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1994--The Year in Review

Fortnightly Magazine - January 1 1995

Tel. Corp., - PUR4th-, Dkt. Nos. 94071 et al., Oct. 13, 1994 (N.Y.P.S.C.).

Competition in the local telephone market was uniquely acknowledged by the Maine Public Utilities Commission (PUC) in a recent rate case involving New England Telephone Co. The PUC found that current rate structures did not cause toll service to subsidize basic local service (em that is, the actual cost of local service closely matched revenues re-ceived by the carrier. Thus, it rejected the local carrier's proposals to raise local rates by 25 percent and further reduce toll rates by 8.5 percent. It described the carrier's rate plan as "a

short-sighted reaction to the growing competition in the telecommunications industry." Re New Eng. Tel. Co., 152 PUR4th 1 (Me.P.U.C.1994).

In a case that should soothe those alarmed at the prospect of a regulated company using

its monopoly revenues to support competitive activities, the West Virginia Public Service Commission premised its cost allocation for the Chesapeake and Potomac Telephone Co. on new plant being installed primarily to provide market-based services. The LEC must assign any in-creased depreciation costs (em such as a reduction in the remaining life of an asset (em to the competitive category, unless it can show that monopoly service was the direct cause of the added expense. Re Chesapeake & Pot. Tel. Co. of W.Va., 150 PUR4th 286 (W.Va.P.S.C.1994).

In another landmark case, the Michigan Public Service Com-mission (PSC) granted its first competitive certificate in the local exchange telephone market. City Signal Inc. was granted a license to provide local telephone service in the Grand Rapids District Ex-change in competition with the existing local carrier, Ameritech Michigan. As the PSC found, "the time has come for competition in the local exchange market." It cautioned that new players in the local exchange market cannot create exchange configurations or pricing mechanisms that serve only business or high-volume users. On the other hand, as new competitors, they will not be required to serve every customer in the local access and transport area or the state. Re City Signal, Inc., Case No. U-10555, Oct. 12, 1994 (Mich.P.S.C.).

Telecommunications common carriers in Massachusetts, except pay-telephone service providers, will no longer require a certificate from state regulators before offering new intrastate services. But the commission rejected calls to streamline its rate tariff regulations for non-dominant carriers, because that would involve altering a state law that prohibits rate changes until 30 days after the filing date. Re Regulatory Treat. of Telecom. Common Carriers, 152 PUR4th 483 (Mass.D.P.U.1994).

Traditional Regulation (em

Alive and Well

Traditional prudence reviews and least-cost planning may not survive intact if competitive

energy markets develop further. Nevertheless, both tools appear alive and well at the state PUCs.

In a telling decision, the Washington Utilities and Transportation Commission (UTC) conducted a traditional prudence review of purchased-power planning by Puget Sound Power & Light Co. and ordered $16.8 million in rate disallowances associated with two large "above-market" cogeneration contracts. The case offers a glimpse of the continuing role of state regulators. Increasing competition means that both "build" and "buy" options must be held to