WNPR

For PURA, Questions Abound About How to Set Rates Right

Jan 13, 2015

Scott Hempling said utilities have two jobs: providing reliable power, and ensuring an ability to make money and invest it back into the grid.

Back in 2011, a few things changed for PURA, the Public Utilities Regulatory Authority. Its staff was cut, and it developed a closer relationship with the Department of Energy and Environmental Protection. Some of PURA's budget and its hiring authority shifted over to DEEP, and the move changed the way the board does its main job: reviewing the performance of power companies.

Those changes were recently questioned by PURA chairman Arthur House in a letter to Governor Dannel Malloy.

"If I were a utility coming into Connecticut, my first reaction would be confusion," said Scott Hempling, an attorney and an adjunct professor at Georgetown Law. He's spent 30 years looking at public utility issues around the country, including Connecticut

Hempling said utilities have two jobs: providing reliable power, and ensuring an ability to make money and invest it back into the grid. "The problem with the Connecticut statute is that it's not clear as to where I would go to get clarity about the present and the future," Hempling said. "Whether it's about rates, whether it's about the certainty of cost recovery, whether it's about the type of power supply commitments that I can make." 

Hempling said the result could be utilities going to both DEEP and PURA with questions about state energy issues. "Now I might like it, over the longer term, if I felt I could play mommy-daddy; if I felt that I could go to one place, and if I didn't get a good answer, I could go to another place," he said. "It may be that utilities can go to the DEEP, get agreement on various future investments, and use that agreement in the public setting to bring public relations pressure on the PURA. I'm not at all suggesting that PURA would be vulnerable to such pressure, but it's certainly a strategy that any active utility thinker would engage in."

PURA spokesman Mike Coyle said his agency's relationship with DEEP was "collegial," and Hempling said he wouldn't recommend increasing the number of PURA's commissioners from three to its previous number: five.

But that reduction to three commissioners pointed to another issue raised by Arthur House in his letter to Governor: it's tough for those commissioners to talk to one another. Due to open meeting laws, House said commissioners "cannot discuss substance by and among themselves at all, unless it is during an open meeting, as any two would constitute a quorum."

"The notion that you get better decisions by keeping people from talking to each other is illogical," said Hempling. "It's a reaction to a sense that government always has to be in the sunshine. And government should be in the sunshine, in the sense that final decisions should be explained. Decision makers should be publicly accountable for those decisions, but the difficult process of asking questions of each other. Of challenging each other. Of coming up with nutty ideas that you wouldn't want to see in the headlines, but could give somebody else the inspiration to come up with a better idea -- that's all lost when you can't have people talking to each other."

So what does all this bureaucratic bickering mean for customers? Hempling said it's tough to tell. "Rate levels are a product of access to natural resources, of managerial competence, world events concerning oil supply and oil prices," he said.

But, he said, the recent dustup with Malloy is reason to ask whether PURA has the resources and lack of interference it needs "to set rates right."