Dec. 04, 2002 – Innovative Telephone's chief executive officer, Samuel Ebbesen, told the Public Services Commission on Wednesday that the company, formerly V.I. Telephone Corp. — Vitelco — was unprepared to pay the full $379,000 that it owes the PSC.
That's how much the company currently owes the commission in assessment fees, according to PSC legal counsel Frederick Watts.
Ebbesen said he was willing to pay the amount owed in three equal installments, but PSC members rejected that offer and did not arrive at a solution on the matter.
Commission chair Desmond Maynard told Ebbesen that the phone company's failure to pay its assessments has "hampered and wounded" the mission of the PSC. "The commission can only fulfill its mission if payments are made in a timely manner," Maynard said. "This commission is going to have to decide whether or not it wants to set a new policy whereby assessments are paid in installments."
Maynard said if the PSC allowed Innovative Telephone to pay in installments, other utilities would want the same treatment.
"I don't want other utilities to come here with the same proposal," commission member Alric Simmonds said. "This would have to be a one-time situation."
His colleague Verne David asked Ebbesen if Innovative Telephone could produce financial records showing that it would have difficulty paying in full. Ebbesen said assessment fees were budgeted, but at a level lower than what the PSC has charged.
Watts told the commission that by law, if a company does not pay its assessment in a timely manner, it can be charged 9 percent interest.
"As long as I'm here, I'm going to exercise the authority that the statute gave me," David said, adding that he wanted to make certain that the utilities regulated by the PSC understand who is in charge.
On Sept. 30, the PSC ordered Innovative Telephone to pay $400,000 of the $604,400 that it owed by Oct. 4. Simmonds said the order has been "totally ignored" by the phone company. After Oct. 4, Innovative did subsequently make two payments of $75,000.
During its regular meeting on Wednesday, the commission heard a report on the rate investigation of Innovative Telephone by the hearing examiner, Watts, and his consultant Gregory Mann. Watts told the PSC that Innovative's earnings did not exceed the 11.5 percent rate of return allowed. "They're not in any sense of the word not in compliance with the commission's order," Mann said.
An Innovative Telephone attorney, however, said a fair rate of return would be 13.84 percent. Julia Johnson said the company would lose $8 million a year of its earnings based on the current 11.5 percent cap. "We believe in this market that the higher rate of return is more commensurate with the risk," Johnson said.
Attorney Greg Vogt, also representing Innovative Telephone, said if the commission were to grant the 13.84 percent cap, the Virgin Islands would have a better environment for investments.
Commission member Valencio Jackson responded: "I don't see that opportunity risk that we're talking about here that would move us to 13.84 percent."
Vogt said failure of the PSC to grant Innovative Telephone the increased rate of return would make it "more difficult for them to attract capital."
Maynard said the PSC would not take any action regarding the rate investigation at this time.
In other action, the PSC gave the Water and Power Authority permission to continue assessing residential electricity customers a street-lighting surcharge until March 1. On Sept. 30, the commission had approved imposition of the surcharge of about $1.50 a month for 90 days, effective Oct. 1. Responsibility for the territory's street lighting was transferred from the Public Works Department to WAPA last December.
Publisher's note : Like the St. Thomas Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.