A GOP-sponsored bill would remake Kentucky’s utility regulator by expanding its board from three to five members and giving the Republican state auditor two of the appointments.
The governor would continue to appoint the other three members of the Public Service Commission (PSC).
Senate Bill 8 also could make it harder for independent groups to intervene in utility rate cases and ask questions before the commission — a change that a former PSC chair told the Lantern would be “harmful to consumers.”
“I think it raises the bar for intervention, limits the likelihood of intervention, and ultimately reduces the evidence available to the commission in making their decisions,” said Kent Chandler, the former chair of the commission and a resident senior fellow of energy and environmental policy at the think tank R Street Institute.
Organizations that frequently intervene in PSC matters on behalf of consumers also lambasted the provision. The environmental legal group Kentucky Resources Council called it a “calculated effort to silence independent advocacy for residential customers.” The group often represents a coalition of nonprofits advocating for low-income ratepayers and for renewable energy and energy efficiency measures in commission cases.
When asked about the pushback, the bill’s sponsor, Sen. Brandon Smith, called it a “great question” and that he would address the issue on Wednesday when his bill will be heard by the Senate Natural Resources and Energy Committee, which he chairs..
Smith, R-Hazard, told reporters Tuesday afternoon his Senate Bill 8 was partly a response to the outcry of constituents over electricity bills in his Eastern Kentucky district.
“I do want it to be an effective bill, and I do want to send a signal to people at home that we 100% understand what’s happening to us and that it’s not an easy fix,” Smith said. “I will do everything within my power to try to fix this so we can get the smartest Public Service Commission we can.”
A barrier to intervene
The commission weighs requests from utilities in quasi-judicial cases. Interested parties, ranging from industry to environmental groups to Republican Kentucky Attorney General Russell Coleman, can be granted permission by the regulator to provide testimony and evidence on a particular utility’s request.
The PSC has broad responsibilities, regulating the rates and services of more than 1,100 utilities that range from large investor-owned electric utilities like Louisville Gas and Electric and Kentucky Utilities to districts that provide drinking water to rural communities. The regulator also fields complaints from Kentuckians about service and rates and hears requests from utilities to retire or build new power generation.
SB 8 would require that an intervenor in a commission case have a “special and unique interest in the specific rates or service of the utility” and not just a “generalized assertion of an interest of specialized knowledge” in a case. The attorney general, through its Office of Rate Intervention, would also be designated in state law as “sole advocate for residential consumers.”
The Kentucky Resources Council, the environmental legal group that often intervenes on behalf of nonprofits, says consumers need representation beyond the AG, who has coordinated with “industrial ratepayers” whose interests “often diverge from, if not directly oppose, the interests of residential customers.” The attorney general has jointly filed briefs with the industry group Kentucky Industrial Utility Customers in PSC cases.
“That dynamic leaves everyday Kentuckians without a truly independent champion at the table,” the group said. “At a time when utility rates are rising, residential customers deserve dedicated, conflict-free representation in proceedings that directly determine their bills and financial stability.”
An email requesting comment on SB 8 sent to a spokesperson for the attorney general’s office was not returned Tuesday.
Gary in an email to the Lantern pointed to a legal brief filed by the attorney general’s office in 2019 that stated the attorney general had a duty to represent all customers, not just specifically residential ratepayers.
Expanding the commission
Kentucky Senate President Robert Stivers, R-Manchester, had filed a similar bill last year to expand the commission’s membership and give appointment power to the state auditor. The Senate leader ultimately decided to table the bill and not advance it. Both Stivers’ and Smith’s bills would add new experience requirements for commissioners.
SB 8 would add two additional commissioners to the PSC, appointed by Republican Kentucky Auditor Allison Ball and confirmed by the GOP-controlled Kentucky Senate. The commission currently has three commissioners total, all appointed by Democratic Kentucky Gov. Andy Beshear, also confirmed by the Senate.
The bill would also administratively attach the commission to the auditor’s office and make the commissioners employees of the office, detaching the regulator from the Kentucky Energy and Environment Cabinet within the Beshear administration. The legislation also gives the regulator more independence in procurements and purchases.
Currently, commission members are prohibited from being a part of a political action committee, conducting business inconsistent with their duties, receiving things of value from utilities and holding stocks and bonds of a utility. No more than two commission members can have the same occupation, and state law directs the governor to consider expertise in utility regulation and the interests of consumers and utility investors when making appointments.
Under SB 8, commissioners would also have to have specific experience to serve: At least one commissioner would have to be an active, licensed attorney for at least seven years; other commissioners would have to have at least five years of education or training in a number of topics, including economics, engineering, utility regulation, operation and management.
If the three current commissioners, all appointed by Beshear, don’t meet the experience requirements in SB 8, their terms would be terminated. SB 8 has an emergency clause, meaning it would go into effect immediately upon becoming law. The bill does not state who or what determines whether current commissioners meet the designated experience requirements.
Scottie Ellis, a Beshear spokesperson, in a statement said SB 8 is a “partisan move to remove both appointments and authority from a Democratic governor and send them to Republican officeholders.”
“The bill’s provisions likely violate the Kentucky Constitution and will result in less representation and transparency for Kentucky families that are worried about their power bills,” Ellis said.
Chandler, the former chair of the commission, said given that the commission deals with hundreds of cases each year, adding one or two members to the board “doesn’t do it.”
He said the commission, along with the attorney general’s office that intervenes before the PSC, needs more funding and resources to do their work to regulate utilities effectively. When he was commission chair, he testified to the legislature about the significant need for more staffing at the commission.
“If you have five commissioners, and one of them is all of a sudden an engineer, knows how to ask engineering questions, that’s great — but they can only do so much,” Chandler said. “They need to be talking to staff and asking where and how to probe in any particular case with their engineering expertise.”