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    Phone rate flap to land in PSC's lap

    A proposed phone rate increase has put the Public Service Commission in the middle of a storm of political finger-pointing.

    By ANITA KUMAR, Times Staff Writer
    © St. Petersburg Times
    published April 21, 2002

    TALLAHASSEE -- It was one of the most contentious bills the Legislature passed this year, generating more letters, phone calls and e-mails to Gov. Jeb Bush than any other issue.

    No wonder: the bill (CS HB 1683) could lead to higher local telephone rates across Florida.

    Consumer advocates, including the AARP, say the bill would hurt the poor and others who don't make many long distance calls. They are urging the governor to veto the measure.

    If Bush signs the bill this week, as expected, he is likely to shift the burden of blame for higher rates to the Public Service Commission.

    That's because the bill gives the PSC the final say over whether monthly local rates should rise by as much as $5 over five years in the Tampa Bay area, or as much as $7 in other parts of the state. Bush insisted on that provision before the bill passed, the legislator who sponsored the bill said.

    Opponents call the PSC provision a sham. They say the commission, whose members are appointed by the governor, would have little choice but to approve higher rates. They contend the Republican-controlled Legislature merely provided itself and Bush with political cover.

    But regulatory lawyers, professors and researchers who have examined the bill's language disagree. They say the bill gives the agency the power to reject a proposed rate increase -- if it can ignore political pressure.

    "This is not a slam dunk by any means," said Mark Jamison, director of telecommunications studies at the Public Utilities Research Center at the University of Florida. "It baffles me that people would say that."

    Even the bill's staunchest opponents, such as Attorney General Bob Butterworth, concede that the bill gives the PSC the authority to deny an increase. But they say it would be difficult for the PSC members to do so.

    "The deck is stacked against them," said Jeffrey Jones, special counsel to Butterworth. "It's not a level playing field."

    Jones and other opponents point to legislative findings in the bill that say a restructuring of basic phone rates should promote local and long-distance competition.

    Some senators, including several from the Tampa Bay area, were uncomfortable with the message those findings send to the PSC.

    "It's virtually leading them," said Sen. Ginny Brown-Waite, R-Brooksville.

    A bid to remove those findings from the bill failed.

    But experts say the PSC, similar to agencies in other states that regulate natural gas, electricity, water and phones, can gather its own facts and take testimony before deciding whether rates should rise.

    The five commissioners, appointed by the governor and confirmed by the Senate, would not comment on the phone bill. But Chairwoman Lila Jaber took the unusual step of writing a letter to senators last month after opposition heated up.

    "The commission would have the discretion to grant or deny a request by local telephone companies," Jaber wrote. "The commission is required to make specific findings before granting such a request. Should the local exchange companies not provide sufficient evidence to allow the commission to make such findings, the request would be denied."

    Several former commissioners also dispute claims by opponents that the agency is a lapdog for lawmakers.

    "I'm not impressed with that argument," said Diane Kiesling, a Tallahassee attorney who recently left the commission. "To say the commissioners are puppets is somewhat insulting."

    The bill allows local phone companies, including Verizon, to petition the PSC to raise monthly bills by as much as $5 over five years. The higher cost of basic service is supposed to be offset by cheaper long distance calls within Florida.

    The original proposal called for legislators and the governor to sign off on the rates. But the bill that passed left the final decision to the PSC.

    "The PSC does not have to act," said Rep. Jerry Maygarden, R-Pensacola, the bill's sponsor and House majority leader. "They don't have to take a step unless it benefits the consumer."

    Consumer advocates, who call the proposal the largest increase in phone rates in at least two decades, say the Legislature shouldn't have involved the agency after it expressed an interest in raising rates.

    "PSC involvement in this deal is a sham, mere window dressing to cover up for legislators and the governor, if he signs it," said Mark Furrulo, director of the Florida Public Interest Research Group.

    Opponents claim there are these specific problems: First, the legislative findings in the bill tie the PSC's hands. Second, the commission wasn't given the power to force long-distance companies to lower rates.

    "Provisions purporting to place the ultimate decision in the hands of the Florida Public Service Commission are so weak as to be almost meaningless," Butterworth wrote in a letter urging Bush to veto the bill.

    But telecommunications experts say the legislative findings don't force the PSC to accept any specific rate increase. They say the bill does say that consumers who call long distance within Florida must benefit from the changes, which should ensure that long distance companies lower their prices accordingly.

    "It doesn't sound to me like it's mandatory," said Joe Cressi, a commissioner from 1979 to 1985.

    The bill describes, in somewhat vague terms, six factors the PSC must find before an increase can be granted. They include benefits to consumers and competition among companies.

    "The Legislature gave them a mission," said Ray Lawton, director of the National Regulatory Research Institute at Ohio State University, which provides research to state public utility commissions and others. "They will look at the six criteria and decide. They will hold hearings, evidence will be presented. It will be an open and fair discussion."

    But consumer groups worry that customers who have only basic phone service and rarely call long distance would end up paying more.

    Their opposition didn't stop the Legislature from passing the bill 103-12 in the House and 26-9 in the Senate. The bill was sent to Bush, and he has until Wednesday to allow the bill to become law or veto it.

    The PSC, which would not receive its first cases until after Dec. 1, has 90 days from the date of the application to make a decision.

    The proposal, which took some consumer groups by surprise though it had been years in the making, became one of the most heated issues during the legislative session. Consumers have sent more than 2,500 e-mails and letters to the governor's office opposing the bill. Almost 700 favored the bill.

    The Legislature deregulated part of the phone industry in the mid 1990s, so the PSC couldn't consider local rates without legislative authority, except to consider minor increases related to inflation each year.

    In a 150-page report to the Legislature in 1999, the PSC said companies were subsidizing local phone service because the prices were below cost. The commission agreed that raising rates would help. But, it said, any increases would have to be under strict conditions that included imposing price caps, gradual increases over a period of years and breaks for customers with low incomes.

    The PSC has existed in some form in Florida for more than a century. Most of its cases stem from companies or consumers wanting to settle disputes or change rates.

    The Legislature doesn't often send a case to the commission. Every time it does, some worry that it cannot overcome political pressures.

    "This is an ever-present debate in regulation," said Jan Beecher, director of the Institute of Public Utilities at Michigan State University. "But historically, there is independence. It's a pretty typical set up."

    Phone companies, which are lobbying to get the bill passed, say they know the PSC could reject their requests. Company officials say they support the bill because it's the only chance they have.

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