The Moreland Commission on Utility Storm Preparation and Response, was created on November 13, 2012 by Executive Order No. 73. While its main focus was investigation of the Long Island Power Authority and storm issues, its mission also encompassed the broader functioning of utility regulation in the state:
(A) study, examine, investigate and review: (i) the emergency preparedness and response of utilities during and following emergency weather events, including the performance of the utilities during and following emergency weather events; (ii) the adequacy of present laws, rules, regulations, practices and procedures with respect to utilities’ emergency preparedness and response; (iii) the adequacy of existing oversight and enforcement mechanisms; (iv) the structure, organization, ownership, financing, control, management and practices of the utilities as they affect emergency preparedness and response; and (v) the provision of utility services to New York State under the existing legal regulatory framework, including but not limited to the jurisdiction, responsibilities and missions of the New York Power Authority, the Long Island Power Authority, the New York State Energy and Research Development Authority, as well as the Public Service Commission; (B) report and make recommendations for legislative, policy and regulatory changes, as well as reforms as deemed appropriate in utility structure, management and practices, to best protect and serve the public’s interest with respect to emergency preparedness and response, and the provision of safe, reliable, responsive utility services; and (C) review any other matters or activities which may affect the issues herein before specified….
In its Final Report issued June 22, 2013, the Moreland Commission issued several broad recommendations for legislative action to improve the system of state utility regulation and the functioning of the Public Service Commission (PSC). These include
adding a “public interest” criterion to the currently nonexistent statutory qualifications of PSC Commissioners, removing the exemption of the PSC from the State Administrative Procedure Act provisions regarding private “ex parte” communication during cases with PSC Commissioners and their advisors, and enhancement of utility consumer advocacy.
PSC Commissioner Qualifications.
The Moreland Report lamented the “decline of New York utility regulation” noting that the New York Public Service Commission, historically was nationally preeminent in utility regulation, but had in the past 20 years had years become less than stellar in its composition and achievements:
Throughout our work the Commission has been struck by one overarching shortfall. The people of New York have not been well served by aspects of the diminution and reorientation of utility regulation over the past 20 years. The Commission believes that the PSC of the 1970s, chaired by Joseph Swidler and then by Alfred Kahn and then again under the leadership of Peter Bradford from 1987 to 1995, was a national model. Its decisions were widely emulated and cited and it was staffed by recognized leaders in most of its fields. Top staff positions were filled on a nonpartisan basis and rarely if ever changed for political reasons.
The Commission considered whether statutory changes should be made, noting that the “New York State Public Service Law contains no minimum technical requirements for appointments to the Public Service Commission.” The Commission did not go down the road of specifying particular expertise as a prerequisite to service on the Commission:
The Moreland Commission believes there is little to be gained from specifying academic backgrounds or professional categories in an effort to raise the quality of Public Service Commissioners, and in fact a number of fields could prove useful in such a position, including: accounting, business, consumer advocacy, economics, engineering, environmental studies, finance, and law. Statutory qualifications add only a small weight to the scales in appointments, confirmation, and public evaluation. Of more value is a demonstrated commitment and competence in furthering the public interest in the areas relevant to utility regulation. The Moreland Commission therefore recommends the Governor immediately adopt a policy for future PSC appointments and that the Public Service Law be amended to require that appointees to the PSC have such competence.
The Commission made the following recommendation:
Appointees to the Public Service Commission should have demonstrated in their careers a commitment and a competence in furthering the public interest in one or more areas relevant to utility regulation; the Public Service Law should be amended to codify this requirement.
Ex Parte Communications.
The Moreland Commission urged legislative change and PSC regulations to implement controls over ex parte communications, stating:
The Commission learned during the course of its investigation that it is statutorily permissible and common practice for utility company executives, lobbyists and other paid representatives of interested parties to have unfettered access to the PSC Chair and Commissioners without having to disclose details of these conversations, presentation materials or other specifics to the other parties participating in cases before the PSC ex parte communications consist of evidence, arguments or other information related to a disputed issue pending before a decision-maker or in advance of such submission. Such communications are made in a manner that makes that information insufficiently available to challenge and counter by the adversely affected party or those with differing viewpoints. Since ex parte communications enable one party to influence a decision-maker off-the-record and outside the presence of the other interested parties, it effectively skirts procedural due process. Ex parte communications have the effect of undermining the indispensable fairness and unbiased attributes of decision-makers in judicial and administrative proceedings.
The Moreland Commission did not propose to prohibit all ex parte communications, which may be useful for PSC Commissioners and staff in their information gathering, but would require those involved in ex parte communications to divulge that a contact with the PSC or its DPS staff outside the case process has been made and substance of the communication, as most other state and federal jurisdictions have done. The Recommendations are:
• The existing statutory exemption of ex parte rules as they relate to public utility commissions
must be eliminated so as to subject the PSC to the same rules that other State agencies that are
bound by SAPA.
• Upon elimination of the statutory exemption of ex parte rules, the PSC should enact an
implementing regulation that includes a specific triggering event, preferably with a set term
prior to filing with the PSC, along with sanctions that are sufficient enough to deter violations
The Commission recognized that there is a problem in New York with the lack of adequately funded utility consumer advocacy, stating at Page 13: “The State should create an independent consumer advocacy board that represents all utility ratepayers in rate cases and general consumer-related functions. More particularly, the Commission recommended creation of a new Citizens Utility Board:
The Commission believes strongly that the PSC, once New York has better qualification standards for appointees as well as stricter ex parte rules (see sections 6.1 and 6.2), requires a robust, permanent, professional consumer advocate office to represent ratepayers. There are three possible models that the Governor – or Governor and Legislature – should consider:
• An Executive Order could establish a CUB with an initial board of three members appointed by the governor, speaker, and majority leader respectively that mirrors Illinois’ volunteer funding model whereby it is empowered to raise funds from individual ratepayers. Thereafter an Executive Director will be chosen by the Board or by the contributing members. Along with support staff, they will be charged with drafting governing CUB regulations. • Legislative Option A: establish a gubernatorial administered CUB with an alternate funding Mechanism whereby it would receive a fixed percentage of either the PSC’s or NYSERDA’s annual budgets. • Legislative Option B: establish a gubernatorial administered CUB with an alternate funding mechanism whereby it would receive a fixed percentage of either the PSC’s or NYSERDA’s annual budgets, with an Executive Director appointed for a fixed term removable only for cause. The Commission urges the State to take action to ensure that the CUB be insulated from political interference and budget retaliation. Recommendation:• The State should create a Citizens Utility Board that is independent, controlled by ratepayers, adequately funded and not subject to political interference using one of the models identified herein.