If you have bad memories of telecommunications utility FairPoint, it may be for good reason.
When the company purchased Verizon’s landline and Internet operations in northern New England in 2008, the results were abysmal. Thousands of customers lost services when data failed to transfer correctly between the companies; many people didn’t receive bills; complaints skyrocketed; employees were laid off; and stock prices fell. It filed for bankruptcy 18 months later.
But that doesn’t mean the state should hold FairPoint, and only FairPoint, to a higher standard if it ever goes up for sale.
The FairPoint acquisition of Verizon has served as the backdrop for debate about a bill, LD 1761, sponsored by Rep. Barry Hobbins, D-Saco, that would raise the standard that the Maine Public Utilities Commission applies when reviewing potential reorganizations and mergers involving a telephone utility with gross annual state revenues greater than $50 million. Under those conditions, the bill singles out one company: FairPoint.
Gov. Paul LePage vetoed the legislation, and the Legislature is scheduled to vote Thursday whether to override that veto. Lawmakers should let LePage’s veto stand and kill this bill. It may have some worthy components, but others are counterproductive, ambiguous and retaliatory.
Currently, the PUC must determine whether all the benefits of a proposed merger are greater than or equal to any harm caused to ratepayers and investors. The bill would raise the bar and require the PUC to find that any merger or reorganization would “advance the economic development and information access goals of the state.”
We have no problem with a “net benefit” standard, rather than a “do no harm” standard, as long as the criteria are clear. It’s been applied successfully in other states and can provide leverage for a deal to include more protections for ratepayers.
But applying the standard to one utility — putting it at a disadvantage against all others — would represent shady politics and poor policy, not to mention set an unfortunate precedent.
The bill also would require that any reorganization “not result in changes to the location and the accessibility of the telephone utility’s management and operations” — to prevent management from potentially moving out of state. And it would prohibit changing “the proportion and number of the telephone utility’s employees who reside in the state” in a way that would “adversely affect safety, reliability or quality of service.”
First, it seems the bill would impose a unique and singular burden on FairPoint management. Second, it seems it would set up a conflict between protecting employees versus ratepayers. While utility employees do important work, often a merger results in efficiencies that require the loss of jobs. And because the law already requires utilities to supply adequate service, the language in this bill could be read as either protectionist or redundant.
There is a legitimate conversation to have about how best to regulate utilities, protect the public in the event one is sold, and hold those utilities accountable to their contracts. The state doesn’t want to go through another experience like it did in 2008 — when one could argue the PUC didn’t even abide by its “do no harm” standard. But what’s needed is wider, more intelligent reform, not a swipe at one company.