"When they come to town ... we'll ... accompany them to Capitol Hill ... to make their trip to Washington a 'two-fer,' if you will."

Paul Rodgers knocked NARUC on its ear last July when he announced his resignation as executive of that century-old association.

Rodgers, also general counsel, had served the National Association of Regulatory Utility Commissioners for more than 30 years.

His unexpected move came in the midst of strategic planning at NARUC. The blueprint called for the association to boost its influence in Congress and win more notice from members in the face of what the association saw as declining interest among federal lawmakers in state regulatory matters.

Undaunted, NARUC didn't sit back. In November, four months after Rodgers gave notice, NARUC amended its constitution to allow persons other than attorneys to serve under contract as the association's day-to-day executive. This change (em away from legal scholarship toward deal making and a more engaged constituency (em paved the way for Peggy Welsh, NARUC's new executive. In hiring her, NARUC appeared to say, "We want someone who can sell ideas rather than develop policy,"

especially when it comes to electric industry deregulation.

The outspoken, decidedly unlawyerly like Welsh is herself an alumnus of another electric industry association. Welsh is also a government relations advocate who started her career as an aid in both the U.S. Senate and the Ford Administration. She makes eye contact like a sales rep and falls easily into the free-flowing banter of a seasoned lobbyist.

"I'm not shy," she insists.

Just days after her third month on the job, Welsh sits in her Pennsylvania Avenue office, the Capitol rotunda prominently framed by a window. The invisible mantle of "the new NARUC" sits squarely on her shoulders, and if it's anything like her suit, it's flame red.

How will Welsh lead NARUC?

"Our job is to tell the Congress where the states are," Welsh says. "I consider NARUC to be a microcosm of the Congress. We never expect Congress to come to consensus. We expect Congress to take hard votes. Yet we expect the states to come to consensus on what are often regional issues, where markets are very different.

"We cannot always have the same message of 'don't tread on our authority,' because that is, unfortunately, what some people believe NARUC's reputation to be. So where we cannot agree, we need to articulate that and articulate that clearly."

Is Welsh suggesting that NARUC might abandon its long-standing preference for full harmony among members? No. Welsh insists that NARUC will convey regional differences to Congress, yet won't stray from its ecumenical strategy. "We will develop policy based on consensus and that is how we will continue to do policy," she says.

Is NARUC walking a tightrope? Welsh, for one, is accustomed to tough jobs.

Last December, she helped unite the Electric Generation Association and the National Independent Energy Producers to form the Electric Power Supply Association. She had been EGA's executive director for four years (em a "push-the-envelope stakeholder group," as Welsh describes it. She had little regulatory background to bring to NARUC.

"The mere fact that they hired me should tell you that they have a lot of good vision," Welsh says of her new employers. "They know what they want. They know the kind of skill set they need to represent them in Washington and they weren't afraid of the baggage that came with me."

Of course it doesn't hurt that Welsh lobbied Department of Energy Deputy Secretary Elizabeth A. Moler back when Moler was a legislative aide. Or that she counts Rep. Dan Schaefer (R-Colo.) as an acquaintance and can call others by their first names in agency and political hierarchies. But Welsh pooh-poohs the "greased skids" thinking, declines to share stories of her professional friendships and says all she has is her reputation.

"It's just hanging around town for a long time, representing a particular industry for over 12 years that I've developed the relationships I have," she says. "All I have, all anybody has, is their personal credibility. ... I have very good personal relationships with ... a lot of people in Washington because of my ability to articulate our point of view."

She says she nurtured connections by not drawing lines in the sand.

"And that's what I intend to do [here]. ... The states, I think, have a reputation of early on drawing a line in the sand. It's not true, but because they have a fiduciary duty of articulating state authority, it's often all anyone hears. They don't hear the productive suggestions that are sometimes behind that message."

Welsh doesn't appear afraid of the quid pro quo baggage delivered with NARUC either, particularly when it comes to the group's sometimes lackluster record on high congressional visibility and effectiveness. Even a NARUC staffer will confide that although the association shares good ties with committee staffers, ties are weak with some other members and their staffs.

"They really did want to hire somebody whose skill sets would be able to do that from the get-go," Welsh adds. "And that's what I've done since I got here and that's where the Washington Action Program comes into play: Let's organize ourselves. Let's not do it ad hoc. Let's have a strategy in place, like every other trade group in town."

The Washington Action Program, ironically, has its roots in the debate over last year's Telecommunications Act, when the perception was that NARUC took its position too late.

"I think that a lot of people would probably agree with that perception," outside and inside NARUC, Welsh says. "We did learn from our efforts in the telecom bill and we feel like we are in a position to be proactive in the electric industry debate.

"You can't control the congressional schedule. So no matter who you are, you're going to be reactive to the congressional whims. But we can spend a lot of this time when the debate is not in a frenzied mode educating the Hill, rather than waiting until the debate is in a frenzied mode."

The Washington Action Program will call on state utility commissioners to meet with congressional members from their home states. The NARUC staff will lead the effort to build better lobbying

relationships with Congress, agencies, stakeholder groups and the media. Staff will visit the Hill to establish and maintain relationships and provide congressional aides with NARUC position documents. Rallies, too, could be in the works. Commissioners will be coached on how to approach members of Congress. A newsletter will highlight the program's activities.

This, indeed, would make for a new NARUC.

"We're reaching out to our members and encouraging them to get with their congressional delegations more often than they may have otherwise," Welsh says. "We are, from a staff perspective, hopefully giving them some tools to understand a certain bill that's on the Hill, that sort of thing.

"As an example, when they come to town for business that is not [directly related to] NARUC in particular, but just for their state commissions, we'll encourage them to call on us to let us know they're here, spend an extra couple of hours with us and let us accompany them to Capitol Hill to see their folks, to make their trip to Washington a 'two-fer,' if you will."

The association also will rely more heavily on its research arm, the National Regulatory Research Institute, to educate legislators.

Luckily, NARUC may win extra time to lobby Congress on electricity deregulation. Senate Majority Leader Trent Lott (R-Miss.) said in mid-May that he thought deregulation was unlikely this year and that, like telecommunications deregulation, it could take years.

"I agree it's probably not going to move as fast as everybody originally thought it was at the conclusion of the last Congress," Welsh says. "I think the reason the momentum has slowed somewhat up on the Hill is that a year ago we only had one state that had done anything significant on restructuring. Today we have over a dozen. A year from now, that number will be doubled or tripled."

She believes that since the states are moving forward, those on the Hill are stepping back and wondering what it means for them, what role they can play.

"We probably will see something in terms of real movement on a real bill in the House this Congress. I think Mr. Lott is correct. We probably won't have a bill signed and on the president's desk. ... It's harder than the telecom bill in that it has more money attached to it.

"We will hitch to legislation that allows the states to move forward on their own, while at the same time clarifying state authority. We do need some clarification from the Congress."

Welsh chuckles when asked if a potential squabble between the DOE and the Environmental Protection Agency on the legislation may rival that on the floor of Congress.

"I haven't heard too much about that," she says. "Of course EPA, NRC, the Department of Defense (em we're going to see agencies all over town wanting to play a role in the electricity restructuring debate. ... EPA has their agenda, the protection of clean air in America and there will continue to be clashes of how you get to competition and whether or not stricter environmental requirements are going to be a part of the new game."

Welsh notes dryly that tension will continue.

"Again, it's going to be a regional tension. As you know, FERC and EPA went round and round. With Betsy Moler going over to DOE, she has very strongly held beliefs there, so you'll probably see that tension continue. It's a good, healthy debate. The one thing that I would not like to see is that it bring the entire process down."

The environmental debate will occur on the state level as well, she notes. "You are going to have a coalition of states from the Northeast battling the coalition states from the Midwest on these issues. ... I can't predict how, but it will definitely be a complicating factor, which is why you won't see a bill this year. It will be one of the reasons, for sure.

"Now let me toot NARUC's horn here," she adds with a smile. "For the first time in history, we got the two regulatory communities together last month in Houston at a conference we sponsored with EPA. We got the EPA regulators and the economic regulators, our folks, together to talk about these issues, as well as stakeholders. ... Those are the kinds of good things NARUC does that people don't always know about.

"Now there was not any final decision made out of this conference. What was made was a sense that these issues are being dealt with in both agencies in every state and that they are regional in nature and that there needs to be cooperative efforts done."

NARUC plans to schedule more workshops, further adding to their plate of responsibility, now as environmental equalizers.

What about other growing issues furthered by electric deregulation; re-regulation coming in the form of consumer safeguards, for instance? Public utility commissions are staffed with economists and engineers examining rate structures and depreciation schedules, but PUCs are becoming more consumer oriented. Are PUCs ready to enter the consumer realm?

"I would say we're getting ready very much to be caretakers of the consumer interest, if we are not already actively doing so," Welsh says. "We have an ad hoc committee on consumer affairs that was begun at the beginning of this year.

"Every conversation we have, the test is always the consumer interest and the consumer protection part of that. So I don't like the word 're-regulation' because I don't think consumer protection equals re-regulation. I think that's an unfair equivalency test, but I do think that state commissions are very ready and very able to take on the consumer protection role.

"You're right, they've spent their lives in a rate-case mode. And in a competitive world that changes. But the bottom line test to rate cases has always been: 'What is in the best interest of the public? What is in the best interest of the consumer?'"

Welsh says one of the reasons she respects her new employers is that they're "experimenters," those first out of the gate, and as a result, are the ones always getting criticized. She too, seems to share their preference for the hot seat. After all, besides heading NARUC's intensive lobby effort and other programs, she'll also have to manage a budget of $2 million and a staff of 17.

"I look at New Hampshire and what they've done. And they're going to take a lot of heat for that," she says of commissioners' challenges. "I look at Pennsylvania. I look at California. They're not just talking the big issues. They're really getting down and dirty and doing it. Really doing it. And they don't have any precedents, other than their own knowledge base and their own experience."

As for herself, she admits she has a learning curve when it comes to issues outside of electricity. Issues related to water and telecommunications and, in some states, transportation and insurance.

"The issues are very similar. They're not exact, for sure. Do I worry? No, I don't worry. A good manager understands how to do what needs to be done. And I think that I have those skills. I will rely on the experts [at NARUC] when expert advice is needed."

She says her respect for commissioners stems from other reasons as well. "They're spread very thin. Not only do they have to understand all those industries, but they're dealing with shrinking state budgets, they're dealing with every single industry under their jurisdiction going through major life changes.

"As in human nature, you tend to, as a commissioner, focus in one or two areas and rely on your fellow commissioners to focus on the other areas. Just as you do in congressional committees and just as you do in trade associations."

Welsh says she hopes she can enhance NARUC's reputation. "I think Paul Rodgers left a huge legacy. ... Those are very big shoes to fill." t

Joseph F. Schuler Jr. is associate editor of PUBLIC UTILITIES FORTNIGHTLY.

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