Gulf State Regulators Tackling Hurricane Issues

Regulators face major questions after Katrina and Rita, experts said: (1) What relief, such as waiver of deposits and installation charges, to provide phone customers affected by the storms. (2) Whether to waive service standards such as those for timely installation and repair until carriers have restored service and replaced wrecked facilities. (3) Whether to allow regulated carriers a temporary local rate increase or surcharge so they can recover some storm-caused extraordinary and unexpected costs. (4) Whether networks should be restored to prestorm status, or carriers encouraged to replace wholesale older wires, cables and switches with the latest fiber and digital technologies. (5) What, if anything, states can do to reduce telephone carriers’ near-total dependence on commercial electric power to keep outside plant facilities such as cellular towers and loop carrier terminals operating. (6) How to use state rules to aid electronic communications among emergency responders and prevent breakdowns.

States are addressing some of these. For instance, in Sept. the Ala. PSC passed a resolution asking telecom carriers to waive nonrecurring installation charges for storm evacuees establishing new service at temporary residences or reestablishing service at their old residence. To date, 34 carriers, including BellSouth and CenturyTel, have agreed to the request. The Tex. PUC Oct. 3 adopted a temporary rule requiring waiver of security deposits for hurricane survivors seeking new local phone and electric service. The rule expires Dec. 2. The PUC last month also requested waiver of service installation charges for hurricane victims. SBC is among the utility providers agreeing to that request. Tex. telcos still had about 101,000 lines out of service last week, mostly in the Beaumont and Port Charles areas.

The Miss. PSC asked carriers to waive installation charges and deposits for evacuees, and most have agreed. The PSC also asked carriers to suspend for 3 months automatic dunning and disconnecting of past due accounts, and to gauge customers’ circumstances in addressing past- due bills. Staffers noted the storms disrupted mail delivery and payment processing so even payments sent on time might not be credited properly.

Miss. PSC staffers expect incumbents’ retail customers who lost service to face few problems getting bill credits for the time they are out. But the picture is far muddier for CLEC customers, they said. The PSC is looking into making a blanket rule on calculation of storm-related wholesale-service outage credits for CLECs, which the carriers would be expected to pass along to customers as retail outage credits. Staffers said the credit situation is fairly straightforward in exchanges where an entire central office went out. But credits for cases where individual customers lost service, while the central office and most of the distribution network kept working would have to be resolved through normal trouble- reporting channels.

Some states have moved quickly on waiving carrier service standards. The Miss. PSC gave BellSouth a general waiver of standards for the 3rd and 4th quarters. Most of BellSouth’s remaining Miss. outages are in Hattiesburg and Laurel and adjoining communities in Jones and Forrest Counties. Katrina significantly impaired service in roughly 3/4 of BellSouth’s territory. The Ala. PSC has waived 3rd and 4th quarter quality standards for BellSouth, Gulf Telephone, Century Tel and Frontier in the 6 southern counties hardest hit by storms. The carriers’ service quality monitoring reports will be adjusted to remove the 6 storm-afflicted counties; the carriers will have to meet the standards in the rest of the state.

In La., BellSouth filed a request for a service quality standards waiver due to network damage. Reports through Thurs. showed roughly 380,000 La. lines out of service, mostly in New Orleans and environs. La. staffers said La. service quality standards provide for waivers in extraordinary circumstances, but carriers must petition.

The states haven’t fielded carrier requests for rate adjustments or surcharges to recover extraordinary costs from Katrina and Rita. “At any surcharge customers could afford, it would take from now to the end of time to recover these costs. That’s how bad the damage is,” said one Miss. staffer. But there’s precedent, even with carriers under price regulation. The Fla. PSC last month granted Sprint a $30 million surcharge so it partially can recover extraordinary costs caused by hurricanes in 2004. The PSC authorized an 85 surcharge for 12 months. But a 2005 state law limited natural-disaster cost recovery from phone customers for this year and beyond, keeping surcharges to 50 a line for 12 months.

Regarding network restoration, states haven’t addressed technology. “We are still in recovery mode. Our focus is on getting dial tone back,” said a Tex. PUC spokesman. State staffers indicated they're leaving network rebuilding to the carriers. For backup power, most states require at least 4 hours’ backup power capacity in central offices and outside plants, though most carriers plan for 8-12 hours, which suffice in local power failures. Some state staffers indicated they may reconsider their minimum backup requirements. The Ala. PSC urged carriers to update backup power by replacing old generators and installing generators in rural central offices. In the case of CenturyTel, the Ala. PSC last month restored a $300,000 budget line item earmarked for 6 new generators for its central offices. The staff had wanted to apply 1/2 that money to universal service outreach, but after Katrina urged restoring the generator budget and supporting universal service outreach with money from another account.

State utility commissions have only secondary jurisdiction over responders’ emergency communications. Primary responsibility lies with state emergency management agencies. Staffers said the state commissions’ main role is to facilitate communications between emergency management officials and regulated utilities. As to 911 emergency dialing and 211 human service referrals, staffers said the primary issue is restoring dial tone so people and emergency personnel can place calls.

Fla., which last summer endured 4 devastating hurricanes, came away with some policy lessons. “In making plans, the first priority is prompt restoration of electric power because recovery of the telephone network and everything else depends on it,” said PSC spokesman Kevin Bloom. He said Fla. has no specific policy on service quality waivers for phone carriers, “but if they've suffered major network destruction, it’s understood that we won’t be holding them to all the standards.” He also said some areas may be too far gone to restore to prestorm conditions, and people may decide to abandon those areas permanently.