PUC Officer Urges 13.4% Cut in GTE Phone Rates

The average monthly bill of GTE California phone customers would fall next month by about $4--a 13.4% reduction--under a recommendation issued Monday by a state Public Utilities Commission hearing officer.

If accepted by the PUC, the reduction would likely be the largest percentage cut in local phone bills since at least the early 1970s.

In proposing the reduction, Administrative Law Judge Norman Johnson urged the PUC to slash the annual revenue of the Thousand Oaks-based utility by $216.5 million. This would be the company’s second major reduction this year, following a $122-million cut that took effect Jan. 1. A third cut will be considered before the end of the year.

The PUC, which has held more than 100 days of public hearings on GTE’s rate case this year, is scheduled to act on Johnson’s recommendation Aug. 10. The five-member commission will be free to reject or modify the proposal, and GTE said it will strongly oppose the reduction.

“We believe that the revenue reduction recommended is not supported by the record,” said Larry Cox, a company spokesman. “The additional reduction is just not warranted.”

On the other hand, the consumer group most active in the GTE rate case, Toward Utility Rate Normalization, or TURN, said it will continue to press for further reductions.

“It’s a good step but not enough,” said Sylvia Siegel, TURN’s executive director. “We think the judge was very generous (to GTE) in several areas, and we’re going to work very hard on these in the final phase” of the PUC’s rate hearings.

Johnson’s recommended cut would set a precedent by dropping GTE’s average monthly residential bill below that of Pacific Bell. Baldwin said PacBell’s average bill now is $26.49, which compares to $29.95 for GTE. The recommended reduction would trim GTE’s average bill to less than $26, the company said.

In releasing his recommendation, Johnson insisted that the revenue reduction would still enable GTE to earn its maximum authorized profit--now a 12.75% annual return on investors’ equity. He said the company has benefited from, among other things, improved productivity due to new technology and a continued low rate of inflation.

The commission’s review of GTE’s revenues began in January, 1987, after the company itself asked for a $114-million cut in its annual revenue, a 4.4% reduction. GTE said at the time that improved productivity and layoffs had cut its expenses. In its first response to GTE’s request, the PUC made its interim reduction of $122 million that took effect Jan. 1 while hearings continued.

Any rate change made at this point would take the form of a surcharge or credit applied to various elements on customers’ phone bills, including fixed monthly charges as well as variable charges. In its final adjustment, the PUC will rewrite all of GTE’s prices, eliminating the surcharges or credits.

GTE serves about 2.5 million customers in California, mostly in coastal communities from Santa Barbara to San Diego, along with much of Riverside and San Bernardino counties. The company also serves a few scattered communities in Central and Northern California.