YELLOW PAGES DECISION SHOULD BE MADE BY PSC

Proposed legislation in the Missouri General Assembly would remove Yellow Pages revenues when determining future Southwestern Bell telephone rates. The proposal is disturbing. Our main concern goes beyond the issue of phone rates. This debate simply doesn't belong in the legislature. We agree this measure deserves a spirited dialogue - but before the Missouri Public Service Commission (PSC). This is the body Missourians have empowered to act in our best interest on utility issues. As such, we urge legislators to stop advancement of the so-called Yellow Pages bill.

The PSC holds hearings on requests of public utilities. Evidence is presented during open, on-the-record hearings, and the public has its chance to agree or dispute the facts presented. Now this matter has moved into the hands of legislators and lobbyists - in both a House and Senate version. This circumvents the regulatory process that has served Missouri well for many years. In an unprecedented move, public service commissioners have come out solidly against the legislation. We agree with the PSC - it's bad public policy.

The future of telephone rates has to be part of this discussion as well. The Yellow Pages are very profitable. The exact level of profits has not been easy for legislators to determine since that data is closed under a pending rate case with the PSC. On Friday, however, commissioners voted to release some files on Yellow Pages profits. Other financial data about Southwestern Bell will remain sealed. The PSC order has been delayed until Wednesday to give Bell officials an opportunity to appeal. Without accurate, up-to-date information about Yellow Pages profitability, it will be hard for legislators to make a responsible decision.

Removing Yellow Pages profits from future rate requests would take out a major source of Bell revenue. The PSC is not convinced by Bell's assurances that this move would not affect rates. In an April letter signed by all five commissioners, they state: "....passage of this legislation will ultimately impact customers either through higher rates than would otherwise be necessary or through reduced or eliminated rate reductions or customer credits. Dollars cannot be removed from the rate-setting process with no effect whatsoever."

Earlier this month, commissioners said that if this legislation had been in effect during 1990 and 1991, the loss of Yellow Pages profits from the calculation of earnings "would have virtually eliminated the approximately $45 million in credits paid to customers."

If legislation is approved, Missouri would be the first state to prohibit Yellow Pages profits from telephone rate consideraton. If it is an option used across the U.S., it can't be considered "outdated" as the company contends. Missouri's "leadership" in this matter seems dubious.

On Feb. 1, PSC staff filed testimony alleging that Southwestern Bell is overearning in the amount of $150 million annually. That same day, Bell filed a proposal to reduce its rates by $22 million, continue a profit-sharing plan, and upgrade its fiber optics technology. That raises a question in our mind about current Southwestern Bell profits. Any Yellow Pages legislation should wait until this pending profit controversy is clarified by the PSC.

Our stance is not to take anything away from Southwestern Bell. The company has been a good neighbor in Missouri and our community - supporting many worthwhile projects. Bell has a number of intriguing strategies on the table - including the extension of fiber optics technology into Southeast Missouri. As a demonstration that the Yellow Pages proposal removal won't affect rates, the company has also requested a three-year extension on the freeze of local rates. But that still doesn't speak to the effect five or 10 years down the road.

Southwestern Bell is a public utility and as such, should work within established regulatory guidelines. Bell should formally place its Yellow Pages request before the PSC for consideration. That's where this decision belongs.