Elizabeth Warren's Article in PUF


Senator Warren gets her start in Public Utilities Fortnightly

Today in Fortnightly

It was mid-July 1980, and Elizabeth Warren was busy. She both submitted her article to Public Utilities Fortnightly, and married a fellow law professor. 

Iran held our hostages, and we led a boycott of the Moscow Olympics (following the Soviet Union’s invasion of Afghanistan). Her article, “The Regulatory Lag Fallacy,” was published in the mid-August 1980 issue. 

Today, US Senator Warren of Massachusetts is one of the most influential politicians in America. Then, as a PUF contributing author, she taught contracts, commercial law, legal research, legal writing, and oral advocacy, per the bio that accompanied her article and photo.

Senator Warren focused on regulated industries in those days. But by 1983 she refocused on consumer bankruptcy, her primary field since.

Her resume lists only two publications prior to 1980, both for the Rutgers Law Review, one on regulated industries entitled “Tax Accounting in Regulated Industries: Limitations on Rate Base Exclusions.” That year she also authored an article in the Notre Dame Lawyer entitled “Regulated Industries’ Automatic Cost of Service Adjustment Clauses: Do They Increase or Decrease Cost to the Consumer?” 

Warren was evidently a utility regulation nerd like many of us. So what did the future national leader have to say about regulatory lag?

Warren really didn’t like regulatory lag. This aspect of utility regulation, in which rates are reset to match the facts on the ground well after the facts are established:

“… by masquerading as an efficiency incentive, [regulatory lag] deflects attention from true efficiency incentives that are innovative, well-considered and well-planned.” 

Regulatory lag, to Warren, was undesirable because it’s not a transparent and precise tool of regulation:

“An inefficient company should not profit simply because inescapable costs decline, any more than an efficient company should suffer simply because inescapable costs rise faster than the company’s high rate of efficiency.”

She concludes by blaming utilities for not consistently and forcefully presenting the arguments against regulatory lag, to regulators.

At Public Utilities Fortnightly, we feel obligated to provide you with engaging historical perspectives which will often inform on current regulatory issues and will, we hope, always enliven our days in this mind-numbing field.

Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com