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PSC BRINGS BACK CONSULTANT FIRED 4 YEARS AGO

Sept. 9, 2002 – A Washington, D.C.-based utilities rate consultant who worked for the Public Services Commission for years, then was summarily dismissed in 1998 in a dispute over whether the PSC should investigate the local telephone company's rates, has been brought back on board by the commission.
Jamshed K. Madan of Georgetown Consulting Group has been hired by the PSC to advise it on Water and Power Authority matters currently before the commission.
Madan and the consulting firm were at the center of a brouhaha involving Sen. Adlah "Foncie" Donastorg, the PSC and the phone company — today Innovative Telephone but then known as V.I. Telephone Corp., or Vitelco.
The Legislature passed a resolution in June 1997 calling for the PSC to order a rate reduction of 20 percent in view of near-total tax exemptions that the Industrial Development Commission had granted to Vitelco at the behest of Gov. Roy L. Schneider. At first, the PSC ignored the request; finally, it agreed to hire a consulting firm to study Vitelco's rates.
The 1998 report to the PSC by Georgetown Consulting stated that the telephone company's rate of return was high enough to merit an investigation into whether rates could be reduced without impacting adversely on the utility's maximum allowable 11.5 percent rate of return.
When the consulting firm concluded that Vitelco could be overcharging its customers and that its rates should be investigated, then PSC-chair Walter Challenger rejected that advice and dismissed Madan and Georgetown. In response to that action, the PSC's legal counsel, Maria Tankenson Hodge, resigned.
Since then, a law has taken effect that requires biennial rate investigations of all utilities regulated by the PSC. The first investigation, of Innovative Telephone, has been conducted by AUS Consultants, a firm recommended by Challenger and approved by PSC members without a quorum under Challenger's watch. PSC member Desmond Maynard, who publicly disagreed with Challenger, has since succeeded him as commission chair, and the seven-member commission got four new members late last year.
The PSC also has appointed a new WAPA hearing examiner. Local attorney George S. Eltman will oversee the investigation of several WAPA requests, including one for a monthly surcharge to be added to domestic customers' bills to provide revenue for street lighting costs. Last year, the Legislature transferred responsibility for the territory's street lighting to WAPA from the Public Works Department, but so far the utility has received no government funding to cover the work.
Eltman replaced another attorney, Ronald Russell, who had been appointed by the PSC months ago to oversee the mandated WAPA rate investigation. Authority officials had objected to Russell's appointment on the grounds that he had a lawsuit pending against the utility. Russell said in June that he wanted to step down, in part because of the authority's objections and in part because he was planning to run for the Senate. On July 1, Maynard said he had agreed to the request to relieve Russell of the PSC responsibilities.
The commission has a burgeoning agenda for its regular September meeting, set for Thursday. It is to hear status reports on the above WAPA matters, as well as on the Innovative rate investigation; a request from the V.I. Source newspaper for access to Innovative Telephone financial reports filed with the commission; a report on the local cable television companies' conversion to digital transmission; and several matters relating to ferry companies.
Madan is scheduled to report to the commission on the status of the PSC investigation into WAPA's levelized energy assessment clause, or "LEAC," surcharge, which is tied to world oil prices, as well as on the status of the requested emergency street lighting surcharge.
The meeting is to start at 10 a.m. in the PSC offices in Barbel Plaza on St. Thomas.

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