Shedding Light on PUC Decisions

 

 
  April 27, 2007
 
The line to distinguish lobbying for legislative purposes and judicial purposes is about to get a lot brighter. The Georgia Public Service Commission is taking up the issue in full view of the citizens -- a discussion that will pit utilities against consumer and citizen action groups.

Ken Silverstein
EnergyBiz Insider
Editor-in-Chief

Nearly all public matters must be vetted in full view under statewide "sunshine" laws that require open meetings. But what ordinary businesses and consumers might not be aware of is that utilities are working overtime with the public utility commissioners and their staff to advocate utility positions. By most accounts, they have the upper hand when it comes to getting what they want. That said, power companies have the burden of proof in most cases that go before commissioners.

The issue in Georgia is whether to ban all private conversations between commissioners and any party seeking to influence ongoing matters. Utilities such as Georgia Power and Atlanta Gas Light oppose any changes, arguing that each side of a discussion has an equal opportunity to pursue commissioners and this inherent right to lobby such decision makers should not be altered. Groups such as Common Cause and the Consumer Utility Council disagree, saying that the change in procedure would create more transparency and avoid imparting of partial facts.

"There is an easy line in terms of subject matter," says Billy Jack Gregg, head of the consumer advocate division for the West Virginia Public Utility Service. "No matter how many rules, people will have conversations in private. At no time, however, can anyone talk about a pending case before a judge or a public utility commissioner."

Georgia is one of two states that have no rules against "ex parte" communications between stakeholders and commissioners before a case actually goes into "pending mode." Critics contend, however, that most of the legwork is done well before the case is actually filed and hotly debated in public.

Public utility commissions, generally, have quasi-legislative and quasi-judicial roles. Commissions must inform themselves. Toward that end, they must go on legislative fact-finding missions. In those cases, they are not governed by the strict rules of evidence. The broad rule is then to "permit but disclose," says Gregg. That is, conversations can take place but the subject and the attendees must be revealed and in written form. A legislative role is considered to be any issue in which a case is not pending.

Most issues pending before regulators involve those to decide rates. In the case of regulated utilities, they receive an allowed rate of return on equity that's fair. The definition of "fair" is where the discussion begins. Because the markets don't set that return, the utilities must justify all of their expenses and then posit a suggested rate of return they feel is needed to keep investors happy.

Constant Access

Georgia Commissioner Angela Speir is the force behind changing the rule. In March she put the issue out for comment, with the full body expected to make a final ruling in May. Her view is that the commission makes decisions for the Georgia citizenry that add up to billions -- matters that are too sensitive and too important to discuss behind closed doors. By making the process more translucent, she argues that any bad data would be quickly noticed, giving the whole five-member commission a fuller picture.

But, the utility's lobbyists are polished and know how to work the halls of the state capitol and the regulatory maze. Some of commissioners won't discuss controversial issues with lobbyists unless it is in a public forum. Others do hold private meetings, saying that they must stay informed. That leads to protests.

"Commissioners are continually exposed to 'potentially biased' views on issues," says a comment filed by the AARP representing senior citizens. "Other parties to a case may not even be aware of these communications. Thus there are no 'checks and balances,' only opportunities for the most powerful parties to make their case known outside of a regulatory proceeding, and perhaps to the detriment of the other parties in the case. Strong ex parte rules are sorely needed."

Utilities in Georgia take a different position. They say that any revisions to the current process would impede the flow of information and thereby interfere with the public utility commission's legislative role. Utilities say that because they typically have the burden to build technical and political cases for their positions, they need constant access.

Deciding rate cases is not too different from judging other legal issues. It's an adversarial process in which utilities and interested parties line up and make their arguments in a public forum. Regulators act as judge and jury. Typically, settlements are reached and utility commissioners give their stamp of approval. Many tactics are used to arrive at an outcome, and some, like private meetings or special trips, are not without controversy.

"Historically, the commission has been considered a legislative body with some adjudicative functions," writes Atlanta Gas Light in its public comments. "Commissioners [like legislators] have been free to collect information from such sources in public and private settings, and each entity has had equal opportunity to present its views to commissioners."

Clearly, utilities have the wherewithal and the special talent needed to influence public policy making. That's fair. But given that influence, it is obvious that other interest groups with fewer resources need to be given equal access to such policymakers who make weighty rulings. All but two states do this through an open meetings process, precluding all private discussions with decision makers during pending matters. That's how the public's business should be done.

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