Citizens' Utility Board of Oregon

We Had Better Move Ahead Without Bush

It's a good thing no one in Oregon is waiting for President George W. Bush to save us from global warming. President Bush spoke Wednesday about his plan to reduce greenhouse gases which cause global warming, starting in 2025, allowing a peak in usage 17 years from now. This statement contrasts with leading scientists' estimate that by 2025, we need to have already made emissions reductions in the 20-30% range if we are to avoid the direst consequences of our fossil fuel usage. Some of those consequences are expected to include increased severe weather events (drought, fires, hurricanes, flooding, etc.), as well as decreased snowpack and water supply, disruption of food supply, and rise in sea levels.

The Climate Institute offers the following explanation of a rise in sea levels: "The Fourth Assessment Report of the Intergovernmental Panel on Climate Change projects an increase of temperature ranging between 1.1 and 6.40 C over the next century, necessarily entailing a reduction of the amount of ice. As a result, sea levels could rise 10 to 23 inches by 2100... In addition, the IPCC suggests that by 2080, sea level rise could convert as much as 33 percent of the world's coastal wetlands to open water (IPCC 2007)." Because many of the world's largest cities, including American cities such as New York City, Los Angeles, San Francisco, Miami, Seattle, Boston, and even Portland, are either directly on the coastline or connected via river channel, a significant sea level change would indicate large population dislocation.

Whether such impacts and dislocations occur depends greatly on what we do in the next 2 decades, the very years the Bush Administration would like to allow business as usual, with climbing emissions: "Unmitigated climate change would, in the long term, be likely to exceed the capacity of natural, managed and human systems to adapt... Early mitigation actions would avoid further locking in carbon intensive infrastructure and reduce climate change and associated adaptation needs... Many impacts can be reduced, delayed or avoided by mitigation. Mitigation efforts and investments over the next two to three decades will have a large impact on opportunities to achieve lower stabilisation levels. Delayed emission reductions significantly constrain the opportunities to achieve lower stabilisation levels and increase the risk of more severe climate change impacts." ( IPCC 2007, p. 19.)

Offering no specific policies or regulatory regimes leading to greenhouse gas emissions, and instead speaking of "accelerating the development and deployment of new technologies," Bush's speech comes just weeks before Congress expects to debate climate change legislation which would introduce real mandatory emissions reductions. While we found Bush's lack of action regarding global warming extremely disappointing, we find this charade meant to resemble genuine action even more so. Perhaps we are supposed to take heart that the President finally sees climate change as a problem; however, it is discouraging that having recognized the problem, the President doesn't actually want to do anything about it.

Meanwhile, back in Oregon, utilities are working hard to incorporate carbon-neutral power sources such as wind and solar so that they can meet the Renewable Energy Standard passed by the Oregon Legislature in 2007. Under the RES, 25% of Oregon's electricity will come from new renewable sources by the year 2025, the same year Bush would only begin to make a reduction in emissions. In addition, Oregon has the highest percentage nationwide of voluntary participants in the renewable energy programs offered to residential customers by Portland General Electric and PacifiCorp. Not to mention the fact that Oregon's Public Utility Commission has rejected the last several utility requests to build new coal plants (the highest-emissions electrical power source), rejections for which CUB led the charge.

CUB continues to advocate for actions and policies which would mitigate the worst effects of climate change in Oregon. We are working with the Western Climate Initiative to craft a realistic and meaningful limit on carbon emissions, a so-called "cap-and-trade regime." (Another member of the WCI, British Columbia, has already instituted a carbon tax to reduce its own emissions.) It is clear to us, as it does not seem to be clear to the Bush Administration, that an earlier start on reducing greenhouse gas emissions is not only helpful, it is essential.

Qwest Proposes to Deregulate and Raise Phone Rates

Oregon's largest phone company, Qwest, has proposed a radical plan to immediately raise rates and deregulate phone services over the next three years. Once rates are fully deregulated the phone company would be able to add additional rate hikes. Of course, the company pretends that their proposal does not deregulate rates, but that is nonsense. Under Qwest's plan, the Public Utility Commission of Oregon would no longer have the power to establish rates that are "just and reasonable," which has been the basis for establishing regulated utility rates for decades.

Under Qwest's proposal, rates for basic local phone service would be allowed to increase immediately by $2/month or 15.6%. Rates for Extended Area Service would remain where they are and all other retail services would be deregulated, allowing unlimited rate increases.

]]> While Qwest does not specify what it would do with these prices after deregulation, we know that they intend to raise rates. In Washington, Qwest got a similar plan passed and immediately raised rates significantly. Based on the Washington experience, these are the increases that CUB expects would happen were the Qwest proposal to be approved.

Service & Increase
* Residential Telephone Line: 15.63%
* Residential Measured Telephone Line: 11.17%
* Call Forwarding Variable: 22.45%
* Call Waiting:100.00%
* Call Waiting ID: 20.00%
* Caller ID - Name and Number: 26.05%
* Caller ID - Number: 36.36%
* Last Call Return: 33.90%
* Selective Call Waiting: 20.00%
* Three-Way Calling: 18.64%
* Message Toll - Res: 25.00%

Qwest claims that this is not deregulation and that the PUC would have the ability to reregulate rates in the future. But such a claim is deceptive. Their plan would give the PUC the ability to investigate Qwest's rates, but the Commission would be limited in its ability to require rate reductions, as long as Qwest could find a single provider with rates for a similar service that was within 10% of its price. This means that Qwest could raise your phone bill to $70/month as long as it could identify some other provider that was offering a similar set of services for $63/month. If they could identify someone selling phone service for $100/month, they could charge you $110/month.

So, CUB projects that Qwest's plan would raise residential phone bills by more than $20 million per year initially and a much greater amount over time. In exchange for these increases, they are promising to invest an extra $2 million into expansion of DSL service. This does not even come close to being a proposal that is reasonable.

A Specific Response to Global Warming: Let's Take a Look at Cap-and-Trade

The environmental community may have its differences, but one thing that is gaining universal agreement is that we need to reduce our carbon emissions to address the rising waters and rising threats of global warming. So how do we do this? Three commonly discussed mechanisms include a cap-and-trade regime, a straight carbon tax, or direct carbon regulation (without the ability to trade emissions credits). Of these three, the one being discussed by the Western Climate Initiative -- and the one which has gained the most political traction -- is the cap-and-trade option. So next question: what is it?

The purpose of cap-and-trade is to reduce greenhouse gas pollution, the most common pollutant being carbon dioxide. And although carbon emissions do occur in nature, human emissions of carbon dioxide have increased astronomically in the past 150 years, due to fossil fuel use in our vehicles, our businesses, and our homes. A cap-and-trade would put a cap on greenhouse gas emissions that result from the burning of fossil fuels, at some agreed-upon level, and then gradually reduce that cap until we reach a sustainable level of carbon emissions that does not endanger the ecosystems we rely on. The State of Oregon has set a goal for itself of reducing carbon emissions to 80% of 1990 levels by the year 2050. As of yet, this goal has no teeth. But the legal enforcement of some carbon reduction goal cannot be far off, if the message of scientists, the interest of political leaders, and the level of general public awareness, are all taken as indications.

]]> Two big issues arise when discussing a cap-and-trade regime:

1) Where, meaning in what sectors of the economy, do we apply it? CUB believes strongly that any effective carbon reduction plan will have to be applied to all affected sectors: the transportation sector; the big industrial sector; and the utility sector. To be even more specific, here are the numbers: 40% of our nation's carbon dioxide emissions comes from the electricity sector (meaning electric utilities); another 33% comes from the transportation sector; 17% is produced by industrial processes; and an additional 10% from residential and commercial sources. A cap-and-trade could be rather easily applied to the utility sector, because it operates within a relatively finite and mostly regulated system, which would allow for implementation of another layer of regulation without having to recreate the wheel or start from scratch. That said, we think cap-and-trade or complementary regulations must encompass all major sectors, because of the potential for bleeding into one another. For example, if only electricity generation were carbon-regulated, people could just choose to install natural gas for heating rather than electricity; this avoids carbon-regulation cost for the individual, but also avoids carbon reduction in the larger economy. Similarly, a societal shift to plug-in hybrid vehicles is simply moving emissions from one sector (transportation) to another (utility). So CUB thinks carbon regulation must be applied across all major economic sectors.

2) Where do the credits start out? Credits, or allowances, can be auctioned off by the government to companies in the various sectors, and then government can use that money to fund clean energy research and development, and building large renewable projects. State or federal regulatory agencies (depending upon who passed the carbon regulation laws) would provide oversight and assess stiff penalties for not meeting carbon reduction goals or keeping emissions within the allowances purchased. A potential problem that arises in this scenario is that the government could conceivably spend the money on tax cuts, military spending, health care, education, or some other preferred government priority, and then we would be not very much closer to a solution on the energy front. But ideally (from a global warming perspective) government would turn around and invest the money gained from carbon allowances in energy efficiency, conservation, and renewables, which will directly address the problem.

Auctioning allowances is expected to work well in certain sectors, where government is either responsible for the infrastructure that shapes emissions levels (such as transportation), or where government is able to shift the clean energy investment from one sector to another, when emissions reductions may not be directly possible (such as in the case of an industrial plant that cannot be retrofitted to reduce emissions). The scenario goes something like this: A manufacturing company is required to meet declining carbon emissions standards, but there's nothing they can do -- there is no retrofit for their plant to reduce carbon. So they go to the carbon credit market and purchase the credits they need to meet the standards. That money is then invested by the government elsewhere to clean the system. Company management raises the cost of their product enough to cover the cost of the credits, passing that cost along to their customers, and other parts of the economy become more efficient. The system becomes greener and the entire ecosystem becomes one step more stable.

Giving allowances for free to industrial companies opens up a potential problem, what we will call (tongue in cheek) the windfall pitfall. This would be a scenario where government gives allowances for free to the company, they are able to retrofit their operations relatively inexpensively to reduce emissions; however, they still pass along a higher cost to customers, letting shareholders reap the benefits of the free allowances when they are sold to other emitters. This is specifically a pitfall associated with giving allowances to unregulated, for-profit companies, and would not apply to regulated utilities, since regulators examine costs and profits closely and would not allow such a corporate windfall to occur (because we won't let them!).

Regulated utilities are a unique entity, combining a system of existing regulatory oversight with ever-changing resource portfolios offering many opportunities for direct emissions reduction. Regulated utilities have numerous ways to reduce emissions, such as energy efficiency, distributed generation, or replacing dirty generation with clean energy. For example, an electric utility company would mostly likely meet its goal by shutting down coal plants, a carbon-intensive power source. If a company were to shut down a coal plant and be 10% under 2005 levels, when only 5% under was required, they could sell those unneeded credits and invest the money in a replacement. Each year, the idea goes, the cap would reduce emissions even more and the system would become greener.

That is why CUB prefers a cap-and-trade design that auctions allowances generally, but gives free allowances to regulated utilities. Regulators will prevent corporate windfalls and can see that the value of the allowances is invested for the benefit of customers and the climate. Also, CUB recommends giving credits to regulated utilities rather than auctioning them off, because it seems to better meet CUB's two major criteria for a carbon regulation scheme, which are: 1) effectiveness; and 2) affordability. One benefit of giving emissions credits to utility companies is that that is where the investment in clean energy has traditionally happened and needs to continue to happen, at an increasingly fast rate. It seems to be the most effective route. Equally important, giving emissions credits to regulated utilities would make the greening of the system more affordable for customers. If the utility has to buy credits to begin with, it will make it harder for customers, on whose shoulders the cost of regulation will be falling, to pay for the new investment in cleaner energy sources. Electricity is a necessary service in today's world and people of all income levels must pay for its use; we want to make sure that lower-income people are not "priced out" of being able to use the heat and appliances they rely on in daily life.

Ownership of the credits will be a sticky problem to solve under some scenarios. CUB feels strongly that customers have invested in the system that exists now, and customers should receive the benefits when the dirty power sources in use currently are retired and credits sold. As a general principle, we feel that carbon credits should go to whoever is going to be building a new clean system, and customers will be footing the bill for their utilities' investments.

We chose to focus in this article on cap-and-trade, because of the political traction it has gained in recent months. While cap-and-trade has advanced significantly further politically than a carbon tax, there are many who would prefer to enact a carbon tax. We agree that it is appropriate and necessary to compare these two carbon reduction options, but we hope that these discussions can happen in a way that is not damaging to either option. We need to enact one or the other within a relatively short time frame, to start turning the temperature down.

CUB 2008 Legislative Report

The Oregon legislature completed its supplemental session to test drive going to annual sessions. It was scheduled to go from Feb. 4th through Feb. 29th but legislators managed to end a week early on Feb. 22nd.

The number of bills that were allowed to be introduced was limited so CUB had a very narrow agenda. There was opportunity to work on a global warming bill, an energy efficiency bill and we monitored the bill to give OMSI money and a bill to upgrade the business energy tax credit. Here's what passed and what went by the wayside:

]]> 1) HB 3610 - The global warming bill. Although the bill was not onerous on Oregon industry, requiring little more than carbon emissions reporting from industries that were by and large already reporting (or expecting to), the bill generated a tremendous amount of controversy. Big polluters' lobbyists used the bill to "take a stand" on their right to emit whatever whenever. The bill died in the Ways and Means Committee. We will be addressing the issue of carbon emissions again, frequently.

2) HB 3612 - Energy efficiency in state buildings, requires that state agencies reduce their energy usage by 20% by 2015. We attempted to get this bill through in 2007 but didn't quite make it. This time, we did a lot of negotiation and did get the bill through, within a very tight timeframe.

3) OMSI - This Portland landmark received $1.6 million in state assistance, as expected. So, they have got all but $300,000 of the $4.6 million they originally sought. (This was an important issue for CUB to follow after the Legislature attempted to divert energy efficiency funds to OMSI during the 2007 session.)

4) BETC - The Business Energy Tax Credit was expanded to allow greater amounts to go to renewable energy manufacturers, without undercutting other BETC users like energy efficiency projects and the like.

So, here's a big question: did the legislature show that annual sessions could work? Well, the question is still open. Nothing bad happened but nothing extraordinary either (unless you count them finishing up ahead of schedule!).

We are very pleased to have made a large step forward for energy efficiency in state buildings, and we feel that the expansion of the BETC will be significant in the long run. Much work remains to be done in the field of global warming, and we are busy talking with allies about what tack to take on addressing global warming issues with the Legislature when they return in January 2009.

Thanks as always for supporting our work in Salem with your attention, your donations and your grassroots action.

PGE's Management Cannot Control Costs So They Want to Raise Rates

Yesterday Portland General Electric Co. filed a general rate case, its last one having closed all of 2 weeks ago. Among their requests of the Public Utility Commission is an increase in their profit margin, from 10.1 to 10.75%, which could earn shareholders tens of millions more annually; and a sizable increase for general Operations & Maintenance and Administration & General costs. Altogether, residential customers' rates would jump 9.5% if PGE's request is granted.

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We think they're way off base here. First off, the timing is not great. As we said, PGE's most recent general rate case, a yearlong process, has only just recently been completed. Until recently, PGE was filing general rate cases every 4 or 5 years. This aligns reasonably well with the regulatory framework which assures utility companies that their investment of hundreds of millions of dollars in power plants will be recompensed by customers; and assures customers that they will pay a moderate profit margin, and no more, to the company for taking the risk and managing the business well. General rate cases are the forums in which these new investments are examined for prudent management, and then brought into rates. It is unusual to say the least for a company to file general rate cases only one year apart with no large capital investment to provide a reason for the filing.

Secondly, let's look at this large increase in O&M and A&G. For example, there are 130 new staff positions listed in the filing, at a time when PGE should be trimming controllable costs. We have so far found no persuasive driver for this staffing increase. We have already indicated to PGE that we will be going over their proposed cost increases with a fine-toothed comb. And although we have only begun the process of analyzing PGE's rate increase filing, we expect to find a fair amount of unnecessary cost increases in it.

PGE customers have already been hit hard with numerous rate increases due to both investment in new power sources, and the suspension of the Residential Exchange (which had functioned for several decades as a way to share the benefits of the federal hydropower system with customers of investor-owned utilities). PGE customers are going to be facing the same rate increases from higher fossil-fuel costs that the rest of the country is facing, and PGE's continuing investment in new resources (something that was neglected during the 1990s under Enron) will require customers to pay up once more.

Asking for a larger profit margin at this time seems totally inappropriate. Interest rates are falling as the U.S. heads into a recession. Lower interest rates should cause the utilities' borrowing costs to decrease, and this should in turn lower profit margins. For PGE to ask for an increase, when it was only recently reset, is outrageous. In addition, The Oregonian reported on its front page yesterday that not only are gas prices expected to hit $4/gallon in the next year or two, but also (in a separate article) that the average residential electric bill would hit $100 if the PGE increase were to go through.

PGE is not controlling its costs well. Some costs are necessary and we ask only that they be least-cost and prudently incurred. Some of the necessary costs coming onto PGE's books in the near future, but which are not included in this filing, are: 1) new generating power plants; 2) hydro relicensing; 3) clean air costs for Boardman coal-fired plant; and 4) smart meters (which CUB has opposed but the Commission has yet to rule on). These combined projects will cost hundreds of millions of dollars. From CUB's perspective, customers cannot afford to add unnecessary increases on top of the ones which cannot be avoided. We pay PGE a Rate of Return in order to manage the company and our electricity delivery in an efficient manner, and they are failing to do so.

Come on, PGE!

Meet CUB's Shaich Interns

For many years, now, CUB has been benefiting from the life and legacy of one of its earliest supporters. Way back in 1983, OSPIRG recruited a group of college students to work on gathering signatures to put on the statewide ballot the creation of an organization that would fight for consumer rights on utility issues. Three of the young people who answered the call were Jeff Bissonnette, U of O freshman in political science, Kevin Masterson, junior in economics, and Eric Shaich, junior in economics.

Jeff went on to a career in community organizing around the country, returning to Oregon in 1998 to become CUB's Organizing Director. Kevin went on to work at Oregon's Department of Environmental Quality, and served 2 terms on CUB's Board of Governors, including one term as Board Chair. Eric, an honors college graduate, interned at EcoNorthwest and then accepted a job at Bonneville Power Administration. All three, as well as others who worked on the original CUB campaign, continued to be active in politics and energy issues.

In 1991, at the age of 27, Eric Shaich died of Hodgkin's disease. He is remembered as a person with an unusual combination of determination, idealism, intellectual accomplishment, and easygoing humility. Soon after Eric's death, his parents, Harry and Gloria Shaich, approached Bob Jenks of CUB about setting up an endowment out of the proceeds of Eric's estate to work on some of the things he cared most about: energy, environmental advocacy, and education.

]]> A fundraiser in 1993 that featured consumer advocate and Oregon State Representative Bev Stein helped grow the endowment and get the word out about the creation of this program. An advisory board of family and friends helped get the trust set up, transferred to CUB, and on its way.

Since the mid-1990s the Eric Shaich Memorial Fund Internship Program has funded an impressive series of interns, students who handled various projects for the CUB staff on their own way to a career in energy policy, or non-profit management, or some other related field. Today, we want to share a few of the stories of our Shaich interns with you.

Jed Jorgensen, Shaich Intern 1999. Jed currently works as the Marketing and Communications Manager of the Climate Trust. The Climate Trust funds projects that reduce, avoid, or sequester carbon dioxide emissions. During his time as an intern at CUB, Jed compiled research on Energy Star (certified energy efficient) products and submitted op-ed pieces to newspapers around the state encouraging consumers to increase the efficiency of their household appliances. In addition, Jed collected signatures in support of Measure 90 (which sought to prevent PGE from collecting profits from ratepayers on its failed Trojan Nuclear Power Plant) for the 2000 election.

Walidah Imarisha, Shaich Intern 2001. Walidah has recently returned to Portland after spending several years in Philadelphia working on a wide variety of social justice issues. She produced a documentary about the after-effects of Hurricane Katrina in New Orleans and is a poet. Catch her spoken word performances if you can!

Linda Tomassi, Shaich Intern 2002. Linda worked to help defend the Energy Trust of Oregon from attacks during its early years, creating fact sheets and speaking to neighborhood groups. Linda currently works as the Administrative Director of Oregon Women Lawyers, and is serving her first term on the CUB Board of Governors, where she brings fierce enthusiasm and formidable organizational skills.

Melanie Leaf Bissonnette, Shaich Intern 2003. Melanie worked on scheduling forums for low-income energy efficiency issues, and updating organizational information for the Fair and Clean Energy Coalition. Melanie currently works as the Web Coordinator for the Energy Trust of Oregon, and is a licensed Massage Therapist. She and Jeff were married in Fall of 2006 at the Malheur Field Station with close friends and family in attendance.

Ken Snider, Shaich Intern 2004-2005. Ken brought his experience with Community Media and his studies at the Non-Profit Management Center of PSU to CUB. He helped revamp our website and improved our grant-writing capabilities. Ken is now working with the Metro Hazardous Waste Recycling Program and volunteering with the Sierra Club trying to protect Oregon's high desert areas.

Phillip Kelsven, Shaich Intern 2006. Phillip is currently Evaluation Analyst with the Energy Trust of Oregon, and founder of The Future of Energy Group for young energy professionals focused on moving our energy economy in a greener direction. Phillip received an Applied Energy Economics Certificate from PSU, on his way to a Master's degree in Economics, and did loads of research for us on the utility tax reform issue, as well as utility mergers then in process.

Alice Bray, Shaich Intern 2006. Alice is currently working freelance with the Bonneville Environmental Foundation on solar power development issues. Alice received her J.D. from Northwestern School of Law of Lewis & Clark College. Alice wrote a white paper on the issue of Integrated Gasification Combined Cycle Coal plants, researched telecommunications privacy issues, and helped set up a well-received Symposium on Energy, the Environment, and the Law at Lewis & Clark. (This symposium led to CUB's staff attorney teaching a full course at the law school this past fall focused on Energy Law.)

Thomas Balcom, Shaich Intern 2007. Thomas is currently finishing up his Bachelor's Degree at Willamette University (also the alma mater for Bob Jenks). Thomas was a researcher and assistant extraordinaire to Jeff Bissonnette during the Oregon Legislative Session of 2007, an incredible asset during a busy time.

Jessica Aiona, Shaich Intern 2007-2008. Jessica recently graduated from Bowdoin College with a degree in Economics and Environmental Policy. At CUB, Jessica has researched telecommunications and energy issues, and she presented her ongoing work of "signature stories" of how clean energy projects benefit both the environment and the economy to the Oregon Apollo Alliance in January.

We gathered five of our interns together over pizza last week to catch up. Jessica, Alice, Ken, Jed, and Linda were able to join with Bob Jenks, Jeff Bissonnette, and Shannon Floyd on CUB staff. We had a good time and found out that the internship program got excellent feedback from participants. Many of the interns did not know about each other, and so we spent some time reminiscing about how connections were made (we haven't advertised for interns - all of them have come to us through word of mouth), and what skills were learned, whether setting up vendor relationships, researching technical issues, or organizing community events. Every internship has been totally different, based upon the skills and interest of the intern. Connections within the energy policy and non-profit community were one of the most valuable things most of our interns said they gained.

It's often been said that the energy and utility field is kind of dry and technical. CUB strives to break that mold by representing the people served by utilities, and CUB's interns bring fresh energy and ideas to our work. They are a vital part of our work and we thank all of them, and we appreciate the legacy of Eric Shaich which makes this internship possible.

Wireless Do Not Call List Rumors Untrue

We love it, here at CUB, when we are able to respond directly to a query and open up a topic for public discussion. Particularly if we can soothe some fears in the process. Such was the case this past week: Bob Jenks met with a CUB ally who asked about the rumors circulating about the necessity of registering cell phone numbers with a separate Do Not Call List. Emails have been asserting that soon cell phone numbers will be released in the form of a national directory for telemarketing. The calls would be bad enough; that wireless users would have to pay for the privilege of receiving telemarketing calls would make it even worse. "If it's true, why isn't CUB talking about it?" she asked, "And if it's not true, why hasn't CUB let people know?" Luckily, it's not true.

]]> The day after the aforementioned meeting, the cell phone Do Not Call issue again came up, this time in a press release from the Oregon Public Utility Commission. The PUC stated that these rumors are untrue, and that cell phones are not about to become fodder for telemarketing. It is true that there has been some discussion among wireless companies of creating a national directory of wireless numbers, but so far this has not occurred, and it remains illegal for companies to use automated dialing to call wireless phones. The FCC, which has a page discussing this issue also, understands that a significant portion of the cost of telemarketing would fall on cell phone users who pay for all airtime, and we believe they will not approve something so inherently unfair.

There is one Do Not Call List, which was begun in June 2003. Over 100 million Americans have registered their numbers on the list, and anyone who wishes to have the extra protection may register their cell phone number on this list. The original plan was to have a 5-year limit on registration, but because it would involve kicking so many millions of voluntary participants off the list, the FTC is talking with Congress about options for extending registration beyond the June 2008 5-year anniversary.

So do not fear the terrible specter of receiving credit card offers and special travel deals while you're waiting in line at the supermarket or rushing to get home for dinner. And if they call you during dinner on your home phone, register that number with the Do Not Call List - soon!

Victory for Truth in Wireless Billing

If you are one of the millions of Americans who uses a cell phone, chances are good that you received an unwelcome surprise the first time you paid that wireless bill. Wireless telecommunications companies have for quite some time gotten away with advertising prices for their cell phone services that did not include taxes and fees (for example, the Universal Service Charge), which are then added to the advertised rates, so that the customer wound up paying more than they had thought they would.

For some customers, this is about to change, thanks to the National Association of State Utility Consumer Advocates. NASUCA, an organization to which CUB belongs, won the court battle against the big wireless companies, who have been told they can no longer hide certain fees in separate line items.

]]> The U.S. Supreme Court Tuesday declined to review an appeal by Sprint and T-Mobile in their bid to prohibit states from placing any restrictions on their billing practices, such as prohibiting adding unadvertised line items. Federal law prohibits states from regulating wireless carriers' rates, but allows them to regulate terms and conditions. Several states are pursuing truth-in-billing laws; but the wireless carriers want to prohibit such regulation, claiming that it somehow regulates "rates." The real issue is that they do not want to allow states to protect customers from unfair business practices, such as hiding costs in line items when advertising a billing rate.

Our (cold-weather) hats are off to NASUCA, and all those who worked long and hard to bring truth in billing to this branch of the huge telecommunications industry. CUB will keep this ruling in mind as we look into options for protecting Oregon's telecom customers. Consumers in states with truth-in-billing laws will have a clearer idea of what they are getting into financially when they sign a wireless contract. Perhaps one day soon consumers in Oregon will, too.

Our Year Looks Busy -- How About Yours?

As we open up a brand new year, we here at CUB have taken a moment to review the work that we know awaits us in the next 12 months. We share our list of projects with you, our members, so that you are aware of what issues and opportunities will be approaching in 2008.

]]> Legislative and Policy Work

First, we will be present during the Oregon Legislature's February 2008 Session. Although we respect the limited nature of this one-month session, we will be doing the following things, if time permits: 1) we will revisit the bill (which did gain some traction toward the end of the 2007 session) which would require 20% energy reduction in all state buildings by the year 2015; and 2) we will potentially be moving a climate change bill which would require state agencies to evaluate programs and policies in order to achieve the carbon reduction goals outlined in the 2007 Climate Change Bill, HB 3543.

For nearly a decade, CUB has led policy discussions regarding utility structure, regulation, and energy, and much of that has been through its leadership role in the Fair and Clean Energy Coalition (which helped create the Energy Trust of Oregon). We will continue to refine policy and gather major players as we look ahead to the more complete Oregon Legislative Session beginning in January 2009.

We will continue to be a key player in the Western Climate Initiative discussions, an inter- state and province group working to create solutions for global warming pollution reduction. The first meeting of this group in the new year happens this week here in Portland, and CUB's staff attorney, Jason Eisdorfer, will be there. A key goal of the group is to, by this summer, produce a model cap and trade bill, aimed at putting a limit on allowable levels of carbon dioxide emissions.

Because CUB and its sister organization, the CUB Educational Fund, have been increasingly involved in policy development, particularly with regard to energy issues, we have decided to change the name of the CUB Educational Fund to the CUB Policy Center. Same great staff, same high level of commitment and broad experience, same outreach and public education on utility issues, but we feel this is a more accurate name for the way the organizational work load is developing.

Regulatory Work

Where to begin? Well, how about with telecomm? Qwest has filed a request with the Public Utility Commission to remove price caps applying to basic local service, and to deregulate many other commonly used phone services as well (i.e., directory assistance). We are jointly filing a Motion to Dismiss this case later in the week. If the Commission dismisses the Qwest case, we will undoubtedly be fighting Qwest on raising rates in the Legislature again next year. If not, we will continue to fight them at the PUC this year.

Energy efficiency filings have been submitted by Portland General Electric and PacfiCorp, a direct consequence of a provision in the 2007 Renewable Energy Standards allowing the electric utilities to do more cost-effective energy efficiency. PacifiCorp's filing we expect to be approved shortly, while PGE's contains some problematic issues (such as a lost revenue mechanism which would raise customers' rates, and which we believe to be unnecessary).

There are tax dockets open for all the major privately owned utilities subject to the Utility Tax Reform Bill of 2005, SB 408. The first changes in rates resulting from the tax reform will be going into effect this year. PGE customers should receive a rate reduction this summer.

Speaking of PGE, we are battling Oregon's largest single electricity provider on the issue of Advanced Metering machines. PGE wants to spend millions of dollars on meters that do not require human meter readers, and claims that the move will save money down the line. At the same time, they are asking to have customers pick up the rest of the bill on the pilot set of advanced meters they installed near Mt. Hood 4 years ago. CUB cries foul and argues for waiting until the technology is more mature, PGE has less upward pressure on rates, and "smart" appliances are more readily available to work with the advanced meters on evening out peaks in usage.

Another case, questioning whether PGE acted prudently in the case of its long Boardman plant outage in 2005 and 2006, will take some time and will decide who should absorb the money lost while the plant was shut down -- PGE or customers. CUB is trying to make the company pay for its own mistakes.

PGE may also file a general rate case this year, asking for higher rates based on their capital investment costs. We hope not.

There will certainly be the annual power cost rate cases for both PGE and PacifiCorp, in which the companies forecast their 2009 rates based on market prices, hydro conditions, and available generating resources. Idaho Power, serving customers in Eastern Oregon with electricity, will also be involved in a case which will determine the structure used to forecast its variable power cost rates.

The major natural gas companies in Oregon, NW Natural, Avista, and Cascade, have their own variable power cost cases, called PGA (short for Purchased Gas Adjustment) cases. In addition to specific PGA cases for each company, CUB is heavily involved in a more general PGA Investigation, which is reviewing the basic structure of the natural gas rate setting process in Oregon. CUB is arguing in that case for continued sharing of risk between natural gas companies and customers, as opposed to putting all such risk onto customers; and a mechanism which would require the companies to absorb moderate increases in cost, while allowing companies to seek recovery of extraordinary cost increases due to truly unforeseeable circumstances (remember Katrina?).

Last but not least is the issue of the Bonneville Power Administration's distribution of federal hydropower benefits to residents of the Northwest. At issue specifically is the resolution of the disagreement regarding the Residential Exchange, a system which was used until May of 2007 to share the benefits of the BPA system with residential and small farm customers of privately held utilities. An interim agreement signed by BPA contract-signers (mostly publicly-owned utilities) would result in a long-term diminution of benefits to private-utility customers from approximately 16% one year ago to 2% at the end of the 20-year agreement. One consequence of this proposed distribution of benefits would be the shifting of benefits from Oregon to Washington, which has a higher percentage of public power customers. At the same time, BPA has made it nearly impossible for citizens to form a public and get access to cheap federal hydropower that way, leaving a dramatic gap between the rates of public and private utility customers, and leaving BPA on the wrong side of the Northwest Power Act.

CUB has been active in the policy debate surrounding the Residential Exchange and will file as an intervenor in the BPA rate case later this year, during which these issues will be hashed out at greater length, and with buckets of numbers.

We also have to be ready to respond to unexpected rate case filings, and individual member concerns. If another megacorporation comes looking to buy one of our utilities, or if a low-income assistance program needs help to stay on course, CUB will make room on the calendar to do that work as well.

We appreciate the support of our members as we continue in this new year with our consumer advocacy and energy policy agenda. May we stay strong working together in 2008.

CUB Wishes You and Yours a Happy Holiday Season

Today is the eve of the 2007 Winter Solstice, the center point of our season of cold, dark and (here in the Northwest) wet. It is a good time to reflect on the central purpose of our work through the Citizens' Utility Board, which is keeping necessary utility services -- including heat, light, and communications technology-- affordable and sustainable.

As 2008 approaches, we here at CUB hope that you and your family have plenty of the light, the warmth, and the connection with family and friends that we all need during the cold winter months. We also hope that the New Year brings us more opportunities to work with you in achieving the goals we share for fair and clean energy, and affordable (and privacy-protected) telecommunications.

A very happy holiday season from all of us here at CUB to all of you.

Bob, Jason, Jeff, Karen, Shannon & Lowrey

Governor Kulongoski Speaks Out Regarding BPA Residential Exchange

Oregon's Governor Ted Kulongoski spoke recently at the December 2007 meeting of the Northwest Power and Conservation Council. His comments were clear, concise, and spoke to a few issues CUB holds to be extremely important.

He reiterated a basic principle under which CUB has long operated: "Oregon agrees that conservation and renewable resources are the foundation of our energy and economic future." He spoke about the Renewable Energy Standard of 2007, which he first proposed last year, and on which CUB took a leading role, in bringing it to fruition as SB 838.

He went on to talk for several minutes about "one of my greatest frustrations: the sharing of the benefits of the Columbia hydroelectric system." He said that the issue is often discussed in terms of "public vs. private power." But as the Governor said, there is another way to look at it: "The reality is that families have little discretion in who they buy their power from. And currently some families are not getting a fair share of the Columbia hydro system benefits and as a result are paying significantly higher electric bills. As you know, I am referring to the BPA residential exchange program..."

]]> Governor Kulongoski spoke of his letter to the Bonneville Power Administration in August and his wish to see any future exchange agreements meet the principles of meeting historical averages of value and including an inflationary adjustment. Unfortunately, he said,"The recently reported utility agreements that I've seen and heard talked about meet neither of my principles. Under the agreement the rate credits drop under the average historical levels to around 10-12% of the system value, and they are flatlined for 20 years. Based on projected future system value, by the end of the contract, these credits will only represent about 2% of BPA value. So as Oregon's governor, I am looking at a proposal where three fourths of the State's families will essentially be getting no benefits from the Columbia hydro system within 20 years. Frankly, and as I said in my letter, I think this is unacceptable, and I believe that this Council should also believe the same. I ask that you join me in calling on BPA and our regional utilities to reconsider their proposal. At a minimum, any proposal should contain a mechanism to maintain the sharing proportions as time moves forward."

CUB supports the Governor in his call to ask the BPA and the region's utilities to create a proposal that is more genuinely fair to all those involved. We appreciate his knowledge and activism on behalf of a truly fair resolution regarding the residential exchange.

CUB Opposes Putting All of Natural Gas Purchase Risk onto Customers

The natural gas market has seen some major changes in the past 20 years. From a rapidly awakening generalized concern regarding global warming and the carbon dioxide emissions of fossil fuels, to the more specific and radical price volatility that occurred in the wake of Hurricane Katrina, the price for natural gas has been subject to major changes unknown in previous decades. How utilities purchase natural gas and forecast those costs into customer rates is a matter of (occasionally heated) discussion in a current Public Utility Commission case, UM 1286, the Purchased Gas Adjustment case. The current system was implemented, oh, about 20 years ago, and there are those who say it should be updated for a changing market in a changing world. CUB filed Opening Comments in 1286 this week with our own proposed changes.

]]> Natural gas utilities have traditionally procured their coming year's supply of gas through one of three ways: outright purchase and storage; contracts for guaranteed future delivery (costing whatever the market charges at that future date); or hedged contracts, wherein a third party takes on the financial risk of a significant increase in the future cost of natural gas, but for a fee. These hedging fees can, for a large gas utility over a number of years, run into the millions of dollars. It is the position of the PUC staff that Oregon utilities have been relying on hedging too much.

In the current system, when costs exceed the amount that was forecast -- and charged to customers in rates -- customers pay between 67% and 80% (depending on the utility) of the variation in cost, beginning with the first dollar of variation. This sharing of cost between customers and the company (the shareholders , to be exact) is widely held to be an acceptable way to manage the risks of unforeseen changes in cost in the realm of utility regulation. How and when those costs are shared is the crux of the matter, and it is here that CUB parts company not only with the utilities themselves, but also with PUC staff. Staff suggests that customers should pay for 100% of extra costs, above what was forecast, but with increased regulatory oversight of the purchase process (to trim out some of that aforementioned hedging). We respectfully disagree that this is a good idea.

CUB thinks that natural gas utilities should "have some skin in the game." We want gas utility managers to be worrying about the cost of natural gas; we pay them for their expertise, and we expect them to manage the supply and the cost of that supply more carefully if they know that they will bear a certain percentage of any increased costs. Furthermore, we don't think the company should be able to hand the unforeseen costs over to customers starting with the first dollar.

So CUB came with a three-step process for sharing that is similar to what we've recommended for Oregon's major electric utilities.

1) We start with a review of the utility company's earnings to ascertain whether they are within a "reasonable zone" of their expected earnings. Assuming the utility is allowed a 10% Return on Equity (ROE, aka profit margin), and if they are within 1% of that ROE (9-11% ROE), then no cost variations should be passed along to customers

2) Make sure that a deadband exists around the cost variation, so that the utility is expected to absorb a certain amount of normal changes in cost. This gets rid of the practice of charging customers for the first dollar of unforeseen costs. After all, managing the normal variation of commodity costs is not only an accepted risk of doing business, but is also why we pay the utility an ROE to begin with. The size of the deadband increases with the size of the utility, and is asymmetrical so that the company must absorb twice as much change in additional cost before charging customers as is necessary in decreased costs for a refund to go to customers (after all, it is more likely that costs would go up than down).

3) Finally, where there is extraordinary variation in cost, outside the deadband set for normal variation, customers would share the cost variation at 90%, with the company expected to absorb the other 10%. If costs are down, perhaps due to a warm winter and low demand, then customers would receive 90% of the variation in the form of a refund. Sharing ends when the company has been brought back within its reasonable earnings zone.

CUB feels that this is a good distribution of the risk of volatile gas markets: the company carries the burden of normalized risk, while the broad shoulders of a wide customer base are on hand to share the burden of a truly extraordinary change in gas prices. We certainly hope to see the Commission agree that taking all of the risk away from the utility and placing it on customers is inappropriate; the utility, which has control of gas purchasing, should share the risk of price volatility. 'Cuz that part of the equation isn't going away.

GAS FACTS
In developing our analysis, we studied Oregon's natural gas prices in comparison to the national average and prices in other Western states. Oregon's commodity gas prices were lower than the national average price for natural gas, and with the exception of an atypical year in 2002, lower than most other Western states' prices.

Natural gas is going up in price, partially because the demand for it is rising. Some reasons for increasing demand include: it is cleaner-burning than most other heating options (i.e., oil heat, wood heat, coal-generated electricity); is more efficient to burn directly to heat water for your tea or heat a house than to generate electricity and run it through the grid to your house to do the same; and is increasingly being used to generate electricity, which increases demand on a somewhat limited supply.

All fossil fuels, including natural gas, release carbon dioxide when burned; we appreciate the opportunity provided by NW Natural's Smart Energy program to contribute toward carbon offsets on their customers' gas bills.

CUB Monitors Additional Energy Efficiency Investments

Oregon's landmark Renewable Energy Standard, passed earlier this year, contains a provision allowing for additional electric utility revenues to be collected from customers to fund energy efficiency and low-income weatherization programs. PacifiCorp and PGE have just made Advice Filings with the Public Utility Commission; both utilities are requesting permission to make additional investments in energy efficiency, PacifiCorp an additional $8.5 million and PGE an additional $16.7 million. The additional investment is great, since the cheapest, greenest power is the power you don't have to produce.

Both utilities have requested keeping a certain amount of money to facilitate enrollment in energy efficiency programs managed by the Energy Trust of Oregon, and the low-income weatherization programs managed by the State's Community Action Partnership organizations. This makes sense, due to the fact that most customers have regular contact with their utility but don't necessarily know about all the great programs they might be eligible for to save energy. Account managers and customer service representatives at PGE and PacifiCorp can help connect residential and business customers with programs that will both save them money and reduce our overall energy usage. PGE, however, has requested an amount beyond what we feel is necessary to achieve energy efficiency goals.

]]> PGE is asking to retain a greater share of the increased funds for purposes that, we believe, stretch the parameters of the law. PGE plans to spend part of the increased funding on initiatives related to conservation; however, PGE has not explained how these initiatives are cost-effective. For example, PGE is designing a curriculum to teach public school students about energy. While energy education is a laudable activity, PGE provides no analysis that this reduces usage in a cost-effective manner. Just as we opposed the Legislature giving money to OMSI from the 3% "public purpose" funds designated to obtain real energy savings goals, we also object to PGE's lack of focus in this current filing.

Furthermore, PGE claims that a reduction in energy usage cuts into their revenues to pay for fixed costs of the system (i.e., poles and wires), and that the Commission should therefore approve a "lost revenue recovery mechanism" to reimburse them 4 cents for each kilowatt hour (kwh) of power which is not produced due to energy savings (the current price per kwh is about 8 cents). To which our response is a great big "WHOA!" Even assuming that PGE's theory is correct, and that they are losing money due to energy usage reduction, our analysis is that the amount lost would be no more than about 2 cents/kwh.

But we don't believe that PGE's theory is correct. Due to continual load growth (the Oregonian reported just today on a steady stream of people moving to the Portland area - 102,000 last year), we actually think that PGE is not losing money, that those fixed costs are being paid for quite adequately out of customer revenues.

PGE always has the option of filing a rate case to request a rate hike, if they are indeed losing revenues that should be covering fixed costs. That would require analysis of a great many numbers that PGE has not, in this filing, put on the table. We currently have no evidence to support PGE's argument that they need an additional incentive to invest additional money in energy efficiency.

Most importantly, Oregon's Integrated Resource Planning (IRP) process, which occurs through the PUC as well, already requires utilities to make the "least cost" and "least risk" investments. And the rising cost of fossil fuels and inevitability of carbon regulation costs makes energy efficiency more and more cost-effective all the time. This means that Oregon's utilities should be doing more energy efficiency, even without extra incentives (that may or may not be justified).

Utilities have always had a bit of a conflict of interest in doing effective energy efficiency. And our experience throughout much of the 1980s and 1990s was that utilities would often try to maximize the public relations benefit to the company of energy efficiency programs, rather than maximizing the actual energy savings. That's why it was such an important policy step to create an independent non-profit with the mission of getting the biggest bang for the consumer's buck in savings from energy efficiency. The Energy Trust has been averaging a savings of about 25 average megawatts of electricity every year for the past 3 years (and with a lower overhead cost than the utilities used to have to provide the same service). Pretty impressive.

We happily support the utilities upping their investments in these programs that help clean the system and lower rates for everyone. We just want to make sure it's done right.

Proposed BPA Settlement Is Unfair to Oregon

A proposed settlement regarding the BPA Residential Exchange has recently been reported on in the Oregonian. The settlement being discussed leaves a lot to be desired, decreasing Oregon's share of the federal hydropower system significantly.

]]> As we have talked about before, the Residential Exchange is the process by which the Bonneville Power Administration has for almost 30 years passed through some benefits of the federal hydropower system to customers of the Northwest Region's privately owned utilities. The hydro system was set up in 1937 primarily to serve underserved rural areas, many of which had publicly owned utilities. In 1980, the Northwest Power Act mandated that the benefits of the system be shared with small farm customers and customers of privately-owned utilities. The Residential Exchange, the mechanism for distributing these benefits to privately-owned utility customers, was suspended this past May following a court case brought by some of the Region's publics. With the suspension of Residential Exchange benefits, electricity rates for the majority of Oregon customers went up 14%.

The level of benefits being discussed in the current settlement is between $200 and $220 million per year. This initial figure, though low for the historical average of Residential Exchange benefits (it accounts for 8.8% of the system, down from 14.8% this time last year) is downgraded but not absolutely unacceptable. The real problem is that the 20-year agreement offers no escalation of benefits to keep up with market prices, load growth, or even simple inflation.

We know that load is increasing in Oregon, and much of that increase is to be found in the service areas of the privately-owned utilities. We know that inflation seems to be on an upswing. And we have absolutely no doubt that the cost of energy is increasing by leaps and bounds. As global warming is taken more seriously and carbon regulation is instituted, the market value of BPA's carbon-free hydropower will increase quickly. This includes power that is sold directly to the Region's public utilities and also surplus power that is sold on the market outside of the Region, the benefits of which flow back into the system.

The final year of the agreement, therefore, in 2028, would leave residential and small farm customers of privately-owned utilities, including all those served by PGE and Pacific Power, with 2.9% of the system. That's CUB's analysis, using fairly conservative numbers; an analysis by Oregon Public Utility Commission staff concludes the Residential Exchange share would be even smaller, at 1.8%. The settlement would not meet the intent of the Northwest Power Act to equalize rates amongst Northwest utilities and share the benefits of the federal hydro system.

Many people have said, "Alright, then, all we need to do is go form some more public utilities." Well, unfortunately, that option has been taken away as well. In the Record of Decision regarding BPA's plan for the next 20 years of power contracts, the BPA adopted a new long-term policy that severely limits access to BPA's cheap hydropower for newly-formed publics. As we've said before, this means you can't get in through the front door and can't get in through the side door. So far, we can't see any back door.

Approximately 75% of Oregonians are served by privately-owned electric utilities. This means that as the value of the federal hydropower system increases by leaps and bounds, those benefits will flow more to Washington customers while Oregon customers receive fewer benefits. Oregon's Governor Kulongoski wrote to BPA, saying that any agreement that did not include an escalation of Residential Exchange benefits would be unacceptable. We agree whole-heartedly.

CUB will urge the PUC to reject the deal, when Oregon's private utilities bring it to the PUC for approval. We hope that the Commissioners will find it was not a "prudent" agreement, did not meet the needs of its customers, and that therefore shareholders should be held accountable for some of the loss of benefits.

Oregon's Senators Wyden and Smith should hear from you on this issue. Call and let them know that they should tell BPA that, as the value of the federal hydro system increases, the benefit to Oregon customers should as well. Not doing so increases the disparity in rates between the average Oregon customer and the average Washington customer. We can and should do better.

Qwest files for phone rate deregulation

Qwest is at it again. Unsuccessful in attempts to move through a plan to deregulate rates (and therefore raise them) for basic phone service on the Governor's Telecommunications Task Force of 2006, and in the Oregon Legislative Session of 2007 (note earlier mention of SB 2621), Qwest has now filed a case with the Public Utility Commission trying to do the same thing. We've looked it over, and it isn't pretty.

]]> Qwest has filed a case with the PUC asking to raise the rate of basic local phone service and erase the price caps on many other additional phone services, as well. Their argument about needing more revenue lacks strength since basic telephone service is a declining cost industry, and has been for several years. Also, although Qwest may have been prohibited from raising their prices for most local services for several years, customers have seen increases on their phone bills, due to the FCC moving more of the costs of the national phone network onto subscribers' local phone service bills.

Qwest's filing would allow them to opt out of their current system of price cap regulation, which they chose out of a range of possible options in 1999, when Senate Bill 622 created the model of price cap regulation for Oregon under which Qwest has been operating. There was an assumption by those involved in the passage of SB 622 that the price cap regulation was a fairly permanent status change, and that only another legislative change would allow a change in that status.

Other options include traditional rate regulation based on the utility's rate of return (generally utilities earn about 10% above their rate of investment; this is the regulation PGE and PacifiCorp operate under); complete deregulation of services, dependent on the utility proving to the Commission that sufficient competition in providing those services exists to ensure a fair market; and an alternative form of regulation, which allows the PUC to set prices without regard to rate of return on investment. Whether Qwest can legally opt out of their current price cap regulation is a primary issue, as far as CUB is concerned.

Qwest is seeking price deregulation under a statute that allows the Commission to set prices without examining a utility's profit. A fundamental question, however, is whether this is legal. The Commission uses its regulatory power to set prices; can it use the same power to deregulate and not set prices? We are skeptical.

What is at stake is, of course, a great deal of customer money, and while the burden of increased rates would fall on every one of Qwest's customers, those hardest hit would be those with the least income who have only a single basic phone line. Those customers would see a $2/month increase sometime in the first 4 years, and then unlimited increases after that. All other phone services would be immediately eligible for unspecified (and uncapped) levels of price increase, including directory assistance, caller id, call waiting, unlisted numbers, and other optional phone services. (Voice mail service has been deregulated for some time and DSL service has never yet been regulated.) So, just for starters, Qwest could earn an extra $2 million per month on basic phone service, with greater increases from these additional phone services, and any increases they add to basic after the 4-year period is up.

What they have offered in return is a $1 million investment in network infrastructure in places that might not have been cost-effective (they say) to build in. And up to an additional $1 million for high speed connections for Oregon K-12 schools -- no base level of investment is guaranteed. We don't mean to be uncharitable ourselves, but do want to point out that a very small surcharge of less than 10 cents per month on existing basic service phone lines in Oregon for one year would give the same million dollars for schools, while Qwest would be pocketing at least an extra $1.9 million per month (or $1.90 per month per line) forever! When they were negotiating SB 622 eight years ago Qwest offered $120 million in network investments; it seems to us their negotiation offers have slipped somewhat.

One of the rationales Qwest gives for the attempt to raise local service rates is that they are subject to competition. We aren't disputing the increased competition in the telecomm world. But most of the competition comes from wireless phone services, which offers an increase in portability and convenience, which this filing doesn't address; and from the bundling of basic phone services with options such as cable television and internet, DSL, or wireless together on one bill (Qwest's main competitor in these fields is Comcast), and Qwest is quite capable of competitive bundling without this filing.

We're not impressed with the arguments put forth in Qwest's filing and we're not impressed with their going over well-traveled ground either, repackaging previous failed efforts to deregulate prices. But Qwest has successfully pursued this kind of rate deregulation in other states, and so CUB will file a response that attempts to keep Qwest's hand out of the proverbial cookie jar, once again.