Supporters of controversial Cal. bill (AB-2958) to limit PUC pric...

NAACP, Congress of Cal. Seniors, Cal. Chamber of Commerce, Cal. Hispanic Chamber of Commerce, Cal. Small Business Assn. and several regional business advocacy groups, held news conference to praise Assembly’s action. They vowed to make sure senators knew of their strong support for legislation. Bill would prohibit PUC from reinstating until 2007 profit-sharing and productivity-based inflation indexing features of Bell and Verizon plans, which agency suspended 3 years ago. PUC is in midst of 4th triennial review of program. Agency has been urged by some competitor and consumer interests to reinstate sharing and indexing to correct allegedly excessive telco earnings and prices. Reinstatement calls were spurred by Bell and Verizon audit reports filed earlier this year indicating companies might have failed to report several hundred million dollars in potentially shareable earnings. PUC and other opponents in May 9 news conference said passage of bill would be bad news for state and telecom industry and vowed to fight it (CD May 10). Telcos said overwhelming bipartisan support in Assembly showed lawmakers agreed that bill was positive step forward for regulatory process. Telcos said opponents’ assertions that bill would entrench incumbents’ monopoly position or lead to reinstatement of rate-of-return regulation by stripping PUC of tools needed to make price cap regulation work, were completely unfounded. SBC attorney Mark Weideman said postponing sharing and indexing wouldn’t impair PUC’s direct authority over prices. Former PUC Comr. Mitch Wilk, who served when program was being developed, said framers of price cap regulation never intended that indexing or sharing be permanent features. He said they were included as temporary safeguards for small ratepayers against uncertain future of competition. He said PUC always had intended program to evolve to today’s pure price cap regulation. Wilk said opposition had “exaggerated” role competition was supposed to play in cap program. Pac Bell and Verizon said current cap plan insulates consumers from investment or revenue losses carriers might suffer due to risks of competition while allowing companies to keep profits if their strategies paid off. SBC’s Weideman said cap system had worked well over last 3 years, producing basic residential rate of only $10.69 monthly while encouraging investment by incumbents and competitors alike, and bill would merely maintain status quo for next 4 years.