AUGUSTA, Maine — Public Advocate Richard Davies is seeking an emergency assessment on telephone users of at least $100,000 to pay for the legal costs to represent Maine consumers in the FairPoint bankruptcy case under way in New York City.
“It may be more, but we had to put a figure in when we submitted the legislation as a place-holder,” Davies said. “In our first bill from our counsel we have seen $30,000 of that eaten up already.”
He said some of the cost of representing the state’s phone consumers in the bankruptcy proceedings would come from existing funds. The advocate’s office is funded by assessments on utilities regulated by the Maine Pubic Utilities Commission. The utilities pass the cost on to ratepayers.
“The case is ongoing and there are some critical decisions that will be made in the next few months or so, and we want to be active players to protect the public interest of Maine,” Davies said.
He said it is important to get the assessment as an emergency because the costs will mount swiftly once FairPoint has filed its plan for reorganization and the pace of negotiations increases. That plan was due to be filed last Friday, but has been delayed.
Sen. Barry Hobbins, D-Saco, co-chairman of the Legislature’s Utilities Committee, said the committee is putting the measure on a “fast track” with a public hearing at 1 p.m. Wednesday, Jan. 27. He said it is important for consumers to be represented in the court proceedings, but the advocate will have to make a good case for the emergency assessment.
“The funding mechanism obviously is going to have to be looked at very carefully,” he said, “to see whether or not it is the appropriate means of funding the independent representation.”
Under the proposal, all telephone users in the state will pay the assessment, not just FairPoint customers. Sen. Roger Sherman, R-Houlton, the GOP senator on the committee, said that raises an obvious fairness question.
“We’re going to have to do it,” he said. “We may — again like some things this year in the budget — have to do some things that stink and we will just have to hold our nose.”
Hobbins said that in normal budget times he would seek to have the state general fund pay for the cost of intervening in the case because of its importance to the state, but he said these are not normal budget times.
“I would rather do this than take $100,000 from other programs that are being cut already in the budget,” he said, “because I don’t think this will be the last request. Those lawyers down in New York are real expensive, probably $400 to $500 an hour, and $100,000 is not going to last long.”
The “one-time” assessment is based on usage. The advocate estimates it will be 2.6 cents per $100 of phone usage.
Davies said the $100,000 is the base request and said during committee deliberations the panel could decide to increase the assessment. If the case goes longer than expected, there could be another request.
He also said Sherman’s estimate is on target with his office negotiating a blended rate of $465 an hour with the firm representing the state.
“When we spoke with one firm we asked if they had a government rate lower than the regular rates and he said, ‘Yes, we would be glad to lower our rate to $980 an hour,’” Davies said. “Needless to say, we moved on.”
He said it makes sense to ask all telephone users to help pay for the costs of intervening because nearly every phone call made in the state will travel over FairPoint equipment for a portion of the call. He said maintaining that infrastructure in good condition is crucial to individuals, businesses and public safety.
“The folks at [the Maine Department of] Public Safety and at [Maine Emergency Management Agency] are very concerned about making sure this infrastructure is maintained properly,” Davies said. “Much of our emergency communications use that system.”
FairPoint also inherited the contract to operate the land line communications used by 911 dispatch centers that are critical to police, fire and rescue services across the state.
Davies said that while it is expensive to participate in the bankruptcy proceedings, the state has a lot at risk with its goal to expand broadband access in the state. He said while the bankruptcy court has a lot of authority, whatever final plan is accepted by the court still will go back before state regulators later in the year.