CPUC blesses deceptive accounting by SBC

Customers lose hundreds of millions in refunds

For Immediate Release From The Utility Reform Network

A CPUC vote today, taken amid allegations of "open meeting law" violations, permits SBC to swindle its customers out of more than $350 million in refunds. A majority of the deeply divided Commission chose to ignore the results of a legally mandated audit of the phone giant and violations of the Commission’s accounting rules and decisions. The refunds are owed to customers because SBC failed to record nearly $2 billion in profits over a three-year period during which they were required to share excess profits with consumers.

"An independent, unbiased auditor chosen by the Commission itself determined that SBC had been cooking the books in order to avoid refunding customers’ money" said TURN executive director Bob Finkelstein. "Rather than following through on its own process, the Commission is turning a blind eye toward SBC cheating California consumers out of hundreds of millions of dollars."

The decision comes at the end of a long process in which SBC repeatedly did its best to scuttle the audit. When the audit went forward over its objections, SBC resisted the auditors, cried "bias" when the unfavorable report came out, and finally unleashed a furious lobbying effort in hopes of avoiding a CPUC decision that would require it to refund the money it owed to customers.

"This outcome was pre-ordained last spring, when CPUC president Peevey re-assigned the case from Commissioner Lynch to Commissioner Kennedy, a consistent pro-utility vote since her appointment to the Commission" Finkelstein said. "The ALJ who reviewed mountains of evidence in the case issued a proposed decision ordering the refunds," he added. "The Kennedy alternate decision generally ignored that evidence, agreed with the utility and slashed customer refunds."

Finkelstein said TURN was also concerned about allegations that "serial meetings" among the Commissioners in violation of the Bagley-Keene open meeting law had influenced today’s vote. "If the Commission serves only to rubber stamp whatever the utility does, even if customers are being robbed, it should be on SBC’s payroll, not the public’s."