CTC out, PUC in

The Commonwealth Telecommunications Commission has been abolished, after acting Gov. Timothy P. Villagomez signed the Public Utilities Commission bill into law yesterday.

Authored by Rep. Francisco Dela Cruz, House Bill 15-55 is now Public Law 15-35, or the Commonwealth Public Utilities Commission Act of 2006.

The PUC law provides the CNMI’s first comprehensive framework for the regulation of public utilities, including cable television, telephone, power, and water services.

Villagomez described the measure as “landmark legislation” for the Commonwealth.

“The law allows an independent, non-political, and highly qualified regulatory body to set rates for business profitability, as well as for consumer protection,” he said.

The PUC law sets high standards for the commissioners, with minimum educational and work-related requirements. Appointments to the commission will be subject to approval by both houses of the Legislature. Each commissioner will serve a term that does not end with a change in administration.

The law also establishes rules to ensure that all utility rate increases are justified. It will completely eliminate government subsidies for the Commonwealth Utilities Corp.

“PUC will be apolitical and professional, operating with the highest standards of public accountability, to ensure that private companies earn a reasonable profit consistent with industry standards, while also protecting consumers against arbitrary price increases,” Villagomez said.

Pacific Telecom Inc., the only public utility regulated under the old CTC law, welcomed the enactment of the law.

“Today is a significant day for PTI, as well as for people of the Commonwealth. We believe this will be the beginning of the turnaround of our economy,” said PTI board member and senior adviser Jose S. Dela Cruz.

He said the new law would benefit PTI for a number of reasons.

First, the PUC law lowers PTI’s annual franchise fee from 2.5 percent of its annual gross revenue. Under the new law, each public utility will have to pay only 0.75 percent of its annual gross revenue, or $135,000, whichever is less.

Since the new law applies to all public utilities, PTI will no longer be the sole provider of operating funds for its regulatory agency.

The PUC law also rids of many requirements previously imposed by the government on the telecom firm. Membership to the national telecommunication association, which involved payment of dues, was one of those requirements.

“The piece of legislation is business friendly. It treats businesses fairly and squarely. It eliminates requirements that were unnecessary and burdensome to businesses,” Dela Cruz said.

PTI general manager Anthony Mosley agreed. “The administration has righted some of the wrongs. They set the stage for infrastructure moving forward. We are looking forward to working with them,” he said.

On the former CTC, Mosley said, “They [commissioners] did a credible job. It was the administration that went overboard.” He was alluding to the Babauta administration, which insisted on numerous conditions during negotiations for PTI’s purchase of Verizon.

Michael Fitzgerald, chairman of the now defunct CTC, had opposed many of the provisions of the PUC measure. He said that the bill would get rid of CTC, as well as the past five years of work it has done.

“This bill would allow anyone in the government who had an axe to grind or a special interest to do exactly that. They could block funding, micromanage decisions. What it really creates are a [PUC] that is severely hampered by funding issues. If the funding is limited, that limits the type of actions the commission can take,” he said.

He added, “[This legislation] prohibits a business from earning a profit. It now eliminates the CTC Verizon deal and eliminates the CTC. It prohibits rate smoothing which benefits Tinian and Rota. It allows utilities to unilaterally increase rates, subject to a five-month suspension.”