Pacific Bell Cuts Proposed Rate Hike

Pacific Bell said Tuesday that it will slash its proposed 1986 rate increase of $1.36 billion by one-third, lopping about $400 million off the package filed with the California Public Utilities Commission last year.

The company had proposed raising the added revenue next year by adding an across-the-board 30.9% surcharge on the monthly phone bills of its 7.2 million residential customers and 1 million business customers in California. With the planned reduction, the surcharge would be 20.5%, which would later be replaced by higher prices on a broad spectrum of the local telephone services Pacific Bell provides.

The revised rate increase package will total about $950 million, said L. Reed Waters, Pacific Bell vice president for regulatory affairs. That figure could be revised further today when the PUC is scheduled to act on Pacific’s request for a mid-course correction in its rates, which were increased by $595 million in 1984. The PUC permits such adjustments in years between the utilities’ major rate cases.

Waters pointed out that the 1986 rate case was drafted in the first few months after the company came into existence as an entity independent of American Telephone & Telegraph Co. and took over operation of the local telephone network from Pacific Telephone & Telegraph Co. Earlier cost estimates have since been refined, he explained.

Also, the company’s interest costs have declined, he said, and the PUC and Pacific Bell have since agreed to a change in the financial reserves that the company must earmark for replacing obsolete equipment.