Administrative law judge Barbara Hale has recommended that the California Public Utilities Commission (CPUC) reject requests from Pacific Bell and GTE California for billions of dollars in compensation for financial losses expected from local telephone competition (Docket R95-04-043). Pacific Bell is seeking $3.7 billion over five years; GTE is asking for about $500 million.
The carriers maintain that CPUC-imposed competition in the local phone market will prevent them from earning a fair rate of return on investment, thus violating their constitutional protection against uncompensated "takings" of property. GTE and Pacific Bell want the CPUC to develop a method of recovering the funds from customers. Hale, however, points out that the federal Telecommunications Act largely preempts CPUC regulation of local competition by prohibiting states from constraining entry into local markets.
Commissioner P. Gregory Conlon issued an alternate decision in late April. He acknowledged problems in recovering investment, but deferred any finding on rate confiscation. (em LB
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