SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 12, 1995
NEW ENGLAND TELEPHONE AND TELEGRAPH COMPANY
A New York Commission File I.R.S. Employer Identification
Corporation Number 1-1150 No. 04-1664340
125 High Street, Boston, Massachusetts 02110
Telephone Number (617) 743-9800
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Form 8-K New England Telephone and Telegraph Company
May 12, 1995
Item 5. Other Events
STATE REGULATORY MATTERS
Massachusetts
On May 12, 1995, the Massachusetts Department of Public
Utilities ("MDPU") issued an order approving with some
modifications the Alternative Regulatory Plan ("Plan")
proposed by New England Telephone and Telegraph Company
(the "Company") to govern its Massachusetts intrastate
operations. The principal components of the Plan are
as follows:
(1)The Company will be regulated under a price
framework through August 2001.
(2)Pricing rules will limit the Company's ability to
increase both overall average prices and specific
rate elements for most services, including a
ceiling on the weighted average price of all
tariffed services based on a formula of inflation
minus a productivity factor plus or minus exogenous
changes that affect the Company's annual revenues
by at least $3 million. The productivity factor
adopted by the MDPU is more stringent than that
recommended by the Company and may be increased if
quality of service standards are not met.
(3)There will be no restriction on the Company's
earnings.
(4)Certain residence exchange rates will be capped
through August 2001.
(5)There will be an increase of $2.50 monthly in the
credit on exchange services for Lifeline customers.
(6)There will be rate reductions for switched access
services.
The MDPU found, without judging the reasonableness of
the investments, that the Company could proceed with
its investment commitments for the public
telecommunications network, including commencing the
deployment of a broadband network in Massachusetts.
The MDPU ordered that the Company's first annual price
cap filing be made by July 1, 1995, for effect
September 15, 1995. The filing must include explicit
cost floors for each of the Company's services. Prices
for all services must exceed their respective cost
floors by the second annual price cap filing.
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Form 8-K New England Telephone and Telegraph Company
May 12, 1995
STATE REGULATORY MATTERS
Maine
On May 15, 1995, the Maine Public Utilities Commission
("MPUC") issued Orders in its investigation of
alternatives to traditional rate of return regulation
for the Company and in a related earnings
investigation. The MPUC adopted a price cap plan for a
five-year term, with the provision for a five-year
extension after review by the MPUC. There will be no
restriction on the Company's earnings. Overall average
prices and specific rate elements for most services
will be limited by a price cap formula of inflation
minus a productivity factor plus or minus certain
exogenous cost changes. The productivity factor
adopted by the MPUC is more stringent than that
recommended by the Company. The Company is to make its
first annual price cap filing on December 1, 1996. The
MPUC also established a service quality index with
penalties to apply if service quality categories are
missed. Penalties would take the form of customer
rebates and are subject to annual limits of $1 million
per service quality category and $10 million overall.
In the related earnings investigation, the MPUC ordered
that the Company's revenues be reduced by $14.4 million
annually. The MPUC stated that the Company may use up
to $4 million of the reduction "to reduce rates and/or
provide additional services or equipment to libraries
and schools." The MPUC also ordered a one-time
customer credit of $2.8 million. The MPUC ordered that
the Company file tariffs by June 1, 1995 to implement
the customer credit and $10.4 million of the overall
reduction. The Company is to file its proposal with
respect to providing up to $4 million to Maine
libraries and schools by June 15, 1995.
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Form 8-K New England Telephone and Telegraph Company
May 12, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
New England Telephone and Telegraph Company
By Morrison DeS. Webb
Morrison DeS. Webb
Vice President,
General Counsel and Secretary
May 24, 1995
