Unions call on regulators to reject deal that falls short of earlier recommendations and hold new hearings
The CWA and IBEW are contesting a settlement reached by FairPoint Communications, Verizon Communications, the Office of Public Advocate, the Advocacy Staff of the Public Utilities Commission, and various other parties because it fails to protect the public interest. The settlement also falls far short of conditions recently proposed by the Commission’s advisory staff and the Office of the Public Advocate. The Commission is not obligated to accept the terms of the deal in whole or in part.
Although the settlement would modestly improve FairPoint’s finances, Mainers still will be left with a financially risky company without sufficient resources to improve service quality and expand high speed broadband. While some issues affecting workers have been addressed, the deal falls drastically short of these critical concerns.
The CWA and IBEW -- joint intervenors in the regulatory proceedings -- have formally asked the Commission to reject the proposed settlement -- or at the very least -- suspend its deliberations and hold hearings to address the problems posed by the settlement. Commission rules allow intervenors the opportunity to present arguments against such a proposed settlement and to request hearings.
“If the PUC allows this deal to be part of the case, then it should follow its own rules and hold a hearing to examine all of its implications,” said Pete McLaughlin, Business Manager of IBEW Local 2327. For example, the Commission should examine the impact of the deal on FairPoint’s financial viability since it would increase the company’s operating expenses and reduce its revenue which will adversely affect its profits and cash flow.
“We are surprised that the Public Advocate settled for much less than what he recommended only a few weeks ago,” added McLaughlin.
The unions were only invited to participate in settlement discussions last Friday December 7, even though such talks had been going on for some time. The unions unsuccessfully tried to ensure that the parties in the settlement discussions addressed the deal’s shortcomings through a number of proposals. After these attempts failed, the unions were again shut out from any discussions. The proposed deal is deficient in a number of areas including the following, because it:
· Requires Verizon to reduce FairPoint’s debt significantly less that the $600 million recommended by the Hearing Examiner and previously by the Public Advocate.
· Permits FairPoint to pay out common stock dividends greatly in excess of FairPoint’s level of net income in each and every year.
· Does not enable FairPoint to weather foreseeable adverse financial circumstances (such as reductions in revenues, increases in expenses, or increases in capital expenditures) without jeopardizing the financial health of FairPoint.
· Does not provide FairPoint with the financial capability to eliminate or substantially modify its plan to dramatically reduce its workforce through attrition during the next eight years.
· Allows FairPoint to invest $40-$50 million a year less in capital expenditures than Verizon’s historic annual levels in Maine, New Hampshire, and Vermont.
· Does not require FairPoint to fund any of the more than $400 million in projected retiree health care liabilities it will incur through 2015 and does not provide FairPoint with the financial capability to reasonably meet these liabilities.
· Changes significant aspects of FairPoint’s previously filed financial model, including its projections of revenues, expenses, capital expenditures, and cash flows (not even taking into consideration changes to which FairPoint may be required to agree in New Hampshire and Vermont.)
The CWA and IBEW continue to agree with the Hearing Examiner’s November 26 recommendation that the sale should be rejected because it is not in the public interest. If the PUC disagrees with this recommendation, the Examiner also recommended that it should condition any approval on requirements that Verizon reduce FairPoint’s debt by $600 million and reduce its Transition Services Agreement fees by approximately $130 million. Further, FairPoint should be required to reduce its dividends, increase capital expenditures and be subject to stronger service quality standards and penalties.
“The stakes are very high because it concerns the future of the dominant provider of telecommunications services in this state and the northern New England region,” said Cheryl Ahern, president of CWA Local 1400. “Our current and future economic well-being depends on the financial health of this provider. We cannot afford to be saddled with a financially shaky company without the resources to improve service and provide high speed broadband.”
The CWA and IBEW are contesting a settlement reached by FairPoint Communications, Verizon Communications, the Office of Public Advocate, the Advocacy Staff of the Public Utilities Commission, and various other parties because it fails to protect the public interest. The settlement also falls far short of conditions recently proposed by the Commission’s advisory staff and the Office of the Public Advocate. The Commission is not obligated to accept the terms of the deal in whole or in part.
Although the settlement would modestly improve FairPoint’s finances, Mainers still will be left with a financially risky company without sufficient resources to improve service quality and expand high speed broadband. While some issues affecting workers have been addressed, the deal falls drastically short of these critical concerns.
The CWA and IBEW -- joint intervenors in the regulatory proceedings -- have formally asked the Commission to reject the proposed settlement -- or at the very least -- suspend its deliberations and hold hearings to address the problems posed by the settlement. Commission rules allow intervenors the opportunity to present arguments against such a proposed settlement and to request hearings.
“If the PUC allows this deal to be part of the case, then it should follow its own rules and hold a hearing to examine all of its implications,” said Pete McLaughlin, Business Manager of IBEW Local 2327. For example, the Commission should examine the impact of the deal on FairPoint’s financial viability since it would increase the company’s operating expenses and reduce its revenue which will adversely affect its profits and cash flow.
“We are surprised that the Public Advocate settled for much less than what he recommended only a few weeks ago,” added McLaughlin.
The unions were only invited to participate in settlement discussions last Friday December 7, even though such talks had been going on for some time. The unions unsuccessfully tried to ensure that the parties in the settlement discussions addressed the deal’s shortcomings through a number of proposals. After these attempts failed, the unions were again shut out from any discussions. The proposed deal is deficient in a number of areas including the following, because it:
· Requires Verizon to reduce FairPoint’s debt significantly less that the $600 million recommended by the Hearing Examiner and previously by the Public Advocate.
· Permits FairPoint to pay out common stock dividends greatly in excess of FairPoint’s level of net income in each and every year.
· Does not enable FairPoint to weather foreseeable adverse financial circumstances (such as reductions in revenues, increases in expenses, or increases in capital expenditures) without jeopardizing the financial health of FairPoint.
· Does not provide FairPoint with the financial capability to eliminate or substantially modify its plan to dramatically reduce its workforce through attrition during the next eight years.
· Allows FairPoint to invest $40-$50 million a year less in capital expenditures than Verizon’s historic annual levels in Maine, New Hampshire, and Vermont.
· Does not require FairPoint to fund any of the more than $400 million in projected retiree health care liabilities it will incur through 2015 and does not provide FairPoint with the financial capability to reasonably meet these liabilities.
· Changes significant aspects of FairPoint’s previously filed financial model, including its projections of revenues, expenses, capital expenditures, and cash flows (not even taking into consideration changes to which FairPoint may be required to agree in New Hampshire and Vermont.)
The CWA and IBEW continue to agree with the Hearing Examiner’s November 26 recommendation that the sale should be rejected because it is not in the public interest. If the PUC disagrees with this recommendation, the Examiner also recommended that it should condition any approval on requirements that Verizon reduce FairPoint’s debt by $600 million and reduce its Transition Services Agreement fees by approximately $130 million. Further, FairPoint should be required to reduce its dividends, increase capital expenditures and be subject to stronger service quality standards and penalties.
“The stakes are very high because it concerns the future of the dominant provider of telecommunications services in this state and the northern New England region,” said Cheryl Ahern, president of CWA Local 1400. “Our current and future economic well-being depends on the financial health of this provider. We cannot afford to be saddled with a financially shaky company without the resources to improve service and provide high speed broadband.”
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