Maine Utility Commission Approves FairPoint Regulatory Settlement, Calls it in Consumers’ Interest
Voting 2-1 late Thursday, the Maine Public Utilities Commission approved a regulatory settlement FairPoint proposed as part of its bankruptcy reorganization. The commission approved both FairPoint’s application for change of control, required in its restructuring, and the settlement negotiated by the company, the Office of the Public Advocate and a representative of the utility commission. “These approvals will allow FairPoint to continue to move forward with plans to emerge from Chapter 11 by early fall,” the company said in a statement.
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The telco asked to modify the timing and extent of a plan to expand broadband coverage laid out by the commission’s January 2008 merger approval that led to FairPoint’s takeover of Verizon networks in the state. The acquisition triggered a cascade of troubles that drove the company to seek Chapter 11 protection last year.
Commission Chair Sharon Reishus and Commissioner Jack Cashman approved the entire package of regulatory changes presented by FairPoint. Commissioner Vendean Vafiades voted against. “FairPoint’s financial restructuring and shedding of $1.7 billion in debt is certainly in the interests of Maine ratepayers -- the company will emerge a healthier, more stable company able to service Maine telephone customers,” Reishus said. “We have concerns about the proposed reductions in scope and implementation of the promised broadband expansion and pricing. However, Maine ratepayers will be best served by FairPoint’s successful emergence from bankruptcy and the protection of the broadband commitments that remain."
"In a bankruptcy, everyone gives up something,” Cashman said. “In this agreement the tools for maintaining service quality and for enforcement remain untouched."
"FairPoint has made promises to this Commission and to Maine consumers,” Vafiades said. “The Company is using the bankruptcy process to renege on broadband commitments which were a central aspect of approving the FairPoint takeover of the Verizon phone network. These changes were not required by bankruptcy court and are a disservice to rural customers."
The changes approved by the commission include delaying the deadline for completing the first phase of the company’s broadband expansion project from April to December 2010; authorizing a 3 percent cut in the percentage of lines required to be capable of carrying broadband upon completing the five-year broadband expansion; relief from pricing restrictions for unregulated broadband service; and prospective restrictions on the company’s overall indebtedness, the commission said. FairPoint got a three-month delay on paying a rebate to ratepayers for quality failures the previous year. The company has similar proposals before the utility commissions in Vermont and New Hampshire, where it also acquired Verizon assets.
"This decision enables FairPoint to focus on continuing to improve customer service and continue deploying broadband across Maine,” FairPoint state President Mike Reed said in a statement after the hearing. “FairPoint will emerge from Chapter 11 as a more financially viable and competitive company in this ever-changing, dynamic industry.” FairPoint sees the settlement balancing the various interests related to the company’s situation while maintaining the “core commitments of the 2008 merger order,” Reed said.