OCR Text |
Show Telephone Company Asks For Authority To Revise Exchange And Toll Rates In Utah Announcement was made today that The Mountain States Telephone Tele-phone and Telegraph Company has asked the Utah Public Service Commission for authority to revise certain exchange and toll telephone rates in Utah to enable the Company Comp-any to meet increased operating expenses and improve net earnings sufficiently to attract the additional addition-al capital that is required to continue con-tinue its program of expansion and improvement of its service in the state. The company states that although al-though it is handling the largest volume of business in its history of operation in Utah, its earnings on its intrastate investment in telephone plant are lower than at any time since World War I at an annual rate of 2.67 percent on a going basis. The present low earnings situation situat-ion is brought about by expenses increasing faster than revenues. Labor costs which comprise 65 per cent of total expenses have been the largest source of increased costs of doing business. Wage rates have increased substantially during and since the war due to adjustments adjust-ments comparable to those made in other industries of similar skill. Labor costs are now consuming 59 cents of every revenue dollar, compared com-pared to 35 cents in 1941. The cost of nearly everything the Company uses in constructing and maintain-ings maintain-ings its plant and service is substantially sub-stantially higher. Some of the items it-ems listed by the Company were poles which had increased 64 per cent; copper wire 83 per cent; and lead covered cable 104 per cent. The company states that during the war the extension of its plant was limited to projects that were essential to the war effort and public health and safety, and that since V-J day the demand for service ser-vice l;as been so great that it has not been able to restore prewar margins in its plant that are necessary nec-essary for efficient operations and satisfactory service. Despite the fact that it has carried out the largest construction program in the last two years ever undertaken in the state, about $7,000,000 and gained nearly 36,000 telephones, a 32 per cent increase since V-J Day, there were on October 1, 1947 near-iy near-iy 11,000 orders which could not be completed because of lack of facilities. fac-ilities. The Company's engineers estimate that in order to take care of preesnt orders on hand and to restore normal margins in plant and provide for replacements and offered business during a five year period ending 1951, that a gross construction program in the order of $24,000,000 will be required. The Company points out that the new capital required for this program pro-gram will not come from the increased in-creased revenues requested in the revision of rates. All of that will be needed to maintain good service to meet operating expenses and interest and divident requirements. In order to attract the additional capital that will be required, earnings earn-ings will have to be at a rate that will make investment in the business bus-iness attractive. The proposed new rates would increase the Company's total revenues rev-enues in Utah by approximately $76,000 per month. Since Federal and other income taxes would take 40 per cent of this amount, monthly month-ly earnings would be improved by about $45,000. The effect on individual indiv-idual customers will vary considerably consid-erably and will depend on the type and the amount of service they have had and the exchange from which they get local service. The last general adjustment of telephone rates in Utah was in 1938, most of the adjustments at that time being decreases. In general, gen-eral, present telephone rates in Utah are the same or lower than rates established in 1922. The proposed exchange rates are designed to recognize that there is some variation in the value as well as the cost of the service with the number of telephones in an exchange. The present intrastate toll schedule is adjusted to make it. conform more nearly to the interstate in-terstate schedule at varying distances, dis-tances, and to provide about one-fourth one-fourth of the necessary revenue. |