We Don’t Need to Yell at the Utility Regulators or the Utilities but the Government Who Appoints Them

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.

Why are Companies taking a Myopic View on EPA’s Clean Power Plan?

By Paritosh Kasotia

An article that appeared in The Guardian cites large corporations such as FedEx stating that they don’t have to take a stand on the EPA’s Clean Power Plan rules because they are not directed at their industry sector. Another unknown company also stated that “there’s a reluctance if a regulation doesn’t get into your core competency to get into somebody else’s backyard. It’s an unspoken acknowledgment that you stick to your knitting.”

I am baffled by this logic. It’s one thing if you are addressing a topic that is very clear cut and only impacts certain industries but the point of the Clean Power Plan isn’t just to make power companies cleaner but address a bigger cause which is of climate change. These companies need to be reminded that the Clean Power Plan is much more than just a set of regulations imposed at electric power companies. Here’s how it would impact different business industries:

Financial institutions: All financial and investment institutions plan for unknown risks imposed by climate change. As we have seen, climate related events are becoming a recurring phenomenon with massive economic loss. We are witnessing the increased frequency of heavy rainfalls and subsequent flooding, droughts as well as rise in the sea levels. The surest and the cheapest way to hedge against these risks is to mitigate the impact of climate change by supporting policies such as Clean Power Plan which addresses the number one cause of emissions – electricity generation. According to the Final Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), investors and financial institution decisions have a critical influence on how our society responds to climate change. More than anything, these institutions should realize the emerging opportunities in new clean energy markets where they can leverage their capital to build a clean energy economy.

Food and Retail Companies: Food and retail companies such as McDonalds, Ocean Spray and Walmart have a lot to gain from supporting the Clean Power Plan. These companies have substantial environmental and sustainability goals of their own. Walmart, for example, has a goal of being powered by 100% renewable energy. Co-incidentally, one of the building blocks to comply with EPA Clean Power Plan is to invest in renewable energy sources.  Being vocal about its goals and how the Clean Power Plan provides Walmart an opportunity to meet its sustainability goals, the company will strengthen its commitment to sustainability and in turn please its stockholders who are increasingly demanding accountability on environmental and social metrics. Moreover, sustainability goals and actions of these companies by themselves are futile if they are done in a vacuum. For them to realize the impact of their efforts, they need to use their power to get other industries on board that contribute significantly to greenhouse gas emissions.

Transportation Companies: These companies are especially vulnerable to the damages caused by flooding, hurricanes, rising sea levels, or other natural disasters. Moreover, the transportation companies are a vital link to our economy. Any impediments in our air, water, or rail infrastructure will have drastic disruptions and negative economic impacts on our other industries such as food and agriculture that are so heavy reliant on the transportation sector.

Climate change is everyone’s business. Companies need to rise about the politics and the rhetoric and support a cause that is more than just a set of regulations directed at a particular industry. Each sector, whether it’s electric, agriculture, transportation, or financial, has a role to play and the clout to impact how we, as a society, respond to the grave challenges of climate change.

So, the big companies out there, don’t be a bystander. Take a stand.

Conflicting Views on St. Louis’s Business Stand on EPA’s Clean Power Plan

By Paritosh Kasotia

In an article appearing in St. Louis yesterday, it’s no surprise that St. Louis business and political leaders criticize the EPA carbon regulations as a threat to the state economy. The panel was hosted by the St. Louis Chamber of Commerce and organized by the Partnership for a Better Energy Future, a group affiliated with the US Chamber of Commerce and the coal industry groups.

So, does the article represent the majority opinion of businesses in St. Louis? Ameren, a major utility company based in St. Louis which gets 70% of its power from coal power plants has offered a different perspective regarding the EPA Clean Power Plan rules which are more conciliatory and productive in reaching a middle ground that would address the concerns of all stakeholders.

Similarly, in a letter to the editor of the MinnPost, Mary Timmel, Midwest Outreach Manager of the Small Business Majority provides an opinion in support of the EPA Clean Power Plan. According to a survey conducted by the Small Business Majority, climate change and extreme weather events cause real financial hardships for small employers. According to Natural Resources Defense Council (NRDC), Missourians paid an estimate $1.8 billion or $1,100 per taxpayer, in federal taxes to clean up the damage from extreme weather events in 2012. EPA’s Clean Power Plan aims to reduce carbon emissions and in turn mitigate the climate change impact, and is seen as a positive development among small business owners. By just investing in energy efficiency, which is one of the building blocks of the Clean Power Plan, Missouri businesses could save $183 million in 2020 alone.

Other benefits that cannot be overlooked include the health benefits and the economic benefits. Substituting coal power plants with clean energy industries such as wind and solar have the potential to create thousands of jobs. In addition, advancing wind and solar industries would keep the Missouri dollars in Missouri which are currently spent outside the state to import $1.6 billion worth of coal from surrounding states.

Bottom line is that the EPA Power Plan does create some losers but mostly a lot of winners. Coal companies who see this as a threat to their business and economic models can take a proactive approach and strategically plan to shift their investments from coal to clean energy technologies. It’s not only the US government that is pushing for it but also the US citizens who are demanding cleaner options.

The clean energy future is here and is a level playing field. Those who are able to see the opportunities amidst the threats will be the winners in the long run.