Judge at State PUC Modifies Rate Plan

Correcting math errors in a closely watched telephone rate case, a state regulatory judge drastically cut back a proposed 21% increase in wholesale prices to less than 2%, pleasing consumer groups and angering SBC Communications Inc.

The proposed decision, released late Thursday by the California Public Utilities Commission, was a big win for competitors like AT&T; Corp. and MCI Inc. that serve their customers with lines and gear leased from SBC, the state’s dominant local phone company.

“At least it’s good news to our existing customer base,” said AT&T; spokesman H. Gordon Diamond. A big increase in wholesale rates would have led to higher phone bills for more than 1 million Californians who have switched local service to Bell rivals, he said.

The PUC still must vote on whether to adopt the revised decision of Administrative Law Judge Dorothy Duda or modify it. A vote isn’t scheduled yet, but could come at one of the PUC’s two meetings in September.

Commissioner Carl W. Wood, who oversaw the process, had issued an alternative decision based on Duda’s. His called for a 25% hike in rates. He was not available Friday to discuss changes he might make in his version.

Other commissioners also could propose alternatives before a vote is scheduled.

SBC, which has long complained that the rates it is allowed to charge rivals are too low, ripped Duda’s revised draft. The company said it defied logic and fell short of ensuring benefits for consumers and increased investment and jobs.

“This proposed decision would extend a flawed policy and expand the generous subsidies enjoyed by AT&T;, MCI and other competitors in California,” the company said.

But it is the competitors that have been growing, investing and creating jobs in California in the last few years, said Natalie Billingsley, senior telecom analyst at the PUC’s consumer arm, the Office of Ratepayer Advocates.

Duda initially proposed a rate of $16.90 a month to lease the lines and gear needed to deliver a dial tone to customers. That’s nearly $3 more than the current rate of $13.93. Her revision to $14.16 came after both sides complained about errors of computation and judgment. SBC had wanted $30.33 a month, saying its cost is $29.92.

The victory may be a hollow one for the nation’s largest long-distance company. AT&T; has stopped marketing local and long-distance consumer service because executives believe federal regulators have abandoned key rules fostering competition.