December 14, 2006

Senator Don Perata, President pro tem, Chair
Senate Rules Committee
California State Senate
Sacramento, CA 95814

Re: OPPOSTION to the Appointment of Rachelle Chong to California Public Utilities Commission

Dear Senator Perata: Utility Consumers’ Action Network strongly opposes the confirmation of Rachelle Chong as a member of the Public Utilities Commission and asks the Senate to take the unusual step of declining to confirm her appointment. Two compelling reasons are her seeming conflict of interest and her EXTREMELY pro-industry orientation. Her bias is so strong as to effectively preclude her from any fair or reasoned review of complaint cases against telephone companies.

Her conflict of interest stems from the 8,684 shares of Lightbridge, Inc. stock that she owns (She is reported to have the rights to acquire another 63,553 shares) Lightbridge provides Telecom Decisioning Services (TDS) to phone companies. In fact, it is one of the company’s most lucrative units, and does most of its business with major wireless companies. It reported that almost one-third of its revenues in 2005 were from Sprint/Nextel, alone. See Lightbridge’s form 10-K filed with the SEC for the end of the 2005 fiscal year. In mid-2006, Lightbridge announced a major contract with Alltel, another large telecom company.

While this doesn’t constitute direct ownership in a company that is regulated by the CPUC (and thus not a statutory violation), Chong’s persistently pro-industry decisions create a presumption of bias that is further enhanced by her financial and fiduciary interests on behalf of Lightbridge.

Chong’s pro-industry leanings have become extreme, almost to an unimaginable extent. Perhaps her most egregious action has been the last-minute language that she inserted into D. 06-08-030 which the industry (and possibly the Commission) has seized upon to challenge specifically crafted penalties against retrobate telecom companies. For example, SBC was subjected to marketing prohibitions in D. 01-09-058 to stop the company from misleading consumers. AT&T claims that Chong’s language in D. 06-08-030 effectively “eliminates asymmetric marketing, disclosures and previously mandated administrative processes.” The entire clause drafted by Chong at the last-minute, reads:

This language effectively hamstrings any enforcement actions against telecom companies as it might preclude the Commission from ordering the companies from changing their practices. The Commission is has subsequently allowed this language to remain in effect, thus causing a troubling precedent for all telecom enforcement cases. And beyond that, it sends an unmistakable signal to the industry that the Commission will not discharge its enforcement responsibilities with any fervor.

UCAN has been advocating on behalf of San Diego residential and small business consumers for over two decades; UCAN has only once before opposed the appointment of a Commissioner. For those 20 years, UCAN has been able to work with all Gubernatorial appointees, no matter the party-affiliation or ideologic persuasion. However, it has become obvious over the past year that Rachelle Chong cannot serve California’s consumers in a thoughtful or constructive manner.

California consumers deserve a Commissioner whose top priority is promoting and protecting their interests. California does not need a CPUC member driven by the mantra “what’s good for the large phone companies is good for consumers.” Unfortunately, Rachelle Chong appears to deem promoting and protecting the “market” and the large, entrenched companies that dominate those markets as her primary concern. Further undermining our confidence in the prospects of Commissioner Chong is her determination to ignore actual facts and allow her decisions to be driven by ideology. The most telling example is the assessment of whether or not full-fledged competition exists for particular utility services. There is no disputing that for many Californians, there is no meaningful competition for local phone service – the incumbent local exchange company is the only realistic choice. Yet, Ms. Chong led the effort to “conclude” that competition in California’s telecommunication’s market was sufficient to allow the CPUC to eliminate most regulations governing local phone service, Where the ideology was undermined by factual evidence, the evidence was ignored. As a direct result, Californians that need the protection of utility regulation will be without it.

While serving at the CPUC during 2006, Ms. Chong has amassed an anti-consumer record best summarized as giving the industry what it wanted over consumer objections, all couched in the name of promoting “competition.” Her disregard for public debate and proven facts is unique amongst the many Commissioners that UCAN has advocated before over the past 20 years. In its opposition letter, TURN detailed many examples of her distain for fact-based decision making. UCAN confirms that in all of its efforts before the Commission, Chong has exhibited little regard for the interests of the consumers who she is charged with protecting.

Her lead role in dismantling of the Bill of Rights is one of the lowlights of her tenure and the history of this Commission. Since that dismantling, Chong continues to serve as the phone industry’s advocate at the Commission. During the so-called “Consumer Protection Initiative” process that Chong chaired, UCAN witnessed how she gave the industry free reign to control the process and outcome. The result of the process was so embarrassingly one-sided in support of the industry that Chong was subsequent forced to abandon all of the consumer education work completed. UCAN is unable to identify even one instance when, having to choose between an industry-supported position and a consumer-supported position, Commissioner Chong supported consumers. The thought of her serving on the CPUC for an additional five years to concede a dedicated industry seat to the theoretically impartial CPUC for that tenure. For all of these reasons, UCAN urges the Senate to not confirm Ms. Chong for this position.

Respectfully submitted

Michael Shames

Executive Director