Bill calling for election of Public Service Commissioners (SB 151) won't protect ratepayers [UPDATED]

Last week, the Kentucky Senate passed Senate Bill 151, a bill that would change the Kentucky Public Service Commission (PSC) from a three-member governor-appointed, Senate-approved body as it now exists to a seven-member elected body.

The bill was introduced by Sen. Ray Jones after American Electric Power recently increased its utility rates by 17% with the PSC's approval. Residential electric ratepayers are feeling the pinch of increased rates and the most vulnerable Kentuckians are feeling real hardship; however, this bill does not address the underlying issues that are leading to higher rates and, in fact, would further politicize the process of utility regulation leading to greater influence of the large, wealthy utilities corporations upon PSC decisions.

It is for these reasons that KFTC opposes the bill. Our allies such as the Kentucky Resource Council and MACED, as well as the Kentucky Chamber of Commerce and others, also oppose the bill.

Tom FitzGerald of the Kentucky Resource Council addressed these issues before the Senate Natural Resources and Energy Committee last week:

If there were ever a public policy issue that called out for rigorous scrutiny and deliberation, this is that issue. For we are considering here a dramatic change in the composition of a body that we have charged with assuring that public utilities in our Commonwealth provide light in the darkness, heat in the cold, and energy to power our homes, industry and commerce.

In his research, FitzGerald found that "there is no evidence to suggest that states with elected public utility commissions have lower rates than those with appointed commissions, nor that elected utility commissioners are more responsible to the needs of utility ratepayers." In fact, there is "a real potential for the regulated utilities to focus campaign contributions in a manner that would affect the policies and decisions of an elected commission."

Before being approved and sent to the House this week, the bill went through some last-minute finagling. The Natural Resources and Energy Committee substituted language that would make the bill a "study bill," requiring only that the Legislative Research Commission "study the positive and negative effects of electing members" of the PSC. However, on the Senate floor the full Senate overrode the committee by stripping the substituted language from the bill and returning it to its original form. In their editorial on the issue, the Lexington Herald Leader wrote: "Maybe there is good case for electing the PSC. If so, the Senate didn't take the time to make it."

The Herald Leader further editorialized on the bill:

We're not saying the PSC has been too pure for politics or has no room for reform. There's a revolving door between its staff and utilities. Commissioners owe their jobs to the governor...But it's hard to see any advantages to injecting even more politics...If the idea merits serious consideration, there's plenty of time for study before next year's General Assembly.

In addition to adding more politics into the decisions of the PSC, the bill also does not address the underlying causes of rising utility rates in Kentucky – our vulnerability to rapidly rising costs of coal-burning electricity (on which we are more than 90% dependent) and few policies for diversifying electric generation and promoting energy efficiency programs. Passing the Clean Energy Opportunity Act would be a big first step in addressing these root causes.

Senate Bill 151 in its original form, calling for the election of seven commissioners, has been sent to the House and assigned to the Tourism Development and Energy Committee by House leadership.

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UPDATE: According to Bluegrass Politics, the Lexington Herald Leader's political blog, Senate Bill 151 was brought before the House Tourism Development and Energy committee today, even though it wasn't on the agenda. The committee debated the bill, but action on it was delayed. You can read their full, but short, report here: http://bluegrasspolitics.bloginky.com/2011/02/24/bill-to-elect-utility-regulators-surfaces-in-house-committee/