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HomeNewsArchivesINNOVATIVE, PSC CONSULTANTS 'MAKING PROGRESS'

INNOVATIVE, PSC CONSULTANTS 'MAKING PROGRESS'

July 11, 2002 – The hearing examiner overseeing the Public Services Commission's legally mandated rate investigation of Innovative Telephone says he may back off from a threatened subpoena to obtain financial records from the phone company and its parent and affiliate firms.
At a public hearing on June 25-26, PSC financial consultants said they needed to review records of Innovative Communication Corp., which owns the phone company, and other ICC companies in order to make a thorough report to the commission regarding Innovative's rates. Innovative attorney Gregory Voght objected to the requests, saying the records of the other companies were not pertinent to the investigation.
Hearing examiner Frederick Watts said if Innovative didn't submit the requested documents in two days — by June 28, a Friday — he would seek permission from the PSC to subpoena the records. (See "Innovative told: Submit data or face subpoena".) He subsequently extended the deadline until the following Monday and also asked the consultants to negotiate with Innovative executives over the release of the records.
On Thursday, Watts, who has yet to approach the PSC about a subpoena, said that after two weeks of talks, the two side have found some common ground. "I am pleased that we're making progress, so we do not have to have a confrontational situation," he said.
Talks between the phone company and consultants from AUS Consultants and the accounting firm of Ernst and Young were continuing on Thursday, Watts said. The consultants may not get every record they are seeking, he said, but they have told him that phone company officials are trying to provide the information sought in a way that is acceptable to both sides.
"What they are trying to do is provide alternative ways for the auditors to understand and be satisfied with aspects of the property transactions and the taxes," Watts said.
There were several instances where consultants wanted to take a closer look, he said, but the one that raised hackles on both sides involved two real property transactions worth an estimated $4 million between Innovative Telephone and ICC. Other issues included accrued benefits to phone company employees, property contracts between Innovative and ICC, and the allocation of income taxes in the audited financial records of the phone company and ICC for the test period of June 30, 2001, to June 30, 2002.
Watts emphasized that the consultants' requests for records in no way imply any wrongdoing by ICC or any of its subsidiaries. The accounting questions being asked are routine and come up during rate investigations conducted for utilities across the United States, he said.
PSC members already have received some documentation generated by the rate investigation. Following a July 2 hearing on electrical power generation, they were given packets containing the preliminary Innovative audit report, responses filed by the phone company, and pre-filed testimony in writing submitted by witnesses who appeared at the two-day public hearing.
Watts said he expects to begin work on his own hearing examiner's report on the overall investigation by the end of the July and have ready by the end of August.

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