Topics Addressed:
Topics Addressed: |
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At the first PRC meeting of the year, my fellow Commissioners selected me as Commission Chairman for 2008, and Commissioner Sandy Jones as Vice-Chair. I thank my colleagues for this expression of confidence and pledge to do my best to fulfill the responsibilities with which I have been entrusted. Commission Chair for the 2005 through 2007 had been Ben Ray Lujan (I had served as Vice-Chair those years). During that period, the PRC experienced unprecedented unity and growth. I would like to take this opportunity to thank and commend Commissioner Lujan for his contributions and leadership as Chair and his continued contributions during this, his last year of his term.
On a less positive note, last week marked the start of a trial in federal court of a former PRC employee, Joe Ruiz, on public corruption charges. Numerous witnesses have testified that Ruiz worked a “shake-down” scheme through the Insurance Division, threatening regulated companies with large fines for relatively minor infractions, and then offering to reduce the fines in return for donations to charities associated with himself and former Superintendent Serna. (Keep in mind, however, that Ruiz has not yet had his opportunity to put on his defense, and that Serna has yet to be charged with anything.)
The events in question occurred in 2002 and 2003 (possibly into 2004). Things have changed since then. In 2005, at my insistence, the PRC began subjecting Serna’s charitable and other “extracurricular” activities to greater scrutiny, and ultimately he agreed to leave his post after being placed on administrative leave by the Commission in Spring of 2006. Soon after, the PRC terminated Ruiz from his job as Deputy Superintendent, when allegations surfaced of the scheme for which is now being tried. Today, we have a new Superintendent of Insurance, Morris Chavez, who is known for integrity and ethics. Insurance Division staff, working at the direction of the PRC, have instituted new procedures for transparency and review over Insurance Division contracts and other matters. Companies, agents, and consumers have recognized that a new era has begun.
I am not privy to the results of investigations conducted by the AG and the FBI, but based on my inquiries and other information available to PRC management, it does not appear that subordinate employees in the Insurance Division either engaged in misconduct to benefit their own interests, or knowingly abetted the misdeeds at the top. Nevertheless, I am troubled by the thought that more could have been done at the time to bring scrutiny to a host of questionable dealings. This Sunday, the Albuquerque Journal wrote that the events coming to light in an Albuquerque courtroom are a black mark against all of New Mexico. This is a serious matter and in the version of this update that I circulated to employees of the PRC, I have emphasized the requirements of our New Mexico Government Conduct Act, as well as advice given to my law school class by retired Chief Justice Gene Franchini: never do anything in private that you would be embarrassed to see on the front page of tomorrow’s newspaper.
I have asked the Commission to start two new regulatory dockets to begin the year. The first is a telecom docket, to look into requiring wireline phone companies to make their bills simpler and easier to understand. Despite the Commission’s current billing rules, which have a general requirement for accurate and understandable bills, most consumers find the results to be confusing and frustrating. Consumers who try to figure out whether the gross receipts or other taxes are their bills are calculated correctly can’t do it, because they have no idea from the way items are presented whether an item is a taxable service, a government surcharge, or what-not. Because they can’t tell what is a true government tax or surcharge (and what is phone company fee made to look like a government tax), they can’t easily compare prices between phone plans and phone companies. The docket that we have opened will seek recommendations for more definite (more prescriptive) billing rules for ILECs and CLECs. I have opted not include wireless phone companies in this round of inquiry in order to avoid being bogged down by federal preemption issues.
The second initiative is a docket on mitigating regulatory disincentives for utility energy efficiency programs. Under most circumstances, utility companies make money on increased volume, yet New Mexico’s Efficient Use of Energy Act attempts to make utilities responsible for of encouraging their customers to use less therms and kilowatts. The EUE Act tells the PRC to look at ways to realign utilities’ financial incentives to make energy efficiency a money maker, instead of a money loser.
Last summer, in the PNM gas rate case, the PRC rejected the “decoupling” mechanism PNM had proposed as a way to insulate the company from the negative financial impacts of energy efficiency. PNM wanted to get an automatic rate adjustment clause that would make up for revenue losses due to any decrease in average natural gas consumption per customer. The Commission rejected this proposal as overly broad, since it would have made the company “whole” for all declines in usage - not just the results of its own energy efficiency programs. At the same time, PNM wanted to continue to benefit from volume increases associated with new customers coming onto the system.
The docket that I am asking to open will consider more narrowly focused mitigation mechanisms that will produce results that are fair to both customers and the company. It is time for the PRC to be proactive in this area, and fulfill the requirements of the existing law that we undertake such a consideration. Concurrently, the Governor’s office and environmental advocates are pushing for amendments to the EUE Act in the current legislative session to strengthen the state’s requirements energy efficiency (a good thing), but in return, utilities are demanding language that would force the PRC to give them better profit-making opportunities. The PRC has been involved in the drafting of this legislation, and has advocated for language that would not tilt the balance between utilities and customers in the wrong direction.
This small water company in San Juan County, with around 115 customers, has been occupying a lot of the Commission’s time and attention recently. Staff has made several site trips to meet with customers, owners, and interested parties. A docketed case that began with a staff petition has been on quite a few Commission agendas recently, and on Monday, January 14, the Commission held a day-long public hearing in Aztec on Staff’s petition for emergency relief. At that hearing, Commissioners Sloan, Lujan, and I heard sworn testimony from both customers and experts, regarding a water system that has deteriorated through years of neglect, and that can no longer be relied upon for safe and reliable service. Witness described holding tanks held together with electrical tape and scrap lumber; a well house with obvious rust and deterioration, which doesn’t meet N.M. Environment Department standards for protection against bacterial contaminants; and a distribution network that is prone to leaks and lacking enough reliable pumping capacity to get water to the customers at the highest elevations in the system.
In a positive development, the January 14 hearing concluded with a new and bona fide offer from the current owners of Dutchman’s Hills Water Company to sell the utility’s assets (excluding water rights) to a neighboring mutual domestic water association, “Northstar.” At the same time, the Commission expressed support for emergency interim rate relief to provide resources to meet the immediate maintenance needs of the system. However, these developments may not be enough to solve the serious problems facing the Dutchman’s Hills customers. Northstar may not be able to supply the massive amount of capital needed to bring the system up to safety and reliability standards. I expect that the Commission will continue to prioritize this case on our agendas until a viable resolution is found.
Maintaining contact with family members is an important part of the rehabilitation process for those incarcerated in our prisons and jails. Unfortunately, it appears that inmate families are being preyed upon by prison phone companies who see this captive customer base as an opportunity to charge a lot of money for substandard services. Because correctional facilities need to have the ability monitor telephone calls between prisoners and those on the outside to prevent criminal communications, the facilities can’t use ordinary pay phones and ordinary pre-paid phone cards. Instead, they contract with companies that specialize in this area to provide services at the prison with monitoring capabilities. The inmates then either make collect calls or use special prepaid cards issued by the contracting company.
This Tuesday, I conducted a public comment hearing on this subject in Albuquerque, along with Commissioner Sandy Jones, who first brought this issue to Commission attention. We heard from a number of families about $200 - $500 monthly phone bills, and about poor quality service, with noisy and disconnected calls and difficult to access customer service. The charges from the specialty prison phone companies get passed through to the customers regular Qwest bill, and if they are not paid, the family will get cut off from all phone services. As you can imagine, these are not affluent families that can afford a few extra hundred dollars each month. One woman told us in tears that because of the unaffordable cost of her phone bill, she could no longer stay in touch with her incarcerated daughter.
Listed charges from these companies are high, but not completely unreasonable in many cases. For example, one company charges $2.15 per call to place a collect call. The problem is that the call will be disconnected multiple times before the inmate even gets on the line, so they could easily pay that $2.15 four or five times over. Sometimes after paying multiple connect fees, they still don’t get to talk with their family members. Some of these companies also charge outrageous late fees and other ancillary charges, such as fees for the privilege of adding money to prepaid cards.
As the families readily acknowledged at the hearing, their inmate husband/son/daughter owes a debt to society. But punishing their families with excessive telephone bills from private, profiteering phone companies is not what society had in mind. The state corrections department even agrees that making communication between inmates and their outside support systems difficult is a bad idea, and is now looking to rebid its contract for the state-operated prisons.
The PRC began our investigation last summer. One company has already admitted to charging around $100,000 in erroneous late fees, and has attempted to issue refunds. Our case will not end until we have reviewed the charges of all the providers in the state and determined what is fair for them to charge in the future under their tariffs. Companies could also be subjected to fines, depending on the facts determined in our investigation.
The year’s legislative session is the short 30-day session, which should mean fewer bills for us to track, but also a lot less time for deliberation and analysis. The PRC has three bills that we are trying to introduce and pass through the 2008 session:
In addition to the three bills that the PRC has put forward, Commissioners are closely following the bill from the Governor’s Office to amend our Efficient Use of Energy Act to increase the requirements for utility-operated energy efficiency programs, and at the same time make operating these programs more financially rewarding to the utilities. I and other Commissioners are concerned that the result be balanced and not lead to a legal shake-down of ratepayers.
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As always, please feel free to contact my office by email or phone if you have questions about what we are working on, or if we can assist you with a complaint involving a regulated entity.
Jason Marks