Saturday, October 29, 2005

LUS filing exposes BellSouth's real agenda

LUS has responded to the BellSouth lawsuit according to reports in both the Advocate and the Advertiser. That suit aims to cripple LUS' ability to do business by making LUS appear to the bond market as an independent start-up with no resources. If successful, it would raise the costs of bond-based borrowing and increase the cost to LUS customers.

And that’s the whole point of the lawsuits: to raise the cost to LUS’ customers.

This has been a consistent goal of the incumbents; the in lieu of tax “controversy,” for instance, had little to do with taxes (since none were to be collected) and everything to do with increasing the bill presented to customers by the amount that LUS would have to have increased it if it were collecting for those taxes. That’s in a clause BellSouth and allies got included in the (un)Fair Competition Act passed by our legislature.

The incumbents ought to try competing in the classic, classy way. That will involve lowering their prices instead of engaging in legislative and judicial tricks trying to raise the costs to the competition. But the only company involved that has promised to pursue actual price competition is, shock and surprise!, the pubicly-owned local utility. Those who persist in seeing this battle through rosy ideological lenses that paint all private corporations as good guys really ought to rethink. Our situation wherein a local, publicly-owned utility is squared off against monopoly monoliths with a proven record of monopoly practices should really be a learning experience for us all.

As usual, Kevin Blanchard over at the Advocate has the more complete version of the story and walks the reader through the conceptually tough bits. The (un)Fair Competition law in question provides for pledging resources for the explicit purpose of getting the best rates. That’s pretty clear; you get to pledge your assets in the way that will result in the lowest cost to the citizens of Lafayette. Easy. But not so easy for BellSouth apparently.

From the Advocate account:
"This language is seemingly clear and explicit to anyone, except BellSouth. The City is entitled to use the 'resources' of its other utilities," the LUS response says.

"It is self-evident that the bond market requires maximum security," to secure bonds, LUS wrote.

State law also calls for governments to "not be precluded from" common practices of private companies, LUS wrote in its response.

"Surely, even BellSouth will not contend that it is not 'legally permitted to engage in' the pledging and payment of its corporate debt by its corporate parent," LUS responded, quoting a portion of state law.
The point that LUS should be permitted to engage in any practice its private competition regularly resorts to is a good one. The legal standard, established in the law, by which “fair competition” should be judged is defined to mean that LUS should be allowed to do anything that its private competition is allowed to do. Leveling the playing field is the ostensible purpose of the law. BellSouth’s actions make it clear that fair competition is the furthest thing from their minds as they pursue a strategy of raising the costs to their competition’s consumer so that they don’t have to lower their own to compete.