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             California Public Utilities Commission
505 Van Ness Avenue, Room 5301            San Francisco, CA 94102
CONTACT: Armando Rendon           April 24, 1996         CPUC-039
         415-703-1366                                (R95-04-043)

           CPUC COMMISSIONER ISSUES ALTERNATE DECISION
            ON PACIFIC/GTEC REQUEST FOR COMPENSATION

     Commissioner P. Gregory Conlon of the California Public
Utilities Commission (CPUC) today issued an alternate decision on
the Pacific Bell (Pacific) and GTE California (GTEC) requests to
be compensated for revenues the companies say they'll lose due to
local phone competition.
     Pacific is seeking $3.7 billion over five years.  GTEC is
asking for compensation as well, estimated at about $500 million.
Both proposals will be considered for a vote on May 8.
     The Commissioner's alternate finds that the CPUC order to
approve local phone competition along with recent state and
federal legislation have disproportionately impacted California
phone companies by making it difficult or impossible for
them to recover their investments before they can be retired via
approved depreciation schedules.
     However, his proposal defers any finding on whether the
CPUC's order has drastically violated the Commission's duty to
ensure Pacific and GTEC can earn investors a fair rate of return.
     His alternate differs from the proposed decision circulated
by a CPUC Administrative Law Judge on April 8 on several key
points.  He defers the question of what a fair rate of return is
for further hearings if and when Pacific and GTEC file for
compensation.  Following such hearings, the Commission would
determine what might be the most appropriate rate of return to
use as a benchmark for setting the lower range of a "fair" rate
of return.
     Both proposals agree that while the introduction of
competition into the local phone market in conjunction with
regulation might not translate into a violation of their
constitutional protection against uncompensated "takings" of
property, a taking could occur, as the companies argue, if they
were denied an opportunity to earn a fair rate of return on
investment.                                              -###-