Energy Biz - March/April 2008 - (Page 92) » lEGal EaGlE Seeking Transparency proceSS IS crITIcaL by STUarT w. conrad fixing A tire thAt isn’t flAt doesn’t start a stalled car and only prolongs the original problem. Efforts by the Missouri Public Service Commission to address ex parte communications should be sure to focus on the problem – public perception – and not get sidetracked on peripheral issues. Misperceptions of the PSC’s role abound. Regulation was established to substitute for competition where true competition would result in wasteful duplicate facilities. Required services should be priced at their cost, including a reasonable profit for the utility. Customers receive safe and adequate service; utilities receive an opportunity — not a guarantee — of a reasonable return. Courts tell us that regulation was also established to protect the ratepayer from monopolistic abuse. The balance was struck in favor of ratepayer protection. Shareholder protection comes through providing astute management an opportunity to earn a reasonable return. Still, the regulator must treat all interests fairly. Those are the ends to be achieved. But the means of achieving them produce problems. Process is critical to the perception of fairness. Essential fairness and due process are required. Missouri requires final decisions based on substantial competent evidence on the whole record of the proceeding. While some aspects of the process are certainly legislative, major parts demand a judicial approach and are called quasi-judicial. Commissioners should be like judges, evaluating witness credibility, ruling on evidence and – significantly – basing their decisions on the evidence that is presented in the public hearing room. The process should be evidence-driven, not the inverse. Policy makers determine an objective, then marshal arguments and evidence to justify that objective. A judicial decision takes the evidence, then NewsFlash makes findings of fact and reasoned conclusions of tva hiKe law based on the evidence. The Tennessee Valley Judges shouldn’t come to an Authority is seeking to evidentiary hearing seeking increase rates to reorder society under 6 percent in April. the guise of making policy. Rates have increased 15 percent over two Instead, they should come years, according to the with open minds, seeking to Chattanooga Times Free reach a result driven by the Press. evidence. TVA plans to spend If confidence is to be $423 million on natural gas burning generation maintained, the commission plants. It is also must be sensitive to the investing in a second public’s perception that comreactor at the Watts Bar missioners are not controlled nuclear facility in east Tennessee. by those whom they regulate (GUEST OPINION) Stuart W. Conrad and that the process is evidence-driven. When public perceptions suggest that regulators are compromised and can no longer make evidence-driven decisions, public confidence in the process erodes. Indeed, it is precisely that confidence that the judicial conduct rules are intended to assure. Some will insist that perceptions don’t matter if “they’ve done nothing wrong,” or because “nothing actually happened,” thereby confusing reality and perception. In such cases, reality doesn’t matter. It is the appearance of impropriety that counts. If the question needs to be asked, the appearance is already there. In this area, as in many others, perceptions become reality. In some 30 years of practice before the PSC and other similar agencies, I’ve seen commissioners come and go, and I’ve watched the perceived role of the commission shift. I’ve seen commission makeup change from a mix of attorneys, engineers, and accountants, to a group of former legislators, no less committed to public service, but with a legislative rather than a judicial mind-set. Other 92 E n E rgyB i z March/April 2008 http://www.energycentral.com
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