By Paritosh Kasotia
David Roberts of Grist had a great article, “Why Are We Yelling at the Utilities and Not Their Regulators” out on February 20th that brought attention to the role of regulators in supporting clean energy choices. It’s the regulators through the Public Utility Commissions that decide what policies are implemented and which ones are crushed before they see the light of day. But, shouldn’t the bigger question be who are these regulators answerable to? Except for fifteen states, utility commissioners are appointed by the Governor of that state which means that they serve at the pleasure of the Governor.
This brings up the question whether the public utility commissions can operate in an objective and transparent manner. Case in point: Iowa’s Governor recently demoted Iowa Utilities Chairwoman to a member status and replaced one of the existing member with a new appointee. This was most likely a result of a meeting between the Iowa’s largest utility and the Governor where the utility displayed their displeasure over the Board’s decision to return $2 million annually to customers in a wind project. The role of a public utility commission is to make objective decisions but in this case, it came with consequences. Iowa’s utility commission already has two high level and controversial projects lined up, transmission line and an oil pipeline. Both have strong opposition from the public and significant support from the Governor. In fact, the Governor of Iowa went so far to say that the Iowa legislators should stay out of the pipeline issue and let the regulators do their job. The irony of the story is that the Governor himself imposed his views on the Iowa Utilities Board’s leadership because of the power imposed by the utility company.
What does all of this tell us? For one, the utility regulatory structure is not free from special interest groups. In Wisconsin, for example, the Public Service Commission voted on a rate structuring decision that would have a detrimental effect on the solar and DG industry. The commissioners are appointed by the Governor and in Wisconsin’s case, the two commissioners who voted in favor of the rate case were appointed by Governor Walker and those that favored against the case was appointed by the previous Governor. Some states such as Florida, where commissioners are also appointed by the Governor, have started to recognize this as an issue worthy of acknowledgement. Under Bill SB 288, lawmakers hope to remove the closeness between state utility regulators and power companies.
So, why does such a cozy relationship exist between the Governors, the public utility commissioners, and the utility companies? The answer comes down to money. Last year, Florida’s three largest utilities made significant contributions to the re-election campaign of Republican incumbent Governor Rick Scott. Similarly, Governor Walker’s one of the top contributors was a power company.
In order to minimize the impact of such relationships, there are two steps one can take. One is to create strong anti-lobbying rules so that utilities’ influence on the elected officials is diminished. While this is an excellent solution, it is rather difficult to achieve. So, the second solution which has the power to impact how utility business is conducted is for the citizens to unite and demand answers from their elected officials on why certain decisions are made and more importantly how do they safeguard the interests of the public. We can all certainly hope for and work towards a more transparent decision-making process.