DRISKILL SAYS PSC RATE DECISION BILL A COMPLICATED ISSUE

JEFFERSON CITY - The Missouri Public Service Commission would be given the authority to use new methods for setting rates of telephone companies under a bill sponsored by state Rep. Joe Driskill. The bill has passed the House.

By allowing the PSC to determine rates with a method other than on cost of return of providing the service, Driskill said he believes it is more likely that people in rural parts of the state will be able to receive some of the new telephone technology they are not getting now.

"Under the present system, telephone companies are rewarded for inefficiency and waste of money, but not for making investments in its system," said Driskill.

"This does not mean higher rates for telephone consumers, but it means they have the power to determine if the phone company needs a different mechanism to give them an incentive for updating with new technology."

Ten percent of all telephone lines in Missouri are still on four-party line service; 25 percent of those lines are in Driskill's district that encompasses Wayne County and parts of Butler, Bollinger, and Ripley counties.

In addition, 45 percent of the telephone lines in the state are connected by old electrical switching machines, which Driskill said is 1940s technology.

Driskill said he believes his legislation will lead to rural areas receiving access to digital systems and the fiber optics network much more quickly.

"I think we'll accomplish this in a faster, more economical way than there would be under the rate of return," he said.

One alternative method for setting rates could be a sliding scale, kind of a profit sharing, where the consumers and companies save in any cost savings that might be accrued as the cost of providing services go down as equipment depreciates, Driskill explained.

The bill has been endorsed by all five members of the Public Service Commission, a rare action by the commission. Much of the bill was drafted by the PSC.

The measure came out of the Commerce Committee, chaired by Driskill, and went through about five hours of debate before it was perfected Tuesday afternoon. A final vote, sending it to the Senate, is expected this morning before lawmakers adjourn for the week.

Driskill said there was some opposition to the bill, especially from re-marketers of long-distance calls. They were concerned the bill would be able to use revenue from non-competitive areas to subsidize their competitive services like long distance, he said.

Driskill said he believes the concerns are unfounded. "I believe there are significant safeguards in the bill to protect from that, and the House agreed," he said.

Another reason for extended debate was the complexity of the bill. "It is the most complex bill I've dealt with in the 10 years I've served in the House, and maybe one of the most complex bills ever considered by the legislature," said Driskill.

In their letter of support to House members, the PSC stressed the bill "permits, but does not require the commission to set rates through alternative forms of regulation. Any form of alternative regulation specified retains the overriding obligation to produce just, reasonable and lawful rates.

"While it grants flexibility to the commission, it also protects customers by giving full and fair evidenciary hearings, after proper notice is given, prior to adopting any alternative regulation plan."

All hearings and decisions are subject to judicial review.

Another safeguard in the bill is that the PSC must at least annually review the company's earnings, revenues, investment and expenses, so that it can be reviewed on a regular basis to insure that consumers and competitors are not dealt with unfairly.

Annual reports must be given to the General Assembly and the governor about the progress being made on any kind of alternative method of rate setting.

Other parts of the bill expand the notification of proposed rate increases and updates language in existing law to current telecommunications terminology.

The commissioners also stressed that the bill was drafted with the assistance of several telecommunications companies to insure that all views were heard.

Driskill said he would not have handled the bill without the wholehearted support of the PSC.

"The bottom line of the bill is that it will, in my view, allow companies to bring about faster modernization of the telecommunications network," said Driskill.

"We don't take away any of the safeguards already in the law to protect consumers."