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Notes predict cut in GTE rate request

Budget documents and handwritten notes, apparently from a GTE Florida Inc. executive, predict the outcome of the telephone company's pending rate request before state utility regulators.

The prediction is GTE will get less than one-third of what it is asking for.

The notes were included with other budget documents GTE provided to the public counsel. They added some intrigue Tuesday at the start of Public Service Commission hearings in the telephone company's $66-million rate case.

The public counsel, which represents Florida residents in PSC rate cases, offered the internal GTE documents as evidence in the case. The notes and budget documents project the "impact" of the rate case at $19.4-million.

On one of the handwritten notes, GTE's original request for a 13.75 percent return on equity is lowered to 11.8 percent. GTE ended up asking for a 13.6 percent profit for its shareholders.

"It represents someone's opinion of the Florida rate case at some point in time," suggested Harold McLean, an attorney for the public counsel. He noted the name "Nolan" handwritten at the top of one page.

Could that be Paul Nolan, the recently retired president of GTE Telephone Operations' south area, McLean wondered. He also pointed out that GTE is asking telephone customers to pick up the tab for part of Nolan's 1991 moving expenses from Indiana to Florida. The amount of the moving expenses GTE wants Florida telephone customers to pay is $84,228.

Donald McLeod, director of revenue and earnings management for the southern division of GTE Telephone Operations, dismissed the documents as "a scratch sheet of someone's."

If the PSC grants GTE's rate increase _ lowered from its original request in May of $111-million _ telephone rates will go up 30 to 50 percent for 1.8-million customers in Pinellas, Hillsborough, Pasco and four other counties.

The basic bill for an average residential customer would climb $3.42 a month, from $11.37 to $14.79 a month. Business rates would jump an average of $14.08 a month, from $29.14 to $43.22.

Public counsel attorneys want the PSC to decrease GTE's rates $126-million and set its return on equity at 11.3 percent. The Tampa-based Florida Consumer Action Network endorses those recommendations.

Florida's second-largest phone company says it needs the increase to cover rising business costs, address consumer demands for lower toll rates and local calling plans, and position itself for increased competition.

In fact, McLeod revealed, GTE is preparing to seek approval from the Federal Communications Commission to provide emerging services via fiber optics, such as high-speed transport of video signals.

Peter Dunbar, a lawyer representing the Florida Cable Television Association, fears the PSC might make precedent-setting decisions in this case that could hurt cable TV's ability to compete with the phone companies. GTE plans to encircle Hillsborough County with a fiber optic network.

"Do you see the cable television companies as a competitor for the video transport your company is about to offer?" Dunbar asked GTE's McLeod.

"Yes," said McLeod.

"So their effort to enter the marketplace and compete with you is . . . beginning to have an impact on you economically?" Dunbar asked.

"The answer is yes," McLeod said.

But GTE isn't asking for the rate increase to raise money to get into cable television, spokesperson Tammy Lindsay said later.

"GTE Florida has not had an increase in basic local rates in 11 years," Lindsay said. "The fiber GTE is using is for the purpose of improving and modernizing telephone service."

Just two of the PSC's five members _ Chairman Thomas Beard and Commissioner Susan Clark _ are hearing the GTE case. The other three are down the hall, hearing Tampa Electric Co.'s $98-million rate request.

"All five of them should be up there," said Monte Belote of the Consumer Action Network. "The commissioners are letting the utilities railroad the process by letting them all come in on top of each other. The commissioners and their staffs are overloaded."

Other issues expected to come up in the next week of hearings include the public counsel's request for a PSC investigation into GTE Florida's purchasing practices from affiliates (the Federal Communications Commission is auditing GTE Florida); $22-million in expenses for accounting changes that benefit shareholders; and whether telephone customers should pick up the $15,000 tab for corporate chauffeurs, $380,000 for employee fitness centers, and $2-million a year for free telephone service for employees.

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