Editor's note: For background on the PSC case, see earlier story PSC inaction on Vitelco rates legal, I.G. says.'
The V.I. inspector general's finding that the Public Services Commission acted within its rights in declining to hold a formal hearing on V.I. Telephone Corp. rates in response to a legislative resolution calling for a 20 percent reduction has produced predictable responses from interested parties.
Vitelco's top executive hailed the finding and touted the "detailed and in-depth" nature of the study that led to it. And the senator who initiated the action that was at issue before the PSC criticized the report for its limited scope and lack of legal expertise.
Vitelco issued a statement Friday evening to selected news media, excluding the Source newspapers, in which company president Samuel Ebbesen said he was "heartened that after a detailed and in-depth review by the inspector general, the institutional and personnel integrity of the Public Services Commission was vindicated."
Meantime, Sen. Adlah "Foncie" Donastorg, who sponsored the resolution that the 22nd Legislature adopted by a unanimous vote on June 19, 1997, challenged the findings of the V.I. Bureau of Audit and Control report, saying its scope was "very narrow."
All that Inspector General Steven van Beverhoudt did "was ascertain whether the PSC acted according to its rules," Donastorg said, noting that the report specifies that the investigation did not address "the merits of the PSC consultant's report on Vitelco's rate of return" or Vitelco's response to that report.
The report to the PSC by Georgetown Consulting Corp. stated that the telephone company's rate of return was high enough to merit an investigation into whether rates could be reduced without impacting adversely on the company's guaranteed rate of return.
Donastorg said he would resubmit legislation calling for a rate investigation, perhaps as early as Tuesday, when the 23rd Legislature will be in session on St. Thomas. He said the new bill would require that the probe begin within 30 days of the bill becoming law.
Van Beverhoudt himself differentiated twice in the report between the audit bureau findings and legal analysis.
First, "a legal opinion might be necessary" to determine if the Senate resolution "was in fact a formal complaint" as defined by the rules governing the PSC. The study concluded that "the actions taken by the PSC from the beginning clearly show that they intended to treat the resolution as a formal complaint."
A more controversial issue addressed by the inspector general was whether the PSC acted within the law, which requires a formal hearing on a complaint before the commission enters an order on it. The audit bureau report represents "our opinion based on our interpretation of the [V.I.] Code and the event," van Beverhoudt wrote. But in the same sentence he stated that the question "should be more appropriately addressed by legal counsel."
Van Beverhoudt also noted in the report that the audit was performed using tests and procedures in accordance with the standards issued by the comptroller general of the United States "except for limitations to our independence." He explained that federal standards required that the audit organization "be organizationally independent." The V.I. Bureau of Audit and Control is not, he said, and budget and personnel limitations have adversely affected its "ability to fully carry out our responsibilities."
Donastorg also wants to pursue the recommendation in the audit bureau report that the PSC consider "the benefits" of requesting a revision of the V.I. Code to require that the rates and fees of utilities be reviewed at regular intervals such as every two years.
Ebbesen also stated, according to a The Daily News report, that "the inspector general found that the libelous accusations of the improper relationships between Vitelco and members of the commission were clearly unfounded and without merit."
The report states: "During the course of our review, several allegations were made concerning claims that commission members were given pay raises in return for voting against the Vitelco rate reduction petition submitted by the Legislature. Other allegations consisted of claims being made that the PSC members were attending conferences at the expense of Vitelco. Our review of all documents provided to us failed to provide any evidence to substantiate either of these claims. Therefore, pending additional documentation to support the claims, we must regard them as without merit."