Dueling accounts in this morning’s issues of the papers leave the reader with very different impressions of the revisions of the PSC rules that were apparently posted yesterday. Your intrepid blogger can’t get into the PSC website as a consequence of what looks like a DNS error but will report further when more info is available.
For the moment, what that concerned readers probably want to do is go read the Advocate’s version “PSC staff drops ban on LUS plan.” And then, against that background, look at the Advertiser’s story “Final PSC recommendations on fiber released,” which is much less complete.
The key area of disagreement between the two stories is on the question of whether the new rules say that LUS can or cannot repay bonds, in the worst case, by using the full income of the company (something private companies do without a thought, incidentally).
Claire Taylor of the Advertiser presents this tentative view:
…the PSC staff made a change in its original recommendations. In its final recommendations released Wednesday, PSC staff repeated a statement that the bonds issued to build the fiber project “shall be secured and paid solely from the revenues generated by the separate division…”
The staff eliminated a line that previously read, “A creditor, in the event of default upon the bonds, may not have recourse to the assets of the municipality’s regulated divisions.”
The meaning of the staff recommendations was unclear Wednesday evening.
Kevin Blanchard of the Advocate present this more complete version:
“Now, the rules say communications bonds ‘shall be secured and paid solely’ from communications revenues, but continues by saying LUS could ‘pledge’ overall utilities revenues to obtain the best interest rates — language that mirrors state law.”
Letting the reader know the new language that was substituted for the old is crucial and accounts for the substantial difference in tone between the two stories.
So the outright contradiction between the law and the proposed regulations has been eliminated while the law’s ambiguity remains. That’s not what regulations are about–regulations are supposed to resolve, not sustain, legal ambiguity. That’s the point of rule-writing. My guess is that by simply repeating, rather than clarifying, the staff is signaling the commission members that it’s passing the buck on this one on to them. The new language is a shift in the right direction and declares staff neutrality. In the end, even if some ambiguity remains, after bonds are sold based on language that assumes that pledge means pledge, a meaning favorable to LUS will be fixed. But part of this ploy will succeed if any doubt attaches to the bond issue that causes investors to raise their rates. The PSC should be strongly encouraged to write its rules resolving the ambiguity in favor of LUS; making the best rates available to the city was the clear intent of this portion of the brokered, compromise legislation. To allow BellSouth to achieve at the Public Service Commission what it could not achieve at the legislature is unconscionable and should be made clearly politically dangerous.
The Advocate’s article goes on to cover several more issues that LUS had called important:
The new set of proposed rules also removes a previously proposed requirement that would require LUS to pay so-called in lieu of tax payments to the city government — even in the event the new communications business was not profitable.
To my mind that is most crucial win of this stage of the process. Making bonding expensive is unfair, but the this part of the previous rules proposal was intended to impose, continuing, impossible to sustain financial burdens on LUS that did not vaguely resemble those placed on its corporate competition. The staff has wisely backed off.
The new draft retains a previously proposed rule that requires LUS to share its billing system with competitors such as BellSouth and Cox Communications — should the new communications division share the existing utilities’ billing system.
Again that’s simply unfair and we should object. Will anyone suggest that BellSouth allow LUS to advertise directly to its customer base in its bills? Would they object to BellSouth putting advertising for Cingular in those same bill and complain that such “cross-subsidization” is an unfair use of rate-payer monies. No. Of course not. And they’d be right…just as LUS would be right if it did the same.
Both articles note that LUS’ bond proposal has the direct approval of the people. One would think that would have some bearing on the issue. The commissioners have yet to be heard from, and they are the elected arm of this institution.
The PSC should hear from the people, and from the local businesses it was elected to represent and protect. Too much of this process has made it seem that the PSC sees its role as protecting corporate rather than citizen and community interests.