Shocking control

We have all heard the cautionary tales about borrowing when we are broke. The guy who borrows from one credit card to pay another will soon find himself in over his head. A monetary death spiral usually follows with a bankruptcy and a credit rating that looks like a black hole. Businesses and even countries can fall into this same trap when they “borrow from Peter to pay Paul.” Dire consequences follow this short-sided path.

The other side of the picture is a positive image of a loan well thought out, with specific goals in mind and a thorough business plan designed for timely repayment. This scenario is used by prudent individuals, businesses and governments to grow and to build infrastructure in order to prosper. It can mean positive progress and rapid growth.

So we see that the loan or the process is not inherently good or bad; it is the need, use and prudent prior planning, or lack of it, that makes borrowing a blessing or a beast.

So how does it come out if we apply these criteria to the proposal to amend our Constitution in order to allow our government to borrow? Do they need to borrow it? What will they use it for? Is there a reasonable plan to pay it back? We should also ask if there would be sufficient teeth in the provision to force future administrations to follow the plan and actually pay back the loans rather than default. Reasonable discussion of these elements should lead us to the correct answer to the question: Should we borrow or not?

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A cursory reading of Public Law 15-35 shows it to have full control and authority over public utilities, telecommunications and cable television operators. A quorum of any three members of the five-person board can make enforceable decisions with a two-thirds vote, meaning that any two members of the five-person board can force a binding regulation or withdraw one. These five persons can be hired and fired only by the governor (hired with the consent of both chambers of the Legislature; fired directly by the governor for very broadly defined cause). They are to have some expertise in the services being regulated and are to have residency requirements, three from Saipan and one each from Tinian and Rota. There are some pretty complete sounding conflict of interest and stock ownership requirements, which may stave off the worst sort of potential self-interest abuses.

They have the power to regulate fares, fees, rules and services offered by all the affected utilities. Meetings, except for personnel matters and “trade secret” discussions, will be open to the public. They can compel testimony with the same powers as the Superior Court and there seems to be plenty of power to enforce compliance, including fines. It does appear they will have a free walk and don’t have to actually set rates for a full year after they are appointed and first meet, so it could be quite a while before regulatory oversight and fee regulation actually occurs. The Attorney General’s consumer council can also intervene and participate in proceedings. One weakness appears to be a penalty of only $500 per day for utilities that violate commission regulations (later $25,000 is mentioned). They might be willing to pay $500 per day in fines if they are raking in $50,000 per day in excess fees.

All the commission’s operating budget will come from the regulated entities themselves. Sort of like having to pay for the stick that someone beats you with. We must keep a fairly tight rein on these expenses by watching them closely because every dime spent by a utility to pay the regulators will ultimately come out of your own pocket as a user of that phone or electric socket or TV connection. Five people can rack up a pretty sizeable bill if they are all flying around first-class, attending meetings on the Riviera to “study” this-or-that, so again we need to be watchful. They also have the power to hire and spend on the usual consultants and special employees and attorneys, etc., etc., so the overall tab can become pretty expensive. Since it is not their own money they are spending, the commission may be more likely than not to spend freely and wine and dine themselves and others. Once again, keeping a watch on the watchdogs is a good idea.

They may be sorry they chose the acronym PUC for the name of this outfit. When they make unpopular decisions, I predict nasty sounding epithets by homophones of PUC. Other than that, it looks like a good framework for positive change. Lord knows we need positive change in these areas. It only remains to see if the commission will flower and accept this responsibility and carry it out in the best public interest. If they do, we will all be better off. If they don’t we will simply have one more expense to add to the already high cost of utility service. Personally, I think there are plenty of talented, honest folks out there to choose from and that, with good decisions from the governor in picking the five commissioners, we have a good chance to see significant improvements in service and reasonable rates being charged sometime in the future because of increased competition. We may also get a few side benefits like interest on our deposits, timely refund of those deposits to us utility users, and other occasional bones tossed to the masses to keep us happy. Let’s hope for the best.

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Oh, and by the way: [B]BOO![/B] [I](Bruce A. Bateman writes Sour Grapes when the moon is full and the mood strikes. Stay tuned for each exciting episode. “Yes, he is opinionated.” bbateman@pticom.com.)
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