Utah PSC approved inflation-indexing formula for Qwest price regu...
Utah PSC approved inflation-indexing formula for Qwest price regulation program that will end 3-year rate freeze in favor of indexed price caps. Formula will base annual cap adjustments on gross domestic product price index (GDP-PI) plus or minus productivity…
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factor to be calculated each year based on annual difference between local exchange industry productivity and national economy’s productivity. PSC said formula would be applied retroactively to each of last 3 years plus this year because Utah’s 1996 price regulation law required that rates reflect costs. Last time company’s rates were set to cost was 1997 at end of Qwest’s last rate case, when price freeze began. Financial impact on Qwest was unclear because retroactive indexing would apply primarily to revenues collected from basic exchange and access services. Revenue from most discretionary, optional and vertical business and residential services won’t be included in calculations. Qwest and PSC staff estimated productivity factor would run around 5% for each year, which would produce aggregate rate cut for past years in range of 9-12% for affected services. PSC staff next month will supply Qwest with revenue reduction figures for each year 1998-2001 and company is to respond in April with specific rate reductions.