Roseville Telephone Company Acts to Protect Customers From Rate Increase.

Business Editors

ROSEVILLE, Calif.--(BUSINESS WIRE)--April 11, 2000

This week, Roseville Telephone Company (RTC) will begin sending notices to its local telephone customers to let them know that their local telephone bills may increase by as much as 38 percent if proposals made by the California Public Utilities Commission's (CPUC's) Office of Ratepayer Advocates (ORA) and Pacific Bell are adopted by the Commission. RTC is opposing this rate increase and has proposed a statewide fund as an alternative to the proposals of ORA and Pacific Bell. These proposals are in response to a Pacific Bell request to discontinue a long-standing agreement that was originally established in 1960 to allow toll-free calling between RTC's and Pacific Bell's service territories, such as Fair Oaks, Carmichael, Sacramento, Orangevale, Folsom and Lincoln. These types of calls are known as Extended Area Service (EAS). As part of the EAS agreement, Pacific Bell is currently required to pay RTC $11.5 million annually to cover a portion of RTC's costs of providing this service.

In 1996, the CPUC reaffirmed that the $11.5 million annual revenues paid to RTC by Pacific Bell were necessary in order for RTC to recover the costs of providing local telephone service, and left it to a future proceeding to determine any changes to the funding source for these costs.

"We're extremely concerned about the impact Pac Bell's request could have on our customers," said Mike Campbell, executive vice president and CFO, Roseville Telephone Company.

"We've made a long-standing commitment to our customers and pride ourselves on our customer service. We'll continue to advocate on behalf of our customers, and with particular force in this case."

RTC has proposed a revenue replacement proposal to the CPUC which will ensure its customers' telephone service rates are not increased. The proposal recommends that the revenue shortfall be recovered from a High Cost Fund which was established by the CPUC to ensure customers in areas served by small and mid-sized telephone companies have access to telephone service at reasonable rates. This is the same type of process in which RTC customers currently pay an average of $1.58 per month into a similar fund to keep Pacific Bell rates low.

"If this approach is adopted, there would be no change to our customers' telephone service rates, as the replacement revenue would be recovered by this statewide fund," said Campbell.

The CPUC's Office of Ratepayer Advocates and Pacific Bell have opposed RTC's proposal and have expressed positions that the revenue should come directly from RTC customers through an increase in local telephone rates. These proposals, if adopted by the Commission, would increase residential telephone bills between 16.2 percent and 38 percent. Business telephone bills could also increase between 16.2 percent and 38 percent, depending on the rate plan adopted.

RTC plans to send a notification to its customers on this critical issue via a notice in all customer bills beginning April 14, including information about Public Participation Hearings, which will be held on June 27, 2000, at Maidu Community Center in Roseville at 2:00 and 7:00 P.M. Roseville Telephone Company, the CPUC and Pacific Bell will present their proposals at that hearing.

Members of the public are invited to attend and present their views. For information on how to submit comments to the CPUC, see RTC's website at www.rtcnet.com. The customer notice will also provide information as to how comments may be submitted.

Roseville Telephone Company is an incumbent local exchange telephone company and has provided telecommunications services for 85 years primarily in the communities of Roseville, Granite Bay, Citrus Heights and Antelope.