MPUC Orders Fairpoint to Rebate Maine Phone Customers
December 1, 2009
Maine Public Utilities Commission
News Release
FOR IMMEDIATE RELEASE
Augusta, Maine—Yesterday the Maine Public Utilities Commission unanimously ordered FairPoint to file a rate adjustment which includes a rebate for its Maine phone customers because it has failed to meet its required service quality indices for 2008-2009. The Commission requires FairPoint, as part of its rate structure, to meet specific service quality performance standards. If these measurements are not met, the Company must adjust its customer bills and send a rebate to customers.
“We must protect Maine’s phone customers who--as a result of FairPoint’s failure to meet its service quality benchmarks—are now owed a rebate,” said Commission Chair Sharon Reishus. “We remind FairPoint that the Commission can impose additional penalties if our orders are ignored.”
Three times since October FairPoint asked for delays of the ordered rate adjustment which included the required rebate; three times the Commission has denied these requests. Because FairPoint has not filed the required rate adjustment, the Commission today used its authority to file the rate adjustment directly. By yesterday’s order, the Commission directs FairPoint to send rebates of $1.72 per line per month for the 12-month period ending 12/1/10.
Background on FairPoint’s rate structure: The Commission regulates FairPoint’s rates through an Alternative Form of Regulation (AFOR) which is a method of incentive-based rate regulation. The AFOR seeks to provide lower rates to customers by creating incentives designed to encourage management efficiency. Under an AFOR, a utility is allowed to keep its profits from productivity or to lose money if it experiences sub-standard production.
A central feature of current AFORs is a five-year period during which the utility may not seek to increase rates and the Commission may not require a rate decrease except related to service quality as in this current case. The utility’s service quality is tracked and measured against benchmarks for 14 different metrics. Any rebate is based on the extent to which the utility’s service quality has been worse than the established benchmarks. An AFOR was established for New England Telephone (NET) with a service quality index (SQI) in 1994. It was modified in 2001 when Verizon took over the NET network and again in 2008 when FairPoint purchased Verizon’s network.
For more information, go to the Commission virtual case file on its website and see docket # 2009-388; the Order dated 11/30/09 is available there.
The Maine Public Utilities Commission regulates electric, telephone, water and gas utilities to ensure that Maine citizens have access to safe and reliable utility service at rates that are just and reasonable for all ratepayers. Commission programs include Maine Enhanced 911 Service, Dig Safe, and Efficiency Maine.
CONTACT: Evelyn deFrees, 207-287-6141, evelyn.defrees@maine.gov
