PUC Slaps $50-Million Fine on Pacific Bell : Communications: The company charged customers late fees for delays caused by its own bill processing.

The California Public Utilities Commission on Wednesday fined Pacific Bell $50 million for repeatedly charging its customers improper late-payment fees.

The fine, which includes $35 million in customer refunds and a $15-million penalty, is among the largest ever levied against a utility company, consumer advocates said.

A Pacific Bell executive said the company will likely appeal to the commission for a rehearing. “We are concerned and puzzled,” said John Gueldner, Pacific Bell’s regulatory vice president.

“This was all the result of a processing error that we immediately set out to fix the minute we learned of it in 1991.”

The punishment stems from allegations that San Francisco-based Pacific Bell, the monopoly phone company throughout much of the state, routinely assessed customers throughout California late-payment charges and disconnected their service because of delays in the company’s own bill processing operations.

Consumer groups have argued that the phone company knew of the bill processing problems as early as 1986 and deliberately declined to do anything about them until employees leaked the story to a San Diego newspaper in 1991.

Last month, an administrative law judge for the commission recommended that Pacific Bell be slapped with a $65-million fine, including $32 million for customer refunds and a $33-million penalty. However, the commission increased the refund to $35 million and settled on a $15-million penalty.

“That should be sufficient to get their stockholders to ask some questions about how that company is being managed,” said Audrie Krause, executive director of TURN, or Toward Utility Rate Normalization. Krause added that the commission’s ruling is “a strong victory for consumers.” TURN had asked originally for a $50-million penalty in addition to the $35 million in refunds, but Krause said she was satisfied by the outcome.

Half of the penalty is supposed to be used to lower rates for all customers, and $7.5 million will be used to assist low-income customers with connection charges and deposits, the commission said.

Pacific Bell must attempt to contact individuals who might be owed a refund for incorrect late payments and reconnection charges.

Any remaining amount of the $35-million refund will go to the state, the commission said.