In a unanimous decision, the Rhode Island Public Utilities Commission on Wednesday voted to remove rate restrictions from most of Verizon’s residential services in the state.

The 3-0 decision allows Verizon to set its own retail rates on almost all residential telephone services without gaining prior approval from state regulators.

The PUC had given Verizon the same flexibility with respect to business lines in 2003.

“In a truly competitive market, the market is the most effective way of reducing and keeping prices down,” said Elia Germani, chairman of the PUC. “Regulation is an attempt to mimic competition.”

Verizon is likely to raise some rates when the measure goes into effect January 1.

“It is expected that prices for some services would be increased in response to competition in an industry where certain prices have been held below cost and/or below efficient levels for many years,” said Paul Vasington, Verizon director of state public policy.

In addition, the PUC allowed Verizon to reduce the Lifeline discount it offers to low-income subscribers. Currently set at a $9 discount, it would be rolled back to $8 in 2006 and to $7 in 2007.

Verizon’s primary competitor in the state, Cox Communications, offers a $7 Lifeline discount.

This change prompted public outcry at the PUC’s meeting on Wednesday, with some members of the public in attendance loudly criticizing the change. “You’re taking a dollar from somebody’s mother,” someone yelled. It amounts to a rate increase on the poorest subscribers, said some audience members.

The PUC was forced to take a 30 minute recess and bring in local police officers to restore order.

Information from: The Providence Journal