FairPoint Communication’s Mike Smith is proposing less regulation for the bankrupt company he now represents. He is just in time to make his regulatory wish list known in the last days of the Douglas administration while his old friends are still in office.
Seven months ago FairPoint hired the newly retired Smith, Douglas’s former Chief of Administration for their newly created job called Vermont State President.
One state Senator noted then that "He has a good working relationship with the Department of Public Service and the Public Service Board so it will probably will be helpful in that regard,"
I guess it is helpful, because his old colleague Commissioner of Public Service David O’Brien (who represents Vermont customers before the PSB) and Republican State Senator Vince Illuzzi chime in sympathetically that Smith may have a point regarding easing regulations on the bankrupt company.
The major problems cited for FairPoint’s troubles didn’t include over regulation but very poor management, service and a crushing burden of debt.
Smith acknowledged that there are parts of Vermont where FairPoint is the only company offering certain services. He said he would like to see the state regulate the company specifically in those areas; but be less regulated in the parts of the state where there is competition.
The state regulates the rates FairPoint charges customers and its expansion of Internet broadband in rural areas.
"We're looking to the future," Smith said. "We wanted to get this conversation started."
It’s time to shake the tree and start over. I suggest a contract with the regulators that has these 2 features:
1. Salaries for regulators and senior staff match those in the companies that are being regulated.
2. In return, those who take the positions agree not to work for any regulated entity for at least 5 years after leaving their PSB position.
No one is asking for a constantly antagonistic attitude towards utilities, but the fact is that shareholders’ interests are often in conflict with those of the service territory. We need to align the regulators’ incentives with the members of the public. Today they are conflicted by the need to maintain friendly relations with those companies they’re paid to regulate, in hopes of a good-paying job someday.
Before FairPoint should be allowed any relaxation of Regulatory requirements, they should first demonstrate that they can abide by the regulations on the books. Otherwise the PSB is rewarding (again) incompetance.
FP continues to provide poor service, the only difference is that the PSB and PSD are no longer holding public hearings that would expose FP’s continuing issues to public discussion.
Why the silence and closed door hearings? Does the PSB prefer to shift the discussion away from FP’s past, since they hold the blame for allowing FP in the first place?
Since January, after the PSD met privately with FP, they and the PSB have become toady to FP in their plans to emerge from bankruptcy. So, don’t expect much friction from that bunch. FP wants the discussion to be about DSL service in Island Pond, not the ruination of a Bell-System franchise that actually functioned.
What do we expect when the Governor gets to pick his cronies to run boards and commissions?
The revolving door of industry and political placement produces the outcome that we experience.
In Bankruptcy court, FP successfully filed a motion to keep all of the overbillings that they generated from April 2007 to February 2009 as “assets”. Yes, the billing errors where they overcharged customers became cash for FP unless consumers ( residential and commercial) filed a claim form in Federal Bankruptcy Court in NY. Despite having heavy-duty legal representation, the PSD was unaware of this move until after the fact. The NY Court is imfamously sympathetic to corporations, so it was up to the PSD to fight for consumers in that process.
Not a peep from them. Where’s O’Brien’s indignation over sums that make Burlington Telecom’s fiasco look like business as usual?
FP gets to keep millions in billing errors to help them come out of bankruptcy to compete with other carriers (who bill correctly and process refunds when they overcharge). FP cynically asks for deregulation (help to compete after weakening all of their competitors by being dysfunctional for the last two years)and the kangaroo court will no doubt oblige.
There was no announcement or wide spread campaign to inform Vermont ratepayers that if they didn’t find this obscure claim form and venue, that after a deadline (unannounced outside of the NY Court rules)that their money would be forfeit forever. It amounts to millions, which FP denied as being significant. They said the sums were insignificant, and the PSB buys it. Really?
One claim that did make the court before the deadline was submitted by TD Bank, in excess of $800,000 of FP overbilling. FP Bankruptcy lawyers are fighting to keep that claim in a bucket that would pay 8 to 16 cents on the dollar, versus other buckets that would pay 100%. TD can afford to fight for their money. Who’s fighting for us?
For instance, there are small businesses in Vermont that cut trees away from power and telephone poles. Those companies are owed in excess of $100,000s. Hundreds of Millions of dollars will be kept by FP that came from ratepayers and businesses that thought they were dealing with the ‘telephone company’; which used to be a safe bet.
When FP says these windfall sums are insignificant, you can trust them, because every time they have stated facts to the PSB it has turned around to be…….uh, wrong.
The PSD and PSB blithely go along with a bankruptcy plan that rewards FP and lets them pocket millions of dollars of Vermonter’s money, without discussion, public hearings or any semblance of Public Advocacy.
Why?
Because the Governor’s cronies know that what’s good for big business is good for them.
We live in an age where the press only covers the margins and doesn’t dig into the facts. (They are corporatist also, why rock the boat?)
When Ivan Seidenberg, CEO of Verizon, visited Vermont for a private discussion with Gov. Douglass in the summer of 2007, what did they discuss? The press didn’t ask or demand an answer.
Since the FairPoint purchase was already underway (Verizon planning it for years prior and grooming FP to agree to go swimming holding a 100lb. boulder, under the Reverse Morris Trust boondogle that allowed Verizon to spin off VT, NH, and ME tax free for $2.4Billion), was their discussion about about making sure the PSB didn’t get in the way of the deal?
Sounds like the Cheney meetings with Big Oil cronies that our Supremes say we don’t need to know about.
Governor Douglass has never seen a pro-corporate deal that he doesn’t like (at the expense of the citizens he swore to serve). Had Vt Yankee not been spewing radioactivity during the deal, Entergy would have been able to shuck off VY to another FairPoint-like patsy willing to take a dive in Bankruptcy, leaving us holding that bag, as we still are with FairPoint today.
Th PSB’s interests (outside of their stated mission) are to make what happened with FP go away as quickly and as quietly as possible, versus have what transpired (including their hand in it) see the light of day. Even if there is an investigation, Executive Privilege will shelter all but a smoking gun.
That’s what happens when the Gov’s cronies are placed in power and given the duty of oversight of the Public Interest. That’s why patsy insiders like Mike Smith are placed at the head of FairPoint. Not because he can run a public utility better than Verizon did.
After he gets deregulation through the PSB, he can collect his bonuses, retire and re-emerge in government service and pave the way for the next cronie to feed off the public.
Election have consequences. Voting for a Governor because he’s “a nice guy” is really dumb if you don’t know where he stands on protecting your interests from corporatists and big business. But Vermonters for the most part (with a few notable exceptions, such as the current Congressional trio)have always voted against their interests, so why would companies like FairPoint not be emboldened to ask for less regulation?
Who’s going to stop them?
Let’s say I’ve got an old rustbucket, a vintage Vermont beater, runs okay but occasionally breaks down, rusty spot in the floorboards, cracked windshield, bald tires.
I’d hate to fix all that up. Can I get a pass on the annual inspection?
that Fairpoint was biting-off more than it could chew. Regulation had nothing to do with it.