Aug. 21, 2002 – Your telephone bill would go down by a dollar but your electric bill would go up by the same amount if legislation Gov. Charles W. Turnbull is proposing becomes law, and in the process the government might wind up getting significantly less money. Or then again, it might not.
Turnbull said on Tuesday that he will submit a bill to the 24th Legislature to transfer responsibility for collection of the territory's $1 monthly emergency services surcharge from Innovative Telephone to the Water and Power Authority.
Innovative, which has been collecting the fee on behalf of the government since April 2000, announced in May that it no longer wanted to do so, saying the surcharge had caused the company nothing but trouble. At that time, Innovative officials suggested that WAPA, being a government agency, could more appropriately collect the fee.
On Wednesday, WAPA board chair Carol Burke was not happy at the news, nor did she like the way WAPA was informed of the governor's decision. "We found out the same way everybody else did" — via a Government House release, she said. "At least, out of courtesy, the board should have been informed," she said. "We have agonized over the street lighting, and then the barge, and now this."
Since last year, when legislation transferred responsibility for the territory's street lighting from the Public Works Department to WAPA, the utility has received no funding to carry out the mandate. Meanwhile, the board has asked the administration to take back a non-functioning onetime U.S. Navy floating desalination plant that also was foisted on the authority earlier this year without a by-your-leave.
"I cannot speak for what is happening with Innovative," Burke said, "but I can speak for how it will impact WAPA. At first blush, it's my estimation that we will have to ask our executive director to do an analysis on the impact it will have on WAPA's operation."
She emphasized, "We're not in the accounting business. This is more of an accounting function. We are not in the communication business; we provide water and power service. We don't know what type of financing mechanism would be involved."
Managing the surcharge could prove difficult, she said: "From an administrative standpoint, billing every customer is not the answer. Some customers have four different phone lines, and electricity in that household could be coming through a person whose name is not the same as the phone subscriber's. Not every WAPA customer is a phone company customer, and likewise every phone customer does not necessarily have his name on a WAPA bill.
"We would have to set up a whole new system to collect from all the phone customers, and that's not what WAPA is in business to do."
WAPA chair: Impact on bond rating a concern
Burke continued, "Our rating agency is looking at all of this, and they are concerned about the extent to which the board has oversight of what the government is arbitrarily doing — how they put these things on WAPA without any prior consideration. These things are intrusive of themselves, and we are trying to retain our bond rating so we can have decent financing to improve the system … This doesn't help at all."
She noted that utility customers complain about WAPA's antiquated machinery, "and we want to get the money to replace the old equipment."
But in the meantime, "We have not received a dime of the money appropriated for the street lighting [$2.8 million the Legislature appropriated for WAPA, overriding Turnbull's veto of the funds]. And now we have had to purchase insurance for the barge sitting in Krum Bay." She said WAPA has received no response from the governor or the Legislature on its request that the government take back the desalination barge.
Turnbull said in the release announcing his plans on Tuesday, "I must emphasize, this is not a new surcharge but simply a change in the collection process from Innovative, a private entity, to the V.I. Water and Power Authority, a government entity."
The governor noted that the Finance Department and the Office of Management and Budget had worked with Innovative to develop the collection protocol. He said the phone company generates monthly reports summarizing the amount of "tax" billed and sends a remittance statement at the end of the month to OMB and Finance giving the amount billed and payable; then, on the 15th of the following month, it pays the government the surcharge amount received.
Senator: Proposal linked to lawsuit, pending audit
Sen. Adlah "Foncie" Donastorg, long a critic of the telephone company's financial operations, has openly accused Innovative of wrongful collection practices and has sued the company on behalf of the people of the territory in District Court. Additionally, on May 1, he announced that he had requested a federal audit of the emergency services surcharge operations and had filed a new complaint with the Public Services Commission, which regulates the phone company.
Donastorg contends that the approximately $60,000 a month Innovative has been turning over to the government does not represent anywhere near the total amount it has collected each month. The amount corresponds roughly to the number of customers, he said, and not "the actual number of telephone lines, which is, by informed estimates, well over 90,000."
At the same time, Donastorg says the intent of the law making Innovative the collector of the surcharge was to impose a fee of $1 per subscriber, regardless of the number of lines that a customer may have, whereas Innovative has in most cases been billing customers $1 per phone line. Many customers have multiple lines — he, himself, having five, and thus having gotten five bills with five surcharges — he notes.
In an April 15 letter making these points to PSC member Jerris T. Browne, Donastorg asked that the PSC "hire a neutral third party to audit Vitelco's records from 1991 to the present time."
Innovative officials have denied Donastorg's charges. They said at a recent PSC meeting that the billing is done electronically and that the government has oversight of the process. Innovative Telephone's parent company, Innovative Communication Corp., has asked the governor to speak out in the company's defense in response to what ICC's vice president for corporate affairs, Holland L. Redfield II, a former senator, termed "attacks, misrepresentations and outright lies regarding the role we play as merely a conduit to collect these monies for the government."
In a release issued on Wednesday, Donastorg termed the governor's plan to transfer the surcharge collection to WAPA "a direct effort to hamper" both his own lawsuit and the federal audit, which he said is scheduled to begin "early next month."
"This legislation is an effort to hold Vitelco [as the local phone company was known until two years ago, when it was renamed Innovative Telephone] harmless for any stealing or skimming of the $1 charge," he said. "Vitelco asked the governor for this as soon as they found out that the Interior Department would be conducting audits."
Saying that he is "deeply disappointed" that the governor "would participate in what is essentially a cover-up," Donastorg added, "We need to allow the auditors to finish their jobs before proposing such changes."
Public record: Innovative at odds with other carriers
Donastorg has had no luck in his efforts to view any of Innovative's financial records submitted to the PSA. Nor has the Source, which submitted a request to the PSC three months ago, stating that the financial reports are public record.
The matter was on the agenda for the PSC's June 21 meeting, where Innovative's attorney objected to making the reports available, arguing that the
territory's public records act does not allow access to sensitive financial information and that Innovative had submitted the financial reports to the commission "subject to a demand for confidentiality." The commission postponed acting on the request. (See "Phone company told to produce billing data".)
At the July meeting, the Source request for the financial information was not forthcoming because Innovative's attorney was on vacation, although the Source had been given no notice of this. Keithley Joseph, PSC executive director, said on Wednesday that the next PSC meeting should be in early September; he could not confirm the agenda.
Innovative appears to stand alone, or nearly so, regarding access to the financial reports filed by telephone companies with their regulatory commissions, according to Source research. The press officer at the National Association of Regulatory Utility Commissions told reporter David S. North she thought that virtually all states required local phone companies to submit annual financial reports, and that all, or virtually all, of them regarded those reports as public record.
Officials of several state regulatory agencies contacted said annual financial reports are required by law of the phone companies they regulate, and in all but one, Mississippi, the reports in their entirety are public documents.
About a dozen mainland telephone company officials, association representatives and spokespersons for state regulatory commissions approached by the Source all said they had never heard of a local telephone company complaining about collecting and passing on the 911 fees. The Legislature is scheduled to meet in full session on Monday. It is not known whether Turnbull's legislation to transfer the 911 surcharge collection to WAPA will be heard at that time. Calls to Government House on Wednesday morning were not returned.
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