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HomeNewsArchivesPSC CHAIR: GEORGETOWN BACK, BUT AUS STILL IN

PSC CHAIR: GEORGETOWN BACK, BUT AUS STILL IN

Sept. 12, 2002 – The chair of the Public Services Commission, Desmond Maynard, said on Thursday that AUS Consultants, the firm the PSC hired in June 2001 to perform rate investigations of Innovative Telephone and the Water and Power Authority, is still "very much in the picture."
Jamshed K. Madan of Georgetown Consulting Group was recently hired to advise the PSC on WAPA rate investigations and on the utility's request for a surcharge to cover the costs of providing street lighting. The commission had dismissed Madan and Georgetown four years ago and subsequently hired AUS. The re-contracting of the Georgetown group now gave rise to speculation that AUS Consultants had been let go.
Maynard wrote to PSC hearing examiner Fred Watts on Monday telling him, "Please instruct AUS to turn over forthwith all its files and papers relative to the WAPA rate investigation to Georgetown Consulting Group and to do no further work on this matter. It is my intention to have Georgetown assume the investigation into this matter."
At the PSC's regular meeting on Thursday, Maynard said he wanted to make clear "once and for all that Georgetown was dismissed on a particular assignment only." He gave no explanation of his reason for taking AUS off the WAPA matters. He said the firm will continue with its rate investigation of Innovative Telephone.
In 1998, Madan and his 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. Georgetown had been hired by the PSC to look into Vitelco rates.
By law, Vitelco is allowed a profit of no more than 11.5 percent a year. When the consulting firm concluded that Vitelco might be overcharging its customers and that its rates should be investigated, then PSC-chair Walter Challenger rejected that advice and dismissed Madan and Georgetown.
Although Madan was not present at Thursday's meeting, Edward H. Salmon, AUS president, was. He said, "We will continue to cooperate with the PSC. We have a good professional team that has been working for the last 14 months on the rate increases. We will give the requested information to Georgetown and finish up our rate investigation of Innovative Telephone."
Donastorg said on Wednesday that he felt vindicated with the announcement of the rehiring of Georgetown Consulting Group. "These auditors are some of the best and the most thorough in the business," he said in a release. "However, the former members of the PSC and Vitelco did everything they could to discredit them because they didn't like what Georgetown turned up."
In the release, Donastorg said the Georgetown report of four years ago concluded that:
– Vitelco may have overcharged consumers by as much as $20 million in a two-year period.
– Vitelco profits were estimated at well over 25 percent when by law Vitelco cannot earn more than 11.5 percent.
– Vitelco was charging consumers more than $2 million a year for hurricane insurance the utility never purchased.
– Vitelco's earnings more than tripled in a single year, from $6.2 million in 1996 to $20.5 million in 1997, after it was granted tax breaks.
"The fact that the PSC has rehired Georgetown to audit WAPA says loud and clear that these are credible professionals," Donastorg said. "I think this presents the ideal opportunity to revisit Georgetown's 1998 report and get to the bottom on this long-lingering issue."
The Source reported on Monday that AUS Consultants was hired without a quorum present. While the vote was taken in May of 2001 with three of the seven PSC members present, a month later, facing questions as to whether the action was binding, the commission voted again, unanimously approving the hiring of AUS.
Challenger said at the time that AUS did not have a contract with the PSC and was being hired on a case-by-case basis. However, before that June meeting adjourned, and at his suggestion, the commission voted to hire AUS to serve as the PSC's consultant for Vitelco and WAPA utility rate investigations.
The PSC addressed a number of matters on Thursday, including utility investigations and the issue of a cable television channel for the Legislature. The Source will have a full report on the day's actions on Friday.

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