PUC orders lower FairPoint rates, blasts company

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FairPoint Communications' Bangor office entrance is seen in this photo taken Monday, Oct. 26, 2009, the day the company announced its filing for voluntary Chapter 11 bankruptcy. FairPoint owns and operates phone companies in 18 states, though its largest holdings are in Maine, New Hampshire and Vermont, where it bought Verizon Communications Inc.'s land lines and Internet network for $2.3 billion in 2008. (Bangor Daily News/Bridget Brown)   (WEB EDITION PHOTO)
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CAPTION FairPoint Communications' Bangor office entrance is seen in this photo taken Monday, Oct. 26, 2009, the day the company announced its filing for voluntary Chapter 11 bankruptcy. FairPoint owns and operates phone companies in 18 states, though its largest holdings are in Maine, New Hampshire and Vermont, where it bought Verizon Communications Inc.'s land lines and Internet network for $2.3 billion in 2008. (Bangor Daily News/Bridget Brown) (WEB EDITION PHOTO)
Posted Dec. 01, 2009, at 2:50 p.m.

AUGUSTA, Maine— The Public Utilities Commission on Monday unanimously ordered FairPoint to immediately lower phone rates by $1.72 per line per month for the next year and sharply criticized the company for failing to implement the decrease first ordered months ago.

“FairPoint, instead of following the rulings of this commission, they have ignored our rulings,” said Commissioner Jack Cashman. “I find this as offensive now as the first time they did this.”

Three times since the October order finding the company had not met service quality standards, FairPoint asked the PUC to delay implementation of the order requiring rates to be adjusted by rebating customers.

The PUC found the company had not met the service standards it had promised to meet under the rate schedule adopted by the commission. The PUC imposed the rebate as a fine for not meeting the quality standards, but FairPoint had not implemented the PUC order to lower rates.

“Apparently they issued their own ruling granting themselves relief,” Cashman said. “Because they have not done what we told them to do, we are forced to do it ourselves.”

The unusual action by the commission directly sets the rates and requires the rebate to be spread over bills through Dec. 1, 2010. PUC Chairman Sharon Reishus said the commission could impose further fines and penalties on the company for failure to comply with the various PUC orders in the matter.

“There are additional penalties that we can impose if FairPoint chooses to ignore us,” she said. “I would remind them of that — that is also within our statutory authority to do so and that we are providing notice of that possibility.”

The PUC sets the rates FairPoint can charge under a rate-setting mechanism the company agreed to when it acquired the land line business of Verizon in Maine earlier this year. Under the five-year process, the utility may not seek to increase its rates and the commission may not require a decrease except if service benchmarks are not met.

“They clearly have not met the service requirements that were set out in the rates,” Commissioner Vendean Vafiades said. She was sharply critical of FairPoint’s letter to the commission saying the issue of the rebates was part of rate negotiations under way in the company’s bankruptcy case.

“In no way has the commission authorized those discussions to become negotiations,” she said. “I was very concerned about what I consider a misrepresentation in two sentences in FairPoint’s letter. I find it very offensive that they would indicate we were doing some sort of private negotiations.”

All three PUC commissioners stressed that any negotiations must take place in public before the commission. Cashman said the company is fully aware that all proceeding and deliberations of the PUC must be done in public.

“Everything that this commission does is done in a public forum,” he said. “They are not done in private discussions. Everything we do is done in public.”

Reishus believes there are other “mischaracterizations” in FairPoint’s letter concerning the process of the filings under the quality of service requirements set by the commission and agreed to by FairPoint.

When asked to comment on the PUC action and the criticism from the commissioners, Maine FairPoint spokesman Jeff Nevins released a brief statement noting the company filed for bankruptcy on Oct. 26.

“This is a complicated process which is being conducted under the jurisdiction of the federal bankruptcy court in New York,” he said. “We are currently reviewing the related issues raised by the Maine Public Utilities Commission in its November 30 order.”

Under the PUC order, the reduction in rates should appear in the next FairPoint billing cycle.

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