Parallel deregulation bills introduced in Hawaii House and Senate...

Parallel deregulation bills introduced in Hawaii House and Senate would establish price cap regulation system for Verizon Hawaii, state’s only incumbent telco. Legislation (HB-2255 and SB-2864/SB-2874) would establish indexed cap system that Verizon, currently under rate-of-return regulation, could elect. Alternative system would cap basic local service at rates in effect at time of election, with annual adjustment for inflation as measured by Gross Domestic Product Price Index. Inflation adjustment would be limited to maximum of $2 annually during first 3 years of program unless exogenous factors including terrorist acts substantially changed carrier’s costs. Access charges would be capped, with carrier allowed to raise basic local rates to offset PUC-ordered access charge reductions. Retail rates could be cut by any amount as long as they stayed above long- run incremental cost. Rates for nonbasic and competitive services would be deregulated, except for ban on below-cost pricing. There would be no explicit prerequisites or trade- offs for election of price caps. Verizon supports legislation while Hawaii PUC hasn’t yet taken stand. Another new Hawaii bill (SB-2272) would shift regulatory jurisdiction over cable TV from state Dept. of Commerce & Consumer Affairs to state’s counties. Bill would require cable TV operators to pay gross receipts surcharge to counties.