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PSC Comes Under Fire for Unbalanced Regulation of Innovative and Consultant's Conflict of Interest

July 28, 2007 — The Public Services Commission came under fire for appearing to spend a disproportionately small amount of time and resources regulating Innovative Communications and its Vitelco telephone and Innovative cable television subsidiaries during otherwise routine legislative budget hearings before the Finance Committee in Frederiksted Friday.
“You have five paragraphs detailing what you’ve been doing with the ferries, with their schedules and fees,” said Sen. Louis Hill. “But there are only five lines about Innovative, a company with two separate utilities under your purview that are used by nearly everyone in the territory and whose parent company is in bankruptcy proceedings.”
Speaking on behalf of the PSC were PSC Executive Director Keithley R. Joseph, General Counsel Tanisha Bailey-Roka, accounts maintenance officer Claudius F. Moore and Commissioner Raymond Williams. None made a direct response to this complaint. The document Hill referred to was the written testimony of PSC Chairwoman Alecia M. Wells, read by Bailey-Roka. Wells wrote she could not appear in person because she was in court over Harry Daniel’s lawsuit against the St. Thomas Board of Elections, of which Wells is a member. (See "Judge Delays Swearing In of Constitutional Convention Delegates to Hear Daniel’s Appeal") Joseph’s budget testimony gave somewhat more space to telephone company issues.
Hill pressed the PSC testifiers further.
“I see you had 14 public meetings,” Hill said. “How many were about WAPA (Water and Power Authority) and how many about Innovative?”
Joseph said he believed four or five addressed Innovative. Williams said the comparison was misleading.
“WAPA is consistently before the board (sic) because WAPA consistently has a request for the board to act upon,” Williams said.
“Looking at complaints in your written statement, there are 168 listed for telephone, three for electricity, two for water and 12 for cable television,” Hill said. “You don’t have meetings to deal with complaints?”
Williams said complaints are usually resolved at the staff level and do not normally end up on the agenda.
Hill said he was concerned about a lack of legislative oversight of consultants hired by the PSC.
“These consultants are paid from assessments directly made on the regulated utilities,” Hill said. “So the Senate is not even aware of these fees”
Moore responded that the total payments to consultants were included in the PSC’s budget statement given to the Legislature.
Pressed for details about consultant fees, Moore listed the largest recipients. The single largest recipient is attorney Jeffrey Moorhead, who is paid $250 an hour and has logged $287,000 in the first nine months of the current fiscal year.
Committee Chairman Terrence Nelson said he was concerned Moorhead working for the PSC might suggest a conflict of interest.
“When I was in the labor union Jeffrey Moorhead was the attorney who stood at the gates representing Innovative,” Nelson said. “Now he is the attorney advising the PSC on Innovative. In my mind it looks like a conflict of interest, though maybe a lawyer could contradict me. But this concerns me.”
Concerns about the PSC’s effectiveness in regulating Innovative and its subsidiaries have come up on a number of occasions going back at least to Wells’ reconfirmation hearing in 2005. (See "Renominations to PSC Board Come Under Fire") Moorhead’s actions relative to Innovative have created controversy too. (See "PSC Counsel, Chairwoman Come Clean About Letter Supporting ICC Bankruptcy")
Sen. Liston Davis asked whether the PSC had made any plans or discussed what preparations to make in the wake of ongoing bankruptcy and other legal proceedings with Innovative.
“I would refrain from speaking about anything before the bankruptcy court, as it is pending litigation,” Bailey-Roka said.
“But have you discussed what impact it might have, if a decision is rendered not in their favor,” Davis said. “Have you begun an assessment?”
“Again, I respectfully decline to answer that,” Bailey-Roka said.
It is common for parties to litigation to refuse to comment publicly. It is also common for parties to litigation to comment publicly. The PSC is not a formal party to the bankruptcy litigation.
The PSC budget request for fiscal 2008 is $1.45 million, an increase of $.45 million over last year’s budget of $1 million even. The increase is attributed to the hiring of in-house expertise, including Bailey-Roka, as part of an effort to increase the capabilities of the board and provide the commissioners, who are citizen volunteers, with more resources with which to carry out their duties. The PSC’s funding comes entirely from fees assessed to regulated utilities. They regulate: electric power service; municipal water supply; telephone service; public marine passenger transport; cable television and the V.I. Waste Management Authority.

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