Midwest legislators find second careers as utility regulators

Source: Jeffrey Tomich, E&E reporter • Posted: Thursday, September 15, 2016

State utility regulators often exit their posts for jobs at utilities they oversee, raising eyebrows among critics.

But a different, less controversial “revolving door” has become common in the Midwest these days, with former legislators winning appointments to state utility commissions.

In four Midwestern states — Wisconsin, Iowa, Missouri and Kansas — former state legislators represent a majority on commissions. In three other states, commissions include at least one former state senator or representative. In all, of 10 Midwestern states where utility commissioners are appointed, about 40 percent of commissioners (15 of 37) previously served as state representatives or senators.

Even those who didn’t hold elected office have deep political roots. Several commissioners in the region who didn’t hold elected office previously worked as chiefs of staff or policy advisers to governors and other state elected officials. They include the chairs of commissions in Wisconsin, Illinois and Missouri.

Former state lawmakers who now regulate gas and electric companies said the two roles are similar in some respects, especially considering the quasi-legislative role of utility commissions. That’s especially the case in the electric sector today, with the industry in the midst of the most significant transition in a century.

“The industry is in flux and going through massive changes, and the decisions and policies we’re putting in place now are going to have lasting effects,” said Missouri Public Service Commission member Scott Rupp, who served two terms each in the Missouri House and Senate before his appointment to the PSC.

Rupp, a Republican, said that during his tenure, the state Senate was critical of the commission, which at the time consisted of five lawyers. Some state senators thought the attorneys nitpicked at the wording of orders and took too long to decide cases.

Today, only one member of the Missouri commission, Chairman Daniel Hall, has a law degree. The other four members are all former state senators.

Former state legislators make up a majority of commissions in Iowa, Wisconsin and Kansas, too.

Former legislators who serve on utility commissions said the background has undoubtedly proved beneficial. They know how to listen to and assimilate different points of view and encourage compromise. Like lawmakers, utility regulators generally prefer to sign off on a settlement than to cast a deciding vote in a contested case with millions of dollars at stake.

“We typically want to get things done, and we want people to like us,” said John Tuma, a member of Minnesota’s Public Utilities Commission who previously served two terms in the state House of Representatives.

Tuma acknowledged that he didn’t know much about the PUC when he was first elected to the Minnesota House in the mid-1990s. Now he’s a member and said his background as a legislator has proved valuable.

In Minnesota, the five-member commission is delegated its authority by the Legislature, so his background in the House and having a role helping pass laws that affect investor-owned utilities has come in handy.

“It’s important to understand how to interpret legislation, how it’s created … understanding legislative intent,” said Tuma, the lone Republican on the five-member Minnesota commission, all appointees of Gov. Mark Dayton (D).

Putting politics aside

While there are similarities between serving in the Legislature and on utility commissions, there are differences, too. Among them: party politics.

Legislators are frequently identified by the “R” or “D” beside their name, and in many statehouses, it’s not uncommon to see votes on controversial issues divided along party lines.

Although they don’t and can’t shed political ideology when they move from state legislatures to utility commissions, legislators who have made the transition to being regulators say they put aside party politics.

“I check my political ‘feelings’ at the door and concentrate on what I believe is best for ratepayers, providers, and the state of Kansas,” Kansas Corporation Commission Chairman Jay Scott Emler said in an email response to questions.

Emler served 13 years in the Kansas Senate, where he chaired the Utilities Committee and served as majority leader. He and Commissioner Pat Apple, both Republicans, represent a majority of the three-member Kansas commission, which regulates utilities, trucking companies and oil and natural gas production.

Apple, too, said party politics don’t come into play in decisions made by the commission, which is part of the executive branch of state government in Kansas. And to help ensure ideological balance, state law prohibits more than two members of the commission from being from the same political party.

“The quasi-judicial role of the commission requires the commission to fulfill their statutory responsibilities and render decisions that are based on Kansas law not on an individual’s political leanings,” Apple said in an email.

Rupp, of Missouri, said party politics haven’t ever been a factor during commission deliberations, and PSC votes are rarely if ever split down party lines. But political ideology provides important context for policy decisions.

One of the main benefits of having legislative experience, he said, is having learned to apply “kitchen table” economics to the decisions he makes and thinking about how policy proposals — no matter how they sound on paper — will affect consumers.

Political vs. partisan

While party politics may not come into play during commission proceedings, they can and have flared up during the appointment process.

William Kenney, a former Republican state senator who has served on the Missouri commission since 2013, said he owes his appointment to the political process.

Kenney, a former NFL quarterback, said he was named to the PSC after the Republican-controlled Senate threatened to block Democratic Gov. Jay Nixon’s appointment of Democrat Steve Stoll, also a former senator.

Janice Beecher, director of the Institute of Public Utilities at Michigan State University, has studied the influence of politics at utility commissions and wrote a 2008 Energy Law Journal article on the topic.

“In the long history of regulation, it has always been political” and necessarily so, Beecher said in an interview. “We need political processes … to translate our values into policy.”

But, she said, it is important to distinguish political from partisan — terms that are frequently conflated. “Independent regulation is supposed to be sort of technocratic, consistent with good economic and legal principles,” she said.

The most recent research by the Institute of Public Utilities shows that about 17 percent of federal and state utility regulators across the United States have backgrounds as state legislators, some of whom are elected or appointed after being forced out of office by term limits.

In fact, there is no model pedigree for utility commissioners. While some come from political backgrounds, others have experience as commission staffers or administrative judges, and others have worked their entire careers in the private sector.

Said Beecher: “We don’t want robots for commissioners; we want thoughtful, deliberate people who come from different backgrounds.”