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Show PSC: Scrutinize utilities The Public Service Commission's recent granting of an interim rate increase doubling the water fees charged to Summit Park residents raises a number of serious philosophical questions about utilities and regulation. The $30.30 minimum rate set by the PSC more than doubles the current price paid by Summit Park residents, yet is far below the $66.32 requested by the Summit Park Water Co. Yet discussing this case in dollars and cents begs the issue. The history of the case is this. The water company last sought a rate increase in 1979, when the minimum monthly rate of $13.29 was set. Six years later, the company seeks to raise the amount to $82.90, saying it is on the brink of collapse. The question is, why did the company not seek a rate increase earlier? That would have avoided the need to borrow the money from its parent, the Summit Park Co., a land firm that developed the residential mountain subdivision. And it would have spared the water company the $170,000 accrued in unpaid interest on loans taken out by the parent company to meet the water company's financial demands. , . , .,.:.' ,;. Administrative Law Judge Robert Thurman said there is no satisfactory explanantion why the company went so heavily into debt without seeking a timely rate increase. On that point, one only can speculate. Some utility regulators wondered out loud whether the water company did not want to raise its rates because the parent company still was developing land and it is easier to sell lots while water rates are low. The picture is further clouded by the company's request that the debt with the interest be Editorial incorporated in the rate hike. If the PSC agrees to that request, customers will be paying for the firm's own decision to go deeply into debt and run up high interest costs rather than seek a rate increase. Residents who have lived in Summit Park since 1979 certainly have benefited financially by the water company's decision not to raise its rates. But the real victims now are recent residents and those who will move into the alpine community in the future. Forcing them to pay for the company's debts violates what one utilities division official called the regulatory system's cardinal principle against retroactive billing. Such billing cuts against the pay-as-you-go scheme, which is the guiding principle in regulatory theory. For whatever reason the water company and its present development firm had for not seeking a rrate i increase and for incurring steep debt instead, cust6m.ers should not have to accept the burden for such decisions. l4 That should be borne by the firm and its investors. , And the state regulatory agencies also must be asked why public utilities that provide such necessities of life and health are not more closely monitored to prevent those companies from reaching the brink of bankruptcy. If monopolies are going to be granted to private companies that supply essential services, then it is the state's responsibility to assure that they do so in a . manner that does not threaten to disrupt the lives of its customers. |