PSC wants to link Verizon’s service, rate hikes 

Posted: 7:27 pm Wed, February 3, 2010
By Danielle Ulman
Daily Record Business Writer

A modified settlement agreement proposed by the Public Service Commission Wednesday would require Verizon Maryland to offer telephone customers better service before being allowed to raise rates.

Verizon submitted a proposal in August to settle six cases before the commission stemming from thousands of customer complaints that the company left them without telephone service for several days at a time.

The company has 20 days to accept or reject the PSC’s settlement changes.

“Although we still are reviewing the order, we are encouraged that the commission recognizes Verizon’s commitment to provide our customers in Maryland with a high level of service quality,” William R. Roberts, vice president of Verizon Maryland and Washington, D.C., said in a statement.

For the first time, the PSC’s order requires Verizon to show tangible quality improvement before it raises prices, giving Verizon “an incentive to improve” its service and maintain those improvements.

“This will put Verizon’s feet to the fire in terms of getting rate increases,” said Deputy People’s Counsel Theresa Czarski, of the Office of the People’s Counsel, which represents consumers in cases before the PSC.

“This kind of binds one issue with the other, which hadn’t been done before,” she said.

If Verizon seeks a rate increase, it will have to demonstrate that its service has improved over 12 months compared to the prior year. For example, if the company had a success rate of returning service to fewer than 70 percent of customers within 48 hours of an outage for a year, the next year it would have to demonstrate a 3 percent improvement.

Currently, the company gets between 60 percent and 70 percent of customers back on line within that time frame. The PSC said the approach encourages Verizon to improve service issues quickly.

The settlement requires Verizon to restore service to 80 percent of residential customers within 48 hours of notification, excluding weekends and holidays, a metric it has not reached since January 2007. Verizon had wanted to exclude customers in its calculations who did not seem upset to accept an appointment outside the 48-hour window. In its order, the PSC said Verizon must count them.

Regulators said they were unsure of how Verizon would implement the changes, so it will require the company to provide an annual operational plan and submit monthly numbers to the commission for review.

The settlement was the second proposal offered by Verizon, after regulators rejected a previous deal crafted by Verizon, the PSC staff and the Office of the People’s Counsel.

The PSC found that deal “fatally flawed” because it did not tie price increases to improvements in service. The PSC also said it feared Verizon would treat required payments to customers for quality issues as a cost of doing business rather than a reason to fix service problems.

In its rejection of the offer, the PSC suggested guidelines that Verizon should follow in a new settlement proposal. The company accepted some and deviated from others in its revised settlement proposal submitted in August.

The OPC initially thought Verizon’s second attempt at a settlement did not meet the standards set forth by the commission, but Czarski said she is pleased with the PSC’s modifications.

“It looks like the concerns we expressed have been evaluated and considered by the commission when they issued their latest offer,” she said. “… [H]opefully this will put Verizon on the path to remedying the statewide, very frustrating consumer problems it has.”