Thursday, November 30, 2006

Deregulation is Great - for BellSouth

Embarq just asked for a hurricane surcharge and now BellSouth is following suit. And the law says that they can have it, hardly any questions asked. Deregulation is great. From the Palm Beach (FL) Post:

After the 2004 storm season, when FPL and other electric utilities were preparing to ask the Public Service Commission for permission to levy storm-repair surcharges, BellSouth wanted the same option. The Legislature obliged, in a way that almost guarantees that BellSouth will get the surcharge. Even Harold McLean, who as public counsel represents consumers before the Public Service Commission and whose office got the PSC to knock about $500 million off FPL's request, told The Post that he can't do much. Under the law, BellSouth can ask that customers pay about one-third of the repair costs, and $35 million is about one-third of the repair costs.

The Sun-Sentinel tells us that BST didn't carry storm insurance. And after just reaming its customers with a huge rate hike, BST is flush with cash as it reported this past quarter.

Our local phone monopoly, BellSouth, has quietly filed for a $34.6 million hike in the phone rates of every one of its customers. The reason? BellSouth admits that it didn't carry enough insurance, or establish a storm reserve fund, to fully pay for damage to its network in last year's storms. The company's timing is odd: BellSouth is coming off another record profit quarter, pocketing hundreds of millions of dollars in excess earnings, enriching its stockholders with multibillion-dollar stock buybacks and, the icing on the cake, selling the entire company to AT&T for upward of $80 billion.

And yet, flush with $300 million in new revenue [from the 2003 law that allowed a huge rate hike] for the same old phone service, BellSouth couldn't manage to reserve a measly 10 percent for possible storm damage.

As a bonus for winning approval of the merger with AT&T, BellSouth's CEO and his top deputies will collect three times their annual base pay plus three times their standard annual bonus. They will also "earn" an immediate cash-out of their bonus for the year of termination. Not a bad deal, and the extra $34.6 million collected from Florida consumers should just about cover the price tag (BellSouth CEO Duane Ackerman made $3.4 million in salary and bonus last year, so his cut alone will be over $11 million).

Fortunately, BellSouth's executive bonanza is not yet a done deal. Before BellSouth sticks its hand into Floridians' wallets, the public has an opportunity to stand up against this naked greed. In a series of public hearings held in October and November throughout the state, the PSC has listened to public opposition to BellSouth's request. There are local hearings on Wednesday and Thursday. We should all be sure to make our voices heard.

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