State agencies are wasting time and money proposing alternatives to US WEST Communications' proposed incentive rate regulation now pending before the Utah Public Service Commission, a lawyer says.
Kent Walgren, attorney for the Utah Committee of Consumer Services, which represents residential, agricultural and small-business consumers in utility matters before the commission, said a law passed last year by the Utah Legislature virtually gives US WEST veto power over any incentive plan, making it useless for the committee, the Utah Division of Public Utilities and other interested parties to suggest alternatives for consideration.US WEST has filed an incentive plan that would freeze telephone rates for four years if the commission approves a plan to allow the company to keep a portion of any earnings exceeding the authorized profit level if those earnings are generated by improved company efficiency. The company said the incentives are needed to generate investor interest in a planned $100 million system upgrade that includes renovation of central switching offices and installation of a fiber-optic trunk line that would include rural areas of the state.
The committee filed a petition this week with the commission asking that the scope of hearings on the incentive plan, scheduled to begin Feb. 28, be narrowed.
"The way the law is written, the company and the commission are essentially the only parties involved in the case," Walgren said. "Why should we file testimony or rebuttal testimony or pay expert witnesses when the company has already said it will not consider alternatives and the law says they have that right?"
SB115 was intended to clarify existing statutes that Public Service Commission members believed already provided authority to allow incentive regulation or other alternative forms of utility regulation. But included in that law was a provision giving the company filing for incentive regulation the right to opt out of any plan if it does not agree with the provisions imposed by the commission.
"We would have preferred that provision not be included," said Ted Stewart, commission chairman. "I don't like it at all from a philosophical point of view - I don't think the company should be dictating the terms."
While he may not like the law as written, Stewart does not believe it necessarily takes away commission control of the regulation process. And he believes the flexibility given to consider alternative forms of regulation is a good idea, especially if it can be used to encourage conservation.
Stewart said the commission retains the authority to order the company to modernize its system, with or without the incentive regulation and the commission will do just that, if necessary.
"We (the commissioners) see incentive regulation and modernization as married issues but as two separate considerations," Stewart said. "If we see the need to have modernization accelerated, we will order it, with or without incentives."
The committee petition says it plans to spend up to $40,000 for testimony from consultants to develop an alternative plan. Walgren said it appears the money would be wasted, especially in light of pre-filed US WEST testimony that essentially states the company will not even consider options previously proposed.
Kirk Nelson, a US WEST vice president, said the law provides his company with an out because of the risks involved in incentive regulation. "The Legislature recognized that we would be giving up some of the traditional regulation protection."
Nelson said US WEST is committed to sticking with any approved incentive plan once it is put into effect with company agreement. "We see it as a contractual commitment and we would adhere to its terms."