General Telephone Told by PUC to Trim Rates 2%

The California Public Utilities Commission ordered General Telephone Wednesday to trim its rates by 2%--a move that will cut consumers’ monthly bills by an average of 90 cents a month--to reflect the company’s lower expenses.

Going into effect Sept. 1, the cost-of-living reduction will reduce the company’s revenue by $49.4 million a year.

The commission’s ruling marks a departure from past practices. Until now, it has made thorough reviews of telephone rates every third year and has let the companies decide whether their charges should be adjusted for cost-of-living changes in the intervening years.

This time, however, the commission acted despite General Telephone’s position that no adjustment was necessary. The commission cited, among other things, lower inflation and borrowing costs.

General Telephone said it is “very disappointed” by the decision.

“It seems like punishment to us for good management,” spokesman Tom Leweck said.

Net Profits Limit

The commission also trimmed the limit on the Thousand Oaks-based company’s net profits to an amount equaling 13.75% of shareholders’ investment in the company, down from 15.5%. The company had sought a 14.25% return.

For consumers, the reduction is a preview of what is expected to be a much larger cut that would take effect Jan. 1, when the commission’s three-year review is completed. Leweck said there is “no question” that rates will be reduced more then. The amount is expected to total between the $114 million recommended by the company and the $680 million suggested by the commission’s staff.

The 2% cut in the company’s revenues announced Wednesday will translate into a reduced surcharge for local service for General Telephone’s 2.5 million customers. The existing 11.75% surcharge appearing on customers’ bills will be lowered to 1.97%. In addition, the 8.48% surcharge for long-distance calling will be replaced by a credit of 1.3%.

General Telephone, a unit of the GTE Corp., serves 330 communities in California, most of them along the Southern California coast, including Orange County and inland to the Salton Sea. It also serves a few communities in the Central Valley and in Northern California.