Utility Regulators Have Political Ties

All states elect or appoint regulators to oversee the activities of the energy and telecommunications industries, but few of those officials have a background as consumer advocates, according to a new report by the non-profit Center for Public Integrity .

Only seven utility regulators across the country had extensive experience as consumer watchdogs, according to the non-partisan center, which surveyed the background, salary and financial disclosures of nearly 200 regulators serving in 2004.

Most utility commissioners—42 percent—are former state legislators or legislative or gubernatorial staff, the center reported.

In addition, 13 percent of that group worked for a utility company industry before joining the regulatory boards and 22 percent of commissioners or their spouses have investments in energy or communications business, the center said.

For some, the study confirms fears that the fox is guarding the henhouse. “In some cases they are shamelessly protecting the interests of the utilities,” said Rob Sargent, who researches energy issues for the non-profit U.S. Public Interest Research Group .

James Y. Kerr , one of the seven members of the North Carolina Utilities Commission , countered that public utility commissioners are simply enforcing the laws handed down by state legislatures. And some regulators’ political ties should not be a surprise to anyone, since they are chosen through a political process, he said.

Commissioners, who enforce state laws and administrative rules for utilities, are nominated or appointed by governors in 37 states, and chosen by popular vote in 11 states. State legislators pick commission members in South Carolina and Virginia.

The 50 state commissions vary from three to seven members and in some states also oversee railroad, public transportation and trucking industries in addition to basic utilities, according to the center’s study.

Expertise required for the job may include a legal background to interpret state law and administrative rules, and knowledge of accounting, finance and engineering, the center said. Salaries for utilities regulators range from a low of $30,000 a year for a part-time job in Delaware to a high of $135,297 yearly for full-time commissioners in Virginia, with a national average of nearly $93,000, according to the center’s figures.

Richard Cowart, director of the non-profit Regulatory Assistance Project , said former legislators and other public officials are not more prone to bad—or good—decision-making than engineers, lawyers or people with direct utility experience. The most important attribute is independence from the businesses that will be affected by their decisions.

Regulators elected by the public are not necessarily any better than those appointed by governors, because they are sometimes beholden to private companies and their allies for campaign contributions and support, Cowart added.

Kerr, of the North Carolina utilities commission, said his 8-year term and $107,000 salary is what gives him and his colleagues the independence to stand up for consumers. “I promise you, nobody does this job that doesn’t want to do the best they can,” he said.

In addition, 42 states have an official consumer advocate, who is separate from utility regulators, and some states also have a division within the state attorney general’s office that handles consumer complaints, Kerr said.