PUC to Pac Bell: Repay $36-Million Overcharge : Utilities: Commission staff says the overage was levied against Universal Lifeline fund for subsidized service.

The state Public Utilities Commission staff is asking Pacific Bell to repay nearly $36 million that it says the phone company overcharged a fund responsible for financing subsidized telephone service for low-income California residents.

In an audit report to be released later this week, the commission’s Advisory and Compliance Division said Pacific Bell incorrectly billed the Universal Lifeline fund for $35.7 million between mid-1984 and the end of 1989.

Despite the size of Pacific Bell’s overcharges, a PUC official said the audit uncovered “no blatant disregard for the intent of the law.�

The report will be sent to the PUC board, which has the authority to order Pacific Bell to repay the charges. A similar audit of GTE’s lifeline operations two years ago resulted in that phone company repaying $8 million in overcharges to the fund.

A Pacific Bell executive called the findings of the latest audit “groundless.�

Michael Miller, Pacific Bell’s vice president for regulatory affairs, said the audit was done by the same PUC division that has approved the phone company’s charges to the lifeline fund every three months for the last eight years.

Since its creation in mid-1985, California’s lifeline program has brought subsidized phone service to low-income residents who might otherwise be unable to afford it. The program, which has grown as the state’s economy has floundered, now serves 1.8 million households, or about 13% of the state’s phone subscribers.

Eligibility for lifeline service is based on household income. The income limit for a family of two is $14,900 per year; for a family of four, the limit is $21,900.

Release of the audit comes as regulators and consumer groups are increasingly worried that the lifeline program may run out of money. Expenses have soared to $20 million per month as the program has enrolled new subscribers, outpacing the $15.6-million per month income that the fund receives from a special tax levied on the bills of other subscribers. The fund, said its administrator, Terry Wilson-Grey, now has about $40 million, a two-month reserve that is considered dangerously low.

Audrie Krause, executive director of the consumer group Toward Utility Rate Normalization, said the fund would be significantly replenished if the PUC orders Pacific Bell to repay the $35.7 million in alleged overcharges.

Dean Evans, assistant director of the PUC division that performed the Pacific Bell audit, said it shows that the phone company billed the lifeline fund for about $26 million in administrative charges that had already been paid by its other subscribers. He said Pacific Bell’s “double counting� of administrative costs could have resulted from an erroneous interpretation of PUC guidelines.

The remaining $10 million in overcharges, Evans said, was the result of confusion over the rules governing the billing of certain long-distance calls made by lifeline customers.