The Public Services Commission was within its legal authority in deciding not to conduct a formal hearing on a proposed reduction of V.I. Telephone Corp. rates as requested by resolution of the 22nd Legislature two and a half years ago, the V.I. inspector general said in a report released Friday.
On June 19, 1997, the Senate adopted Resolution 1582 requesting the PSC to reduce Vitelco rates by 20 percent. The action was taken in the aftermath of a decision by the Industrial Development Commission to grant Vitelco near-total tax exemptions for a five-year period.
The PSC included Resolution 1582 on the agenda of a public meeting on Oct. 7, 1998, subsequently ignored the advice of its legal counsel and stateside consultants that a further formal hearing was required, and on Nov. 11, 1998, issued an order terminating consideration of the resolution.
Inspector General Steven van Beverhoudt said in a cover letter to Gov. Charles Turnbull and Senate President Vargrave Richards accompanying the report that the review by the V.I. Bureau of Audit and Control was undertaken at Richards' request.
The report noted that the Legislature "did not appeal the decision made by the PSC, thereby tacitly accepting the PSC's decision" not to pursue an investigation into Vitelco's rate of return, which is regulated by the commission.
The review covered applicable provisions of the V.I. Code and Rules and Regulations, transcripts of meetings held by the PSC and the Industrial Development Commission and of the Legislative Committee of the Whole last June 9, reports issued by PSC consultants, responses issued by Vitelco and other documentation. It did not address "the merits of the PSC's consultant report on Vitelco's rate or return" or Vitelco's response to that report.
The audit report also said the investigation "found no evidence to substantiate several allegations of improprieties by PSC members that allegedly would have influenced their actions relative to their decisions." The allegations it cited were "that commission members were given pay raises in return for voting against the Vitelco rate reduction petition" and that "PSC members were attending conferences at the expense of Vitelco."
The reviewers addressed three issues: whether Resolution 1582 constituted a formal complaint; whether the complainant was the bill sponsor, Sen. Adlah "Foncie" Donastorg, or the whole Legislature; and, if the Resolution was a formal complaint, whether a formal hearing was held as required by law.
According to the audit findings, the PSC "chose to treat Resolution 1582 as a formal complaint, with the 22nd Legislature being the complainant."
On the question of whether the Oct. 7, 1998, meeting constituted a formal hearing, the audit found that the PSC had notified Donastorg and Senate President Berry that Resolution 1582 was on the agenda for the meeting. The Legislature was not represented at the meeting, although Donastorg sent a representative, the report states.
At the meeting, it states, the PSC legal consultant advised the commission that it could issue a ruling only after a formal hearing to afford both Vitelco and the Legislature the opportunity to be heard; she further advised that, failing this, the parties involved could petition the PSC for reconsideration and eventually appeal to the U.S. District Court.
However, the audit found, although the PSC chose not to have a formal hearing, ended consideration of Resolution 1582, and sent all parties copies of the order, "none chose to petition for reconsideration."
Van Beverhoudt noted that the review included contacting other public utility commissions about how they handle rate investigations. Three of the four states approached require the review of telephone rates at specific intervals — annually in one case and every three years in the other two.
He recommended that the PSC consider "the benefits" of requesting that the Legislature amend the V.I. Code "to require the establishment of a specific time period to review the various rates and fees" of the utilities under its control.
Challenger, in a letter dated Dec. 8 in response to a draft of the report provided earlier, said the PSC would refer the suggestion to its regulatory consultants for their comments.


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