The Senate Operations Committee on Wednesday voted 5-1 to kill a bill to require the Public Services Commission to conduct regular rate investigations of the Virgin Island Telephone Corp.
The bill, sponsored by Sen. Adlah "Foncie" Donastorg, was defeated in favor of an amendment to it by Sen. Allie-Allison Petrus requiring rate investigations only when Vitelco seeks a rate increase.
"This is the biggest travesty yet," Donastorg said in a release issued after the meeting. "If the bill passes, there won't be a rate investigation for another 20 years – maybe never." Further, he said, a PSC investigation upon a rate increase is automatic, so the amendment has no meaning.
Donastorg added, "We still have no idea how much money Vitelco is making now, when according to the PSC's own records, Vitelco's profits have skyrocketed to nearly 25 percent."
Testifying before the committee on Donastorg's bill was an array of legal opinion – Attorney General Iver Stridiron, V.I. Inspector General Steven Van Beverhoudt, PSC chairman Walter Challenger, PSC counsel Joseph Arellano, Vitelco counsel Julio Brady and Vitelco economic consultant Donald Parrish.
At issue was a report by the Georgetown Consulting Group, which was contracted by the PSC to investigate Vitelco rates in 1997. The investigation was held as a result of a resolution passed by the Legislature in that year calling on the PSC to reduce the phone company's rates by 20 percent.
Georgetown recommended a full rate hearing, concluding that "it was likely Vitelco was realizing a 20 percent return, which meant it was making more than its allowed 11.5 percent rate of return."
According to Challenger, Georgetown announced its findings publicly, thereby politicizing the issue. At a hearing in November 1998, the PSC voted to reject Georgetown's recommendations. Georgetown had admitted making an error in its findings but maintained that Vitelco's rate of return was still too high and should be further investigated.
In June 1999 the Legislature held a 10-hour hearing of the Committee of the Whole questioning the PSC and Georgetown representatives. As a result, the matter was referred to Van Beverhoudt for review. In December 1999 Van Beverhoudt issued his report. He concluded that "the PSC generally acted within their authority in deciding not to continue a further investigation of the rate of return of Vitelco." He said the Legislature, as the complainant, didn't appeal his decision, "thereby tacitly accepting the PSC's decision."
The inspector general recommended that the PSC consider the benefits of establishing a specific time period to review various utilities' rates, a common practice in many states.
Stridiron said his research indicated the proposed amendment was "legally sufficient and not in violation of the separation of powers doctrine." He continued that "the PSC is a creature of the Legislature, and has no inherent authority other than that granted by the Legislature." Key to what Stridiron said is that the Legislature can't override or veto decisions of the PSC, but that Donastorg's amendment doesn't constitute a legislative veto. It provides, he said, that upon the Legislature's mandate, the PSC shall conduct an investigation.
Donastorg said his amendment would "take the politics out of the issue, by requiring regular rate increases."
Challenger said Donastorg's amendment questions the integrity of the PSC. He termed it "bad policy, bad politics and sets bad precedent."
Sen. Lorraine Berry, who voted for Petrus's amendment, said she agreed with Julio Brady's opinion that the Legislature shouldn't interfere with PSC decisions. She said the new commission members, who have been named but not confirmed, should be confirmed and "given the opportunity to make a rate investigation decision." She said that the matter had become "too politicized" and that the current commission's reputation had been impugned by all the publicity. The names submitted by the governer to fill PSC vacancies are currently in the Rules Committee.
As an aside to the proceedings, Sen. Violet Anne Golden said everyone should be concerned about the benefits the United States is granting Cuba, and not try to put Vitelco out of business. Terming Donastorg's measure a "direct attack on one man," she said, "What about those 600 people who climb the telephone poles?"
Petrus lost no opportunity to declaim recent legislation that defeated his amendment to give 100 percent of the territory's share of the tobacco fund settlement to health programs. "This is the real issue in the community, our mortality rate," he said. The Legislature voted to keep the funds as previously decided – 50/50 between the Union Arbitration Fund and the Health Department.
Donastorg presented documentation to back up all of the allegations in his amendment. At one point in the sometimes-heated debate, Committee chair Gregory Bennerson turned off Donastorg's microphone after a disagreement over protocol.
Donastorg is in possession of three cover letters written by Vitelco chief financial officer Elisa G. Hodge on June 23 and 26 of this year to PSC acting executive Keithly Joseph for August 1999 through March 2000. They deal with Vitelco financial statements, affiliated company transaction, a line gain and loss report, a manpower report, and a Vitelcom financial statement. One of the two letters dated June 26 states that the "Vitelcom Inc. financial statements will be submitted under separate cover."
The Petrus amendment was approved by Sens. Bennerson, Berry, Petrus, Donald "Ducks" Cole and David Jones. Sen. Roosevelt David voted against it. Committee member Adelbert Bryan was absent. Next the measure goes to the Rules Committee.
