Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

PUCs in Year 2000: Mixed Mission, Clear Challenge

Fortnightly Magazine - February 15 1995

at risk if they can depend only upon market forces for their survival.

Forging a Role

Some say that the forces of change (technological, structural, and attitudinal) are so strong and pervasive that PUCs can no longer control or shape them. I disagree.

Commissioners have always faced a choice: Whether to pursue a passive or an activist role. In a passive role, PUCs would largely limit their attention to valuing the rate base, setting the rate of return, and perhaps looking in on rate design. As interventionists, commissioners would be found always operating at the outer edges of their statutory authority. While either stance is appropriate, the trend has been moving toward activism. Moreover, some simultaneous contradictory forces are now at work. "Relaxed regulation" implies some abstinence by regulators; but if we define the goal as competition and workable markets, then adroit and sustained PUC participation may well prove essential to speeding up the process. Phrased differently, even if deregulation marks the ultimate objective, it will take high-order public policy skills to get from here to there. Still, the interventionist role should decline over time.

Beyond the debate over activism, we find PUCs changing their decisionmaking style from quasijudicial to quasilegislative. As we know, most PUC cases used to be adversarial; PUCs acted mostly as a sort of judicial panel. Now, formal adversarial proceedings arise less frequently. Generic policy prescriptions of various kinds increasingly occupy the time and energies of regulators.

A major worry for PUCs is what will happen to their traditional independence in 2000. Always having required vigilance to maintain, PUC independence finds itself sorely challenged by the subtle breakdown of arm's-length dealing with utilities and the rise of "collaboration" and "consensus building" as the primary modes of operation. The task becomes even more trying as the turnover rate increases at commissions, wiping away some institutional recollection of the value of independence. Governors' offices, state development offices, and state legislatures can be expected to insinuate themselves more frequently into commission business as a natural consequence of the dejudicialization of PUCs. Finally, ex parte prohibitions and standards of ethical con-duct would appear more difficult to observe and enforce in the new environment of quasilegislative policymaking.

Administrative Functions

Then there is the question of what a PUC might look like in 2000 if the above perception of change in mission, concept, rules, and practices is anywhere near the mark. At issue, specifically, are matters of commission size, configuration, and skills to do the new/old job. Again, my view that PUCs will serve two different constituencies (core ratepayers and noncore customers) defines my answers.

The dejudicialization of PUC activities should provoke some streamlining of operations and further experimentation with alternatives to trial-like behavior. More reliance will be placed on some older procedures like stipulations and on newer varieties like industry/regulator workshops, panels of scientists, negotiated settlements, and new methods for alternative dispute resolution. We may also find that PUC technical staff stop intervening as formal parties in commission cases, returning instead to their earlier role as advisors.

Setting aside agency resistance, it is