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Rule change to improve communication with utilities

JEFFERSON CITY, Mo. – This summer, the Missouri Public Service Commission opened a workshop to discuss the commission’s ex parte rule that both regulators and utilities have called challenging and counter productive.

Both the commission and utilities have found rules governing communications between them to be confusing and that they create an unlevel playing field in cases before the commission.

Hall
Hall

“The existing rules, from my perspective, and I think from the perspective of other commissioners who have spoken publicly about this as well, has some serious problems,” said PSC Chairman Daniel Hall.

Utilities also look forward to changes to the existing rule. Trey Davis, president of the Missouri Energy Development Association, which represents Missouri’s seven investor-owned utilities, welcomed the workshop.

“I think it’s a very good thing for the commission to look at again. I think the rule has been challenging and counterproductive,” he said. “I think anything that can be made to better that communication and the quality of that communication is a good thing.”

What’s not working?

Hall laid out three ways the existing rule hurts the PSC. First, he said, he doesn’t think that that the current rule complies with Missouri law, specifically section 386-210. That section, Hall said, says the rules of the commission should not impose any limitations on the free exchange of ideas.

Second, Hall finds the current rule to be too complicated. Often people will avoid communicating altogether to avoid potential violations, he said. Commissioners and staff created complex decision trees to consult before talking to someone because of the complicated rules.

“If you have to go through a complicated decision tree to determine whether or not a particular communication is a violation of the rule, that’s just ridiculous,” Hall said.

Third, Hall feels the rule doesn’t allow for an even playing field. The burdensome rules that apply to communications between the commission and utilities don’t apply to other interested parties.

Despite his issues with the current ex parte rule, Hall wanted to affirm that there should be rules governing communications with the PSC.

“Any substantive issue in a pending contested case can only be discussed, under the current rule and the proposed rule, in a public setting,” he said. “We, in no way by trying to make some changes here, are we trying to get around that requirement because that is absolutely critical.”

Modernization

But the changing world requires more communication between regulators and utilities, Hall said. Between energy efficiency, renewable energy, residential consumers and industrial consumers, along with the fast rate of modernization, communication is more important than ever.

Davis
Davis

“It’s really important, I think, that commissioners stay abreast of those changes because they have implications for Missouri ratepayers,” Hall said. “If we are hamstrung in our ability to have these types of conversations, I don’t think that’s in anybody’s best interest.”

Davis agrees that the ex parte rule has made it difficult for utilities to communicate with the commission about important issues.

“It’s really made it hard to have communication between the utilities and the commission. You really need that communication,” Davis said. “You need to educate the commission. The commission needs to be able to ask you questions, whether it’s during a rate case proceeding or any other scenario, you need to have that good two-way dialogue. The ex parte rule, from a utility perspective, has made that very challenging to do and I think counterproductive at the end of the day.”

The new rule

Hall thinks the ex parte rule change will help with the different roles commissioners play in the regulatory process.

It will be simpler for PSC commissioners and staff to determine what’s an appropriate communication and what’s not, Hall said. It would create a distinction between what’s a substantive issue in a pending case, and other business matters.

“It’s important that people understand the multiple hats that commissioners wear. When they are wearing their judicial hats, when they are acting as a judge, then there should be no discussion about cases before them, plain and simple,” Hall said. “But we also act in a quasi legislative capacity concerning general regulatory matters. In that capacity the free flow of information should not be prohibited.”

But not everyone appreciated the proposed rule change. James Owen, the acting public counsel, which represents consumers in front of the PSC, thinks changing the ex parte rule could close the door on the public.

“As there is always some sort of case before the Commission (or inevitably pending) before the Commission involving these utilities, there is always the threat of an issue being discussed without a representative of the public being present,” he said. “This is inherently unfair not only to the public but the very process where the Commission is supposed to be a neutral decision-maker.”

But Hall said that between rate-payers, utilities and other interests, there are a lot of different parties that make up the public.

“We are balancing all of those interest,” he said. “When you have one particular segment of the public that is not treated the same way as everybody else, I don’t think that’s fair. I think a system that mandates that type of unfairness should be adjusted.”

Davis also dismissed the idea that the rule change would bring about any sort of backroom dealing.

“If you didn’t have any rules in place, I don’t think you would have that kind of nefarious deals going on,” he said.

Legislation

One communication issue that has brought about the ex parte rule change has been the PSC’s involvement in legislation last session that would change some regulatory frameworks and bring about grid modernization.

During that process, utilities had a hard time meeting with commissioners because they had to notify the public every time they wanted to talk about the legislation.

Owen said that was part of the design of the system. Commissioners should not help craft legislation.

“By engaging extensively in this process, they are in some way endorsing certain mechanisms in those statutes,” he said. “If a party has an issue with that later, how can they be expected to have a fair and neutral evaluation from a body that was involved with the drafting of that very law?”

But Hall wanted to be part of the process to help facilitate communication and lend the commissioners thoughts on the regulatory process.

“It was very difficult to try to facilitate compromise in that area because every single time I wanted to have a conversation with any of the parties, I had to notify the other parties and we all had to sit down together,” Hall said. “It’s naive to think that that is the best way to facilitate compromise.”

Davis said he wanted the process to be open, not just to the public, but to the free flow of information.

“If we’re making communication and educating more challenging, then that is completely the opposite of what we should be doing to make sure that at the end of the day, the best process is there to keep rates affordable, reliable and safe,” he said.