would have limited tollfree calls to Northern Virginia numbers. But it rejected the plan "at this time" because it would take the telephone utility 18 months to implement the proposal.
Northern Virginia business telephone customers will also pay more under the SCC order. The basic business rate charge will increase only 10 cents a month, from $14.05 to $14.15, the SCC said, but businesses would begin paying 8 cents a call for each call after the first 50 a month instead of after the first 80 calls as the present schedule allows.
The 12 per cent increase will apply to long-distance charges within Virginia, as well as service and installation charges, the SCC said. Precise figures on the new rates won't be known until next week when C&P files a tariff schedule with the commission, Berry said.
Under the order, C&P will be authorized to earn a rate of return of 9.2 per cent on its investment in its Virginia operation. The utility had asked for a 10.25 per cent rate of return and Berry expressed doubt today that even with the order C&P would come near the authorized rate because of the impact inflation has had on the company's costs since the rate case was filed eight months ago.
SCC Chairman Preston C. Shannon, in a separate concurring opinion with his two colleagues on the commission will be faced with major utility rat increases each year until it can establish a revised annual review procedure. IN August, 1975, he noted, the commission directed C&P to earn a 9.1 per cent rate of return, but the company was earing only 7.45 per cent, according to figures developed in the current case.
"Our efforts notwithstanding, few utilities come close to achieving the authorized rate of return," Shannon said. "While we do not guarantee a fixed rate of return, still we must afford the enterprise a fair opportunity to earn what we have approved; otherwise utility rate proceedings will become annual events."
Today's decision was something of a rebuff to consumer groups, the SCC staff and teh sate's two Democratic candidates for governor, Andrew P. Miller and Henry E. Howell, all of whom had opposed portions of the C&P rate increase proposal. Miller, as state attorney general, had called for a rate of return of 8.9 per cent. Howell had urged the commission to treat the company as if it were an independent, publicly owned utility, not as the wholly owned subsidiary of American Telephone and Telegraph Co. it is, on the theory that would lower some of the company's costs.
C&P spokesman Berry said the company was especially disappointed that the commission failed to grant the company $15 million it sought, as an "attrition adjustment." That represented a charge for the increased costs the company has had to face between the time of the test period on which the rate case was based and awarding of the increase, Berry said.