Feb. 27, 2006 – Senators and testifiers clashed over a bill Monday which renders any utility regulated by the Public Service Commission ineligible for Economic Development Commission benefits. The bill was approved by the Government Operations and Consumer Protection Committee after six hours of debate.
Senator Louis P. Hill, the bill's sponsor, said the bill was "straightforward" in its aim to prevent companies currently running monopolies in the Virgin Islands from exploiting the EDC program when they are capable of sustaining themselves on the profits they collect from the community.
An amendment added to the bill during the hearing would prevent a regulated utility from obtaining benefits whether or not it had been approved prior to the enactment of the bill. Hill said the amendment is significant since the Virgin Islands Telephone Company's re-application for EDC benefits has been in limbo since it was approved last year by the Economic Development Agency.
"While Governor Charles W. Turnbull has not yet signed off on the certificate, I wouldn't be surprised to hear that he approved the benefits after he heard what we're trying to do with this bill," Hill said.
Attorney Maria Tankenson-Hodge, appearing on behalf of a ratepayer who she is representing pro bono, agreed with Hill's statements, saying that utilities do not need EDC benefits because the statues that regulate them offer a guaranteed rate of return on their investments.
"The purpose of these benefits is to encourage new investment in the Virgin Islands and to attract new businesses," she said. "It simply is not applicable to public utilities which already have a tremendous incentive to invest here – and who have been operating here for many years."
Tankenson-Hodge said offering EDC benefits to companies such as Vitelco, also known as Innovative Telephone, was "arguable in prior years" because the tax savings were passed onto the consumer. "However, what is happening now is that the consumer is being charged for taxes that Innovative does not pay – and the PSC has upheld that decision, even though the Commission's own attorney advised against it," she said.
After hearing ICC representatives' claim that telephone service in the Virgin Islands has improved over the past 20 years, Tankenson-Hodge said that she has received calls from residents saying they had to wait weeks or even months after losing phone service to have it restored.
"If your phone is out for more than 72 hours, then you're supposed to get a credit and a half on your statement," she said. "The only thing that our residents have been getting from Vitelco is their bill. I think that represents a steady decrease in the quality of the phone service over the years, not a steady increase."
ICC's Senior Vice President Samuel Ebbesen, however, said Tankenson-Hodge's statements – and the bill – were "blatantly" targeting the company. "It's clear that this legislation is geared toward Innovative, and everybody in the territory knows it," Ebbesen said. "A bill like this is not good public policy and the biggest losers will end up being the people of the V.I."
He added that if the bill is signed into law, ICC would be pushed to lay off some of its employees and increase rates to recoup the losses caused by the lack of benefits.
Holland Redfield II, ICC's vice president of corporate affairs, told senators, "The exemptions here are not for Mr. Jeff Prosser or the telephone companies – they are for the constituents, the people who elect you to fill these positions."
Redfield said he does not think ICC has a monopoly in the territory, but is instead competing with new advances in telecommunications such as cell phones and wireless services. "That's why we're here fighting for our life against this bill," he said. "This legislation would deny the company a financial source for essential services to the territory."
Cornelius Prior, chairman of Atlantic TeleNetwork – the parent company of Choice Communications in the V.I. – said there is no competition in the telecommunications market. He told senators that Choice has applied for EDC benefits twice, and was denied.
"I support this measure because it brings some sense of justice and equality to the V.I. market," Prior said. "The only thing I suggest is that a clause or amendment be added to the bill to promote competition within the telecommunications industry in the territory."
When asked why Choice was denied benefits, Prior told senators to ask officials from the EDC. However, Frank Schulterbrandt, the agency's chief executive officer, failed to appear at Monday's meeting, despite having been invited to testify.
Redfield argued that the bill would disenfranchise companies providing ferry services in the territory, since they are also private entities regulated by the PSC. However, Hill said this was a moot point, since the ferry companies have never applied for EDC benefits, even though they have been eligible.
Ebbesen said Vitelco does not qualify for Federal Emergency Management Agency funds, and has used the EDC benefits to restore phone service to the territory after hurricanes Hugo and Marilyn. "And in return for those benefits, we have invested more than $100 million in this economy, provided over 400 jobs, and contributed to the infrastructure of the Virgin Islands in several other ways. Yes, we would be getting tax breaks, but the community is also benefiting from that," he said.
Ebbesen said that utilities like the Water and Power Authority and the Virgin Islands Port Authority are monopolies, but receive automatic tax benefits under the V.I. Code. "That's unfair – we provide an essential service as well, yet you're trying to take away a viable financial source from us," he said.
Senators said that WAPA and VIPA are public entities, which are not geared toward generating profits, while Vitelco is a privately owned corporation which uses the profits it generates to fund its operations.
"Furthermore, you guys receive Universal Service Funds from the federal government," said Sen. Shawn-Michael Malone. "Since you don't provide anyone with a copy of your financials, we don't know how much you're collecting annually, don't know what you're spending your money on, don't know anything. It's hard for us not to vote for this bill when we're dealing with such a lack of information."
Attorney Jada Finch-Sheen, ICC's vice president of legal affairs, said Innovative has never publicly released its financials. "We have a confidentiality clause in our agreement with the PSC which says that we will allow them to conduct a rate investigation if we don't have to release our documents."
Finch-Sheen also fielded questions from senators about ICC's rumored bankruptcy, and why the company would loan tens of millions of dollars to another jurisdiction when phone service in the territory is substandard.
"While involuntary bankruptcy proceedings have been filed against us, we personally have not filed for bankruptcy," she said. "And this matter is something that we will continue to fight."
Finch-Sheen said that Vitelco's loan to the Belize government for the purchase of a telephone company was a "sound business investment." She said that Vitelco only encountered a problem when the Belize government decided to nationalize the telephone company, which tangled ICC and the loan in litigation.
Senators also approved two other bills Monday, which allow senior citizens and persons with disabilities to make payments on any debt owed to the government at any government department or agency where there is a bonded cashier, and to enforce protections for residents entering into agreements or contracts with rent-to-own agencies.
Monday's meeting were Sens. Craig W. Barshinger, Roosevelt C. David, Liston Davis, Hill, Malone, Ronald E. Russell and Celestino A. White Sr.
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