Regulators' Roles Increase in Scope and Complexity

Public utility commissioners matter. A lot. Now more than ever, these state regulators are charged with looking out for the best interests of utility customers in states that have regulated electric and other utilities.

As we’ve seen from countless recent news stories, public utility commissions (PUCs) play a significant role in determining what power system assets operate, where, and how. Whether the issue is granting carve-outs or re-regulation protection for certain generating assets, determining appropriate rates for customer-sited generation (see the Legal & Regulatory column for more on this issue), or the appropriate cost recovery for an increasing variety of energy resources and energy management plans, the regulator’s role has become more complex in a short amount of time. That’s true not just on the traditional first-mover West Coast. It’s also true for Hawaii, New York, Ohio, Nevada, Arizona, and just about everywhere in between.

PUCs are primarily economic regulators for essential utilities, but in considering what expenditures and rates are warranted, they must understand policy directives and technology options as well. And that’s not just on the generation side. Regulators are also dealing with the ways in which new technologies interact with the grid from end to end.

PUC commissioners aren’t just responsible for electric utilities. Depending on the state, they may also regulate water and gas utilities, telecommunications and internet service providers, and transportation—including taxi companies, Uber, and Lyft. That latter category is experiencing its own digitally driven business model transformation (or crisis, depending on your perspective).

An Ideal PUC Commissioner Resume

As I’ve watched the issues facing PUC commissioners become more complicated, I’ve tried to create a resume for an ideal candidate. He or she should have degrees and working experience in all the areas being regulated—plus a deep understanding of evolving digital technologies and business models. Instead, what commissions often get are individuals who are more interested in developing a resume that helps them pursue larger political ambitions. That in itself isn’t necessarily a bad thing. In fact, experience with the basic services upon which everyday life and all businesses depend could be useful background.

So, here’s my wish list for an ideal candidate for PUC commissioner in any state. Absent some or all of these qualifications, we have to hope that commissioners are backed by, and listen to, the expert counsel provided by highly qualified PUC staff.

A Willingness to Be Fired. This top requirement is courtesy of Travis Kavulla, vice-chairman of the Montana Public Service Commission and outgoing president of the National Association of Regulatory Utility Commissioners (NARUC), who wrote this month’s Commentary. “All too often,” Kavulla told me in an email, “regulators are really tepid and exist in constant fear of not getting reappointed or re-elected.” I love that this came from an actual commissioner, because to properly serve as a watchdog, a regulator should have the courage to do what’s right, independent of pressures from the governor who made the appointment or the voters of the political party that elected him or her—and independent of the companies being regulated.

Intelligence and Education. A person can be highly intelligent but have little formal education; however, intelligence alone is insufficient for today’s PUC commissioner. Even with the support of specialized professional staff, a commissioner needs to have the proven ability to absorb vast amounts of highly technical, often contradictory information and analyze that material quickly and fairly. That’s why I would make, at minimum, a four-year college degree mandatory for PUC candidates. (This might seem obvious, but it is not a requirement in all states.) Ideally, the individual would have education or experience in engineering, science, public policy, and law. Lacking grounding in each of these areas, candidates should demonstrate interest and self-education in these fields.

Integrity. Commissioners and candidates for PUC service should demonstrate impeccable personal and professional ethics. Though a certain amount of “outside influence” is practically guaranteed by the way commissions work (after all, the industries being regulated are the experts in those industries, and they act in their self-interest), commissioners are expected to hold consumers’ interests above those of regulated entities. Sadly, some states have seen commissioners accused of corruption and bribery, or even convicted and jailed for crimes.

Curiosity. The technologies and services that commissioners are tasked with regulating are changing so rapidly that few individuals can stay current with all the issues surrounding each new development and how it might challenge the status quo. Drawing a straight line from projected demand increases to new capacity and rate increases, as was typical in the past, is no longer possible. That’s why intellectual curiosity—beyond one’s academic training—is crucial.

Another Vote That Matters

Most commissioners are appointed to their positions by their governor or legislature, but commissioners in 14 states are elected. As of October, NARUC listed 208 commissioners as appointed and 58 as elected. At the 2015 NARUC meeting, I asked a number of attendees (a totally unrepresentative sample) if they thought elected or appointed commissioners were better. Nobody would commit to an answer.

This column heads to the printer just after the November election, when many readers will have voted for PUC commissioners. I hope you took that vote seriously and helped friends and family understand the important role these regulators play. ■

Gail Reitenbach, PhD is POWER’s editor.


SHARE this article