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PUCs in Year 2000: Mixed Mission, Clear Challenge

Fortnightly Magazine - February 15 1995

not certain that PUC staff size will be reduced in the years leading up to the millennium. Some are already too small to perform their assigned tasks; others have already downsized to an irreducible minimum. As mentioned, PUC protection of core customers may be characterized generally as "business as usual," with some modifications for price caps and performance-based features. But, although fewer in number, captive customers can be expected to command continued close attention to safeguard their welfare. This attention will require familiar staff resources. Moreover, when periodic reviews and "true-ups" come along, most traditional analyses of earnings levels, rate structure, investment decisions, and service quality will still be necessary. Shrinking and expanding staff size to fit these cycles would prove expensive.

Deciding which services move into the workably competitive category (em those that are emerging and those that are not (em demands a good deal of high-order staff analysis. Some level of surveillance is needed as utility services migrate among the various categories.

Changes in the skill mix and responsibility of PUC staff form another matter entirely. With markedly fewer general rate cases and a focus on competition, one might expect fewer staff attorneys and rate design experts, and more economists focusing on industrial organization. PUC retrenchment from participating in utility planning would shrink the need for engineering staff, but greater emphasis on quality-of-service regulation (replacing financial regulation) will offer a counterbalance. Similarly, accountants and financial analysts (perhaps fewer in number) may shift their attention to the impacts of utility ownership structures, affiliate transactions (domestic and foreign), and mergers and acquisitions.

Finally, PUCs will have to decide what organizational arrangements best suit the old and new tasks. Which organization chart is better (em hierarchical or flat? Do you make the PUC sector-specific (communications, water, and so on), or organize by discipline (law, engineering, economics) or customer category (core vs. noncore). The final result will reflect how well PUCs manage their agency environment amidst the tugs and pulls of legislators, utility managers, industry vendors, academics, journalists, governors' offices, and PUC staff. t

Douglas N. Jones is professor of regulatory economics, school of public policy and management, Ohio State University, and director of the National Regulatory Research Institute, Columbus, OH. NRRI is affiliated with the National Association of Regulatory Utility Commissioners (NARUC), which represents state PUCs. The views expressed here belong to the author and do not necessarily represent those held by NRRI or NARUC.

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