Consumer Federation of California

Consumer groups urged a Senate committee Wednesday to reject Gov.
Arnold Schwarzenegger’s appointment of a former telecommunications
industry attorney to the California Public Utilities Commission.

The Consumer Federation of California, The Utility
Reform Network and other groups said Commissioner Rachelle Chong’s
views were too close to those of the companies she is supposed to
regulate.

"Her track record in the past year shows she will not be with consumers," Ignacio Hernandez, legislative director for the Consumer Federation of California, told the Senate Rules Committee.

"She’s for free markets, less regulation, less consumer protection."
Chong said she cares "very much for consumers, particularly ones
that are the most helpless." But she added that she has philosophical
differences with consumer groups about how to deal with competitive
markets.

She said her approach was "trust, but verify. You hope that the market works, but if it doesn’t, the PUC steps in…."
Schwarzenegger appointed Chong in January 2006 to fill the rest
the term of Susan Kennedy on the PUC after the Republican governor
named Kennedy, a Democrat, as his chief of staff.

Chong also was nominated by former President Clinton in 1993 to
fill a Republican slot on the Federal Communications Commission,
serving until November 1997.
The five-member Rules Committee, which advises the full Senate
about whether to approve gubernatorial nominees, delayed a vote on the
appointment until next week.

The panel’s chairman, Senate President Pro Tem Don Perata,
D-Oakland, said the delay would give lawmakers adequate time to
consider the nomination.

"We don’t make too many decisions that are as important as this one," he said.
Perata also told Chong, "Don’t read anything more into this than
it’s Don’s way of making sure everyone has an opportunity to kick the
tires."

Chong needs to be confirmed by the Senate by Jan. 12 or leave the Public Utilities Commission.
Consumer advocates’ criticism of Chong focused on two actions in
particular – her insertion of language into a telephone industry rate
deregulation decision and her role in scrapping a bill of rights for
cell phone customers.
AT&T, which requested the Chong language, later contended
that it freed the telecommunications giant from certain consumer
disclosure rules.

Chong said the other commission members were advised of the
language that she inserted into the rate deregulation decision and
should have known what they were voting on when they approved it.

She said the commission was re-evaluating that action in response to AT&T’s declaration.

"We will look at it vigorously," she said.

In place of the bill of rights, which among other things gave
consumers 30 days to cancel cell phone contracts, the commission opted
for a program that included a multimillion-dollar consumer education
campaign intended to prevent fraud.
Chong said the state of the cell phone industry had changed
since commissioners began considering a bill of rights six years ago.

She said many cell phone companies, for example, give customers varying
times to cancel contracts.
"We felt that the market was taking care of the problem," she
said. "If you wanted a low-cost plan, you could go with a small carrier
that maybe had a shorter return period but was less expensive."
The bill of rights, she said, "took what I believe was a very
regulatory approach…The new approach looks at every problem
specifically and tries to understand if this is where a rule is
required.

In many instances, we felt we had rules and code sections
that (already) resolved the problem."
She said the commission also figured that "consumers would vote
with their feet" and that cell phone companies that provided bad
service would lose customers.

But Sen. Alex Padilla, D-Los Angeles, said consumers are still
experiencing problems with cell phone companies and implied that Chong
had been too quick to support dumping the bill of rights.

Consumer advocates said those problems include customers unwittingly buying polices at prices they cannot afford.
"If the marketplace was practicing as you’re arguing (it is),
there would not be a need for a…bill of rights," Padilla said. "These
problems would not be happening. The fact is, they are."