A five-year, performance-based regulation plan for New York Telephone Co. (NYT) has been signed by the New York State Public Service Commission staff and 15 other parties. The plan calls for NYT to improve service quality, reduce prices, and foster competition in its service territory. NYT agreed to relinquish its right to file for general rate increases, but in exchange will receive increased regulatory flexibility.
The plan was negotiated over a two-year period and the PSC will review it over the next several months. So far, it calls for $375 million in rate reductions over five years, with an additional $50 million in reductions if the plan is extended for two more years. Reductions include the elimination of business and residential touch-tone rates. Also, interexchange carrier (IXC) access rates would be reduced by $92.5 million by 1999, and staff will request that savings realized by IXCs be passed on to consumers in the form of equivalent toll-rate reductions. No basic-service rate may be increased during the plan except for extended area service.
A performance-based index will be established. To extend the plan to years six and seven, NYT must meet certain service targets and improve its price performance in relation to other companies by 4.5 percent over the term of the plan. Required service-quality improvements would be gauged by progressively more stringent internal and external measurements. If service does not meet the targets, rebates would be paid to customers in the areas where service was below par. Re New York Telephone Co., Case No. 92CO665, filed Sept. 26, 1994 (N.Y.P.S.C.).