PUC Rescinds Order on Phone Rates : Utilities: Panel halts implementation of new local long-distance pricing amid charges that a Pac Bell worker helped draft rules.


In a highly unusual step, the state Public Utilities Commission on Wednesday rescinded its groundbreaking order overhauling local telephone rates amid allegations that a Pacific Bell employee helped draft it.

The commission said it is reopening the case for comment until Oct. 26 to remove any suspicion of impropriety while it continues to investigate the allegations. The action delays any changes in local phone rates for several months beyond Jan. 1. Pacific Bell has denied any wrongdoing.

In rescinding the order, the commission reiterated its intention to allow competition in regional long-distance calling--an indication that the substance of the decision is not likely to change much.

The order allowed regional phone companies to lower their "local long-distance" rates, benefiting business customers who make most of those calls--for example, from Los Angeles to Oxnard. But consumer advocates said that increases in basic telephone service would hurt the poor and the elderly.

Consumer advocates greeted the commission's move Wednesday with cautious optimism. "It will only be meaningful if the PUC is willing to take a fresh look at how the decision will affect a broad spectrum of consumers," said Audrie Krause, executive director of San Francisco-based Toward Utility Rate Normalization, a consumer watchdog group.

The events that led the commission to rescind its decision are unusual even in the testy arena of utility regulation. According to a statement released by PUC President Daniel Fessler, the commission's staff, under deadline pressure, asked for technical help from GTE and Pacific Bell. The telephone companies complied.

Such requests for assistance are not uncommon, particularly in complicated telephone rate cases that require massive number crunching. Advisers provided by the utilities sign statements saying their work is confidential and that they will not try to influence the commission staff.

However, Fessler said the commission's preliminary investigation into the allegations has turned up evidence that "at least one member of the technical experts had gone beyond matters of technical implementation and had made suggestions of a policy nature." Fessler said what impact these suggestions may have had on the final order is under "active investigation." He said the probe could be completed as early as next week.

Fessler did not identify the employee, but others close to the case said he is Jerry Oliver, Pacific Bell's director of competition proceedings. Pacific Bell said Oliver would have no comment but that he believed he was providing the commission with the help requested. The company added that it does not believe Oliver overstepped his role as technical adviser to the PUC. Before assuming that role, Oliver had testified before the commission on behalf of Pacific Bell.

Responding to questions arising from the PUC rate ruling, Assemblywoman Gwen Moore (D-Los Angeles) said she will hold hearings on Oct. 21 in Los Angeles on the PUC's decision-making process.

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