1982-08-18 Regular Meeting - Laserfiche WebLink

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pia ~e11's r'~art~~s • questioned B}• RO\ HC:TCHESO\ Star•Tele`ram Au~t~n Bureau .~L'STI~ -Southwestern Bell Telephone, battling to increaseTex as phone rates. is forcing its custom ers to pay for luxuries for Bell's par ent company, .american Telephone S Telegraph, an attorney charged Friday. .austin attorney Grace Hopkins Casstevens said money funneled from Bell customers to :~T&T has been used for tiew York theater tickets, art for .~T&T headquarters, benefit dinners and a variety of charities. Texas customers also helped foot the bill for :~T&T's antitrust fight with the li.S. Justice Department, she said. his. Casstevens. representing the Texas Municipal League, made the allegations in documents filed Fri• day with state District Judge Hume Cofer of Austin. Southwestern Belb tiled suit in Coffer's court to over turn a Public Utility Commission ruling last year that chopped Belt's rate hike request from about S4i0 million to ~ 43.1 million. Bell contends that the regulatory aeenc}• acted improperly by refus• ing to let Southwestern Bell recover money it spent with'its parent com- pany. .aT&T charged the phone company Sa3.8 million in the year leading up to the rate case for "ad• ~lce and assistance" and research. But .assistant :attorney General Pailip Ricketts. who defended the PLC's ruling, agreed with tits. Casstevens that ma n}• of the cha rges between Bell and its parent firm were -mproper. Ricketts and its. Casstevens said some of the "advice and assistance" that Texas customers pay for amounts to nothing more than phone calls between Bell a rid .aT&T executives. "Obviously, there is no arm's- length transaction in this situation at all.... There are hundreds and hundreds of these expenses," Rick• etts said. "The Public [:ulity Com• mission of Texas cannot control .-~TdtT. That is what I think makes thisanextremelylmportant issue." .atistin attorney Bob Hearon. rep, resenting the phone company, called the allegations "rabb-t trails." Hearon said South~~ estern Bell can rusttfy all of-its expendi- tures uuh .•~T&T. Texas cusfiomers pay for luxuries atfiorney says ".all of these arguments are diver- sionary to this case," Hearon said. "The utility is entitled to recover the Sa3.8 million as an expense." The utility commission, ruling that Southwestern Bell did not prove Texas customers benefit from the payments to AT&T, agreed to reimburse the company for $42.7 million. Gofer's court decision in the 1981 rate case also could of fecc Bell's 1982 rate hike request. in this year's 5471 million rate case, filed at the utility commission Monday, the phone company wants Texas customers to pay for about S60 million in charges from .~T&T to Bell. Cofer, who called the AT&T pay- ments the most important issue in the rate battle, said he hopes to an- nounce aruling Friday. "ft's a big policy question, and I don't know how it ought to be decid- ed." the judge said. Bell executives contend that the payments to aT&T benefit custom- ers because the parent firm helps Bell operate more efficiently. Hearon said the telephonecompany saved at least S88 million during the test year because of ATgT's assist- ance. his. Casstevens, however, ques- tioned why Southwestern Bell cus- tomers should pay for ,~T&T's anti- trust battle. "It's very clear that the cost of the antitrust defense, or a large portion of it, is bung passed through toTex- as customers," she said. °It's diffi- cult tosee how Texas ratepa~•ers are benefittir,g from .aTgT's antitrust defense." A negotiated settlement in the an• thrust case, which is awaiting court approval. would force the parent firm to divest itself of'? local tele- -ph-one companies, including Southwestern Bell. ~S- Under the existing system, ~TEcT provides assistance to the telephone companies as a package deal. "Southwestern Bell doesn't get to pick and choose the services. Those services are forced on Southwest- errFBell whether they want them or not," Ricketts said. Because of the relationship be- tween Bell and its parent compan}•, Rickettssaid, the utility commission has "to protect the ratepayers of Texas not from Southwestern Bell but from aT&T." his. Casstevens said the telephone company's accounting procedures make it almost impossible for the utility commission to tell which ex• penses are valid and which are im- proper. "The 'advice and assistance' is a eery informal and sort of nebulous thing," she said. "In every year's rate case, we find out about some more impermissible expenses passed through Ito Texas custom- ersi." On another issue. Southwestern Bell a[torneys urged Cofer to allow increases in long-distance charges to recover about S21 million that the company recently refunded to cus- tomers. The utility commission ordered the refunds to repay- customers w•ho were overcharged by Bell while tae 1981 rate case was still under consid- eration. _ Bell, however, contends it owes customers only- about ?ti00.0pp..~l- thouQh the company followed the PLC's order to refund the full x'31 million. Southw•esterr. i3el1 wants to recover the funds with a surchar,e on long~istance calls. r~ ~~