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PUCs at 2000 - Question TwoState Commissioners

Fortnightly Magazine - November 15 1995

Department of Public Utilities:

Historically, the Massachusetts legislature has accorded the DPU broad scope in carrying out its legislated mandate. With a quite small number of exceptions, the legislature has deferred to the DPU's policy directions, while maintaining a continuous oversight through two or three major committees. In return, the DPU has tried hard to keep the legislature as informed as it wished to be. For the most part, it has been an "arms-length" arrangement between the commissioners and the legislators themselves, with staffs keeping more regular contact.

Such approaches, however well they have worked in the past, may not suffice as major markets are restructured and, in various measures, deregulated. Customers' (voters') and legislators' expectations with respect to industry performance are firmly entwined with existing legal and regulatory structures. Consequently, attempts to shift to a greater emphasis on customer protection through expanded choice rather than traditional rules and regulation may meet legislative resistance. This resistance has the potential to derail the process, absent understanding and cooperation in the legislature. Indeed, in most states, a degree of active support through statutory change will be needed if markets are to realize their full potential.

The need to proceed in closer step will raise new tensions between PUCs and legislatures. Regulation of rates by independent bodies, always legally a legislative function, has permitted legislatures to distance themselves to some degree from policy actions that, while beneficial overall, had painful consequences for one or another subgroup. In short, independent regulation diluted political accountability for particular actions. As legislatures become more involved in such issues, the tensions between long-run goals and short-run consequences will grow. Yet without legislative involvement, in at least some areas, competitive markets will remain underdeveloped, perhaps imperiling gains already made. Walking this tightrope will provide yet another challenge to regulators, who already face many. [End of Gordon response]

Response by Dan Miller, Chairman, Illinois Commerce Commission:

Our relationship with the state legislature is no better than fair. Many legislators - including some of the most articulate and highest-profile officials - view the commission as a nest of reactionaries trying to protect their jobs by devising more regulations when they should be working themselves out of a job through

deregulation and more reliance on market forces.

In previous years, that negative attitude among legislators discouraged commissioners and some staff from direct contact with elected officials. In the last 18 months, however, the commission has consciously tried to open lines of communication with legislators of both parties, positioning the commissioners and staff as experts in electricity, telecommunications, and natural gas, with a political agenda devoted to protecting those without market power and advancing the public good.

Part of our message also is an unalloyed acceptance that legislators hold the ultimate decisionmaking authority over the pace and direction of change in any regulated Illinois industries.

We've made some progress, but much more needs to be done.

The General Assembly's lack of faith in the commission has resulted in attempts by some legislators to involve themselves directly in regulation. For instance, the General Assembly had to