PSC AND SW BELL AGREE TO RATE CUTS

JEFFERSON CITY -- Southwestern Bell Telephone Co. customers will receive approximately $65 million in credits on their telephone bills this year and see their phone rates reduced by more than $278 million over the next four years.

Rate reductions for residential customers using Touch Tone service will be effective immediately but other savings and long-distance rates are still being calculated by Southwestern Bell and Missouri Public Service Commission officials.

"Right now, the average Touch Tone service cost is about $2 a month," said Mike Schicker of Southwestern Bell external affairs. "That will drop to about 80 cents."

Rotary telephone users who make mostly local calls won't notice any immediate difference.

The commission's Office of Public Counsel and Southwestern Bell have reached an agreement on a regulatory plan to bring Missouri customers a four-year, $1.4 billion package of advanced telecommunications technology, rate reductions and credits. The agreement was reached after months of intense negotiations among the parties, said commission Chairman Allan Mueller.

Said Mueller: "We have been able to put aside past differences in a united effort to provide rate protection for telephone customers as well as economic development opportunities in Missouri through an advanced telecommunications plan. I believe all parties win under this agreement,"

"This agreement establishes regulations based on customer rates, not company earnings," said Horace Wilkins Jr., president of Southwestern Bell's Missouri Division. "These are the kind of changes we told the 1994 Missouri legislature were necessary to make our state a telecommunications leader as we move into the 21st century."

The agreement, said Wilkins, protects customers by providing rate stability and gives Southwestern Bell incentives it needs to begin building the information superhighway.

"Now we can move forward to aggressively complete an advance network and bring valuable educational and health-care services to schools and hospitals," said Wilkins.

Under the agreement, Southwestern Bell will freeze rates through Dec. 31, 1998. The agreement also ends appeals in Cole County Circuit Court of an $84.6 million rate reduction for Southwestern Bell ordered by the commission in December 1993. The appeal was filed by Southwestern Bell and the Office of Public Counsel, both of which disputed the PSC decision.

The $65 million in credit on customer phone bills this year was money held in escrow while the case was on appeal.

The agreement requires the company to invest no less than $275 million a year for capital improvements over four years, beginning in December 1995. Most of that $1.4 billion will be used for scheduled replacement of wiring and switching equipment, Mueller said.

But at least $35 million of that would be earmarked annually for such upgrading projects as eliminating party line service within 18 months, construction of a fiber-optic network among the company's Missouri offices, and building fiber-optic transmitters and receivers for hospitals and schools.

Southwestern Bell will be allowed to increase annual revenues by about $15 million. Mueller said that was in response to legislation passed this year.

He said the money, coming from rate payers, will be used to pay a post-retirement benefit fund for Southwestern Bell employees that mainly covers medical expenses.