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A PUC Consumer Champ Draws Ire

Carl Wood's bid for a union post after his term expires has some usual allies feeling conflicted.

September 20, 2004|James S. Granelli | Times Staff Writer

A state regulator known for championing consumer causes is proposing a 20% hike in wholesale telephone rates at the same time that California's largest telecommunications union, which has lobbied for a big increase, is supporting his elec- tion bid to a union leadership post.

That support from the Communications Workers of America could prove useful to Carl W. Wood, whose term on the Public Utilities Commission expires at the end of the year.

Wood, 56, is battling incumbent Laurie Stalnaker for the top spot on the San Bernardino-Riverside Central Labor Council, an AFL-CIO regional organizing and coordinating body. CWA members are calling on other unions to vote for Wood for executive secretary-treasurer, said Micheal Hartigan, president of Local 9400.

The CWA's assistance comes even as it continues to lobby Wood and other members of the PUC to raise the wholesale rates that SBC Communications Inc., the state's dominant phone company, can charge rivals including AT&T Corp. and MCI Inc. to use its lines.

AT&T, MCI and a slew of smaller companies and consumer advocates say that a bump in the wholesale rate not only would drive up the cost of phone service but also could cause many carriers to exit the business in California, killing competition altogether.

Neither Wood nor CWA officials say they believe a conflict of interest -- or the appearance of one -- exists.

"In the narrow sense, it's clearly not a conflict," said Wood, a former union official. "I'm not taking anything from the CWA or any other union. There's no expense in running the campaign, and I'm not working for any particular union."

But the situation baffles consumer advocates and some of Wood's colleagues.

"I am astonished," said Natalie Billingsley, senior telecommunications analyst for the PUC's independent Office of Ratepayer Advocates. "Does it look kind of funny? A little bit. But it's not a clear-cut conflict."

Bob Finkelstein, executive director of the Utility Reform Network, a consumer advocacy group based in San Francisco, called the situation "very troubling and a huge disappointment."

The soft-spoken Wood, who bills himself as "The Consumers' Commissioner," has built a reputation as a friendly regulator with an open door, a fair mind and empathy for those paying high utility bills.

"He has been one of the few commissioners who cares the most about appearances," Finkelstein said.

Wood was appointed to the PUC six years ago to represent organized labor's concerns. He has supported measures that help utilities pay higher wages. Most of his increase in the SBC rate case, he said, is based on his projections of higher labor costs.

"I don't want to create a rate structure that drives utilities to pay substandard wages," he said.

The other key union in the telecom industry, the International Brotherhood of Electrical Workers, generally opposes higher rates, saying they would reduce competition and lead to layoffs at SBC's rival carriers. The IBEW's influence is considerably less than that of the CWA, which boasts 74,000 members in California.

The PUC is scheduled to vote Thursday on the new rates.

The vote will cap a proceeding that began three years ago when one of the PUC's administrative law judges found that SBC's wholesale prices were at least 20% too high -- and that the price was a barrier to competition.

Federal and state laws intended to encourage competition in local phone service require SBC to sell competitors access to the copper wire, or loop, that connects most homes to the telephone network. The original copper network was built when SBC was part of AT&T, a regulated monopoly with rates of return guaranteed by the PUC. Building a new network from scratch would be prohibitively expensive for competitors.

Interim rates approved by the PUC in May 2002 set the price for basic access to the loop at $9.82 a month per line. Companies that wanted access to the loop and the platform of gear necessary to provide a dial tone had to pay $13.93. After two years of taking testimony and evidence, the judge issued a final report last month that raised the loop price 3.5% to $10.16 and the platform price 1.8% to $14.18.

Last week, Wood issued an alternative decision calling for a 22% increase in the loop rate, to $11.94, and a 20% hike in the platform rate, to $16.67.

At the same time, PUC President Michael R. Peevey and Commissioner Susan P. Kennedy, both of whom have favored the large utilities in their votes, issued drafts that would raise rates 35% to 54%.

"There is speculation that the outrageousness of the [Peevey and Kennedy] drafts will make Wood's look good," Billingsley said. Noting the PUC's dysfunctional nature and animosity among various offices, she said, "I personally would find it difficult to believe this is a coordinated event."

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