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Consensus, Compromise, and Chopping Wood

NARUC President James Kerr seeks harmony among an unruly bunch of state regulators.

Fortnightly Magazine - January 2007

Bush acknowledged last year that America is addicted to petroleum, and for obvious reasons we should overcome that addiction. Does the utility industry have a role to play, and if so, how can NARUC help?

Kerr: We are hearing about utilities being sensitive to more efficient uses of petroleum, and there are utility businesses out there trying to mainstream the plug-in hybrid. As a way to reduce petroleum use and increase demand for electricity in off-peak hours, there seems to be some synergy there.

I’m not sure what policies might fall into the lap of the state regulator, other than recognizing that environmental and conservation concerns are legitimate. If companies are willing to incur these potential additional costs, we can provide a forum for discussing and understanding why those might be prudent decisions to make.

Fortnightly: Some big utility mergers have failed recently. How can NARUC help states address the complex issues that arise in utility mergers?

Kerr: I hope not too much emphasis is placed on the mergers that weren’t approved. Sometimes when people talk about mergers, there tends to be a presumption toward the affirmative. But I trust the agencies involved have done the best job they can, and their concerns are justified.

When Congress passed EPACT, including the repeal of PUHCA (the Public Utility Holding Company Act), it was premised on the stated belief that state and federal regulators were well suited to do this work. It is appropriate for states to fulfill the expectations of Congress, and for each state to apply its own laws. It’s not NARUC’s place, nor should it be, to take a position and say what types of deals should or should not be approved. What we should do, principally through research at NRRI, is to help state commissions think through the issues.