PUC staff suggests 7% NYNEX rate cut> Phone company says revenue hit could hurt

AUGUSTA — Staff advisers to the state Public Utilities Commission on Tuesday urged the panel to order a cut of nearly $24 million in NYNEX rates.

PUC hearing examiners issued their proposed decision in advance of next month’s deadline for a decision. The commission is scheduled to take up the recommendation at a meeting May 1.

NYNEX, which has more than 500,000 customers in Maine, has said its revenue limits should remain unchanged. Meanwhile, PUC staff advocates called for a reduction of more than $42 million a year, and the Maine Public Advocate’s office said rates should be cut by more than $59 million.

The $23.9 million reduction proposed by the PUC hearing examiners would amount to a cut of about 7 percent. The hearing examiners said NYNEX should reduce toll service rates and eliminate charges for touch-tone service.

NYNEX, with in-state revenue of about $330 million a year, has come under fire from a group of activists that complains the company may have been overcharging customers while investing in fiber-optics technology so that it could offer video services.

The PUC, while investigating NYNEX rates, is also considering a nontraditional form of regulation that the company says could help it compete with other telecommunications companies.

A decision in that case is also expected next month.

NYNEX spokesman John McCatherin said company officials disagreed with and were disappointed by the hearing examiners’ report.

“Our concern is if we take that big a hit, it could jeopardize the kind of investment we need to keep this state current,” he said.

McCatherin said the company was satisfied that the report made no finding that NYNEX had overinvested in technology for the purpose of preparing “a cable television network,” but that the report also called for disallowing certain expenses that had been incurred to produce longer-term savings.

“On an overall basis, this is just one phase of the alternative regulation plan,” McCatherin said, under which a new revenue base would serve as “a starting point.”

With one seat opening on the three-member PUC, the NYNEX case decisions are expected to be made by incumbents William Nugent and Thomas Welch, the panel chairman.