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News Release
U S WEST Customers To Receive $270 Million Refund
April 14, 2000 (2000-017)
Contacts: Ron Eachus, Chairman, 503 378-6611; Roger Hamilton, Commissioner 503 378-6611; Joan H. Smith, Commissioner, 503 378-6611; Phil Nyegaard Telecommunication administrator 503-378-6436; Bob Valdez, Public Information Officer, 503 378-8962
Salem, OR - The Oregon Public Utility Commission (PUC) today resolved a rate case dispute dating back to 1997 that will return over $270 million to current and former Oregon customers of U S WEST. It will also provide temporary bill credits of $63 million annually until the Commission sets final rates.
The approximate per-line credit for past overpayments for a residential customer will be $118. The per-line credit for business customers will be $284, depending on how "simple" or "complex" the telephone service is. Simultaneously, customers will receive a temporary on-going bill credit in the amount of $2.47 a month for a residential line and $5.93 for a business line to prevent future overpayments while the Commission considers final rate making. This credit will end when the Commission sets new retail rates late this year.
However, customers may not receive the refund and credit until sometime after August 1, to allow parties procedural rights to ask the Commission to reconsider the order, and allow U S WEST to review any changes made through the reconsideration process.
The order also sets aside 5 percent of the local service refund, $12 million, for former U S WEST customers.
In the 1997 rate case, the Commission found U S WEST had been overcharging customers since the spring of 1996. The contentious case has been winding its way through the courts since the Commission’s May 1997 ruling and was an issue in the 1999 legislative session.
Today's Commission order adopted and modified a stipulation made between the staff and U S WEST last September.
The 1997 decision required U S WEST to refund customers $102 million and reduce annual rates by $97 million. By August the refund would have grown to $526 million assuming the Commission order was upheld in court.
"We were diligent and achieved a reasonable outcome that will finally get customers significant refunds they deserve," Commission Chairman Ron Eachus said. "We accounted for updated information, the risks of litigation, and the length of time that has passed. A bottom line was that we were able to settle at a level that we believe maintains the lower rate of return we imposed as a consequence of U S WEST's poor service."
The original PUC order reduced the Company's allowed rate of return to stockholders because of reduced service quality levels.
To receive a bill credit consumers must be on the U S WEST network as of the date of the refund and have had service for at least 60 days prior to the refund date. The 60-day cutoff period is designed to discourage customers from subscribing to additional lines immediately before the refund date to receive a larger refund. Refunds will be made on a per line basis. The type of service (i.e.) business or residential on each line determines the amount.
Former customers who received at least 6 months of continuous service from U S WEST between May 1, 1996 and the date of the refund are also eligible to apply in writing to U S WEST for a refund from the five percent set aside. Refunds will be available on a "first-verified, first-served basis" in the form of a check.
Long distance providers who are customers of U S WEST will receive an amount equal to 13.8 percent of the total refund ($37.6 million).
The original stipulation made no provision for former customers. However, the Commission insisted former customers be included.
In order to reach agreement with U S WEST the Commission made several adjustments to the rate case. The order takes into consideration $277 million U S WEST spent on improvements to the system since 1996, which reduced the amount of the refund. In addition, the Commission applied the lower rate of return in the 1997 decision, 8.7 percent, as interest on the accumulated refund, rather than the 11.2 percent rate included in current rates.
The parties have 60 days to ask the Commission to reconsider the stipulation. After that time period, U S WEST has an additional 45 days to accept or reject the stipulation. U S WEST may make the refund earlier if it so chooses. If rejected by U S WEST the issue would go back to court.
Commissioner Roger Hamilton said the Commission sought a refund mechanism that is both balanced and will result in a reasonably prompt method to get customers their money. "I was looking for what is reasonably fair and easiest to administer. I also felt it was very important that former customers receive money they are entitled to."
Last November, the Oregon Court of Appeals put the case on hold in order for the parties to consider the stipulation.
The Citizens' Utility Board (CUB) and the American Association of Retired Persons (AARP) opposed the stipulation, arguing ratepayers are entitled to a larger amount.
The refund obligation is based on $53 million dollars a year plus interest covering a period from May 1, 1996 until the stipulation is implemented.
The temporary bill credit will appear on customers' bills at the same time the initial refund is credited. The credit will continue on an interim basis until the Commission sets final rates for U S WEST in phase two of the rate case. Final rates will reflect an annual ongoing revenue reduction of $63 million.
See attached question and answer sheet for additional details
US WEST Refund Fact Sheet
Separate Statement on UT 125, Commissioner Joan H. Smith
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