The Ariz. Corporation Commission (ACC) March 16 will weigh an adm...

Qwest in Ariz. operates under a unique system of retail price caps tied to earnings on assets. The ALJ in Case T-01051B-03-0454 said present rates won’t produce a 9.5% rate of return he judged fair, so Qwest would be entitled to a revenue increase to correct the deficiency. The new revenue would come by extending through 2007 price cap rules letting Qwest raise rates up to 25% per year for vertical services like caller ID and other services classed as semi-competitive, while services dubbed fully competitive would be priced to market. Net revenue boost from all hikes under this proposal couldn’t exceed $31.8 million the first year and $12 million the 2nd. The proposal would require Qwest to cut intrastate access charges $12 million the first year. Rates for basic exchange service, 911 and in-state directory assistance would remain capped at current levels. The proposal would require Qwest to withdraw a May 2004 proposal to declare the state’s major cities rate-deregulated competitive zones. The Rural Utility Consumer Office opposes the ALJ recommendation, saying it wrongly assumes the same level of competition in all Qwest wire centers. It said statewide rate averaging gives Qwest and rivals little incentive to compete on price in competitive markets. But Qwest and some competitors urged adoption, on grounds access cuts would boost long distance competition and keeping current rates for basic services would guard customers wanting only dial tone and local use. Local competitors lauded the plan’s dropping the competition zone idea.