FairPoint, State Regulators Fight over Fee Covering Tax, Broadband Buildout Measurement
In light of the expiration of a tax exemption in New Hampshire, FairPoint is looking to either recover the cost by initiating a “municipal property tax surcharge” or reinstating the exemption through the state legislature, the company said. For years, phone poles in New Hampshire were exempt from property taxes, even though they were taxed in almost every other state. Meanwhile, regulators in Maine are questioning the company’s claim that it has reached its broadband buildout target, one of the major conditions it had agreed to for approval of its acquisition of Verizon landlines in northern New England.
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FairPoint had told the New Hampshire Public Utilities Commission that due to the exemption expiration, all residential and business customers would start to pay an extra 99 cents a month per line for up to 25 lines on each account. But the PUC recently issued an order suspending the fee from going into effect. The new fee is a general rate increase rather than a tariff for services, and so warrants an investigation by the PUC, the commission said. Due to the expiration, FairPoint would be responsible for taxes incurred after April 1, a spokesman said. That means a more than $6 million tax increase per year, a huge cost for a company that has just come out of Chapter 11, he said. A decision from the PUC was expected as early as late Wednesday, after our deadline, he said. The commission declined to comment. The company is also working with the state legislature to reconsider a legislative proposal from 2010 that would reinstate the exemption, the FairPoint spokesman said.
By adding a “municipal property tax surcharge” to its bills, instead of recovering property tax expense through its rates, the company is attempting to make regulators and customers believe that it’s being subjected to some type of special municipal tax, said Cordell Johnston, counsel with the New Hampshire Municipal Association. It’s the same property tax that everyone pays, he said. Additionally, the property tax exemption expired on July 1, 2010, he noted. FairPoint has had 17 months to request a rate increase, he said. It should not be heard now to complain that it needs immediate relief, he said. The municipal property tax surcharge is an effort to blame municipalities for an increase in customer rates and to build legislative support for reinstating the property tax exemption, he said.
In Maine, FairPoint’s claim that it had met its goal of expanding high-speed Internet to 87 percent of the state was challenged by the Office of the Public Advocate, which didn’t agree with how the company had come up with the number. The company believes it has met the broadband targets, the FairPoint spokesman said. The broadband availability definition is clear and the company will continue to work with the state commission to resolve the differences, he said. The state commission is expected to start a hearing process early next year, he said. Consumer advocates in the state claimed the definition that FairPoint used to define a customer with access included customers who live too far from the central office to get proper service.