Today, Carolina Journal’s Donna Martinez interviews Daren Bakst, John Locke Foundation legal and regulatory policy analyst, about suggested reforms to the Public Staff, which is supposed to represent consumers before the state Utilities Commission. The interview aired on Carolina Journal Radio. (Go to http://carolinajournal.com/cjradio/ to find a station near you or to learn about the weekly CJ Radio podcast.)
Martinez: Before we get into your criticisms and your suggestions for reform of the Public Staff, let’s make sure we all understand exactly what the Public Staff does and how it relates to the Utilities Commission. Help us understand that.
Bakst: Well, the Utilities Commission sets rates. They deal with monopolies — basically, the utility companies.
Martinez: That would be like Duke Power, Progress Energy.
Bakst: Right, Duke Power and Progress. And somebody needs to represent the interest of consumers. There needs to be a consumer advocate, and that is the Public Staff, at least allegedly. In the law that has created the Public Staff, it explicitly states that their job is to represent the using and consuming public. That’s why they exist. There are plenty of organizations out there that are representing environmental groups, and the utilities certainly can represent themselves. But the question is: who represents consumers? So, that is why the Public Staff exists, to make sure that consumer interests are protected.
Martinez: So, is it fair to say that when, for example, an electric company decides that they would like to have a rate increase, they have to go before the Utilities Commission and plead their case, essentially, and get that approved. Then the Public Staff is supposed to be there to monitor those requests and determine whether it’s in the best interest of consumers, whether it’s a valid request, and also give that perspective to the Utilities Commission.
Bakst: That’s right.
Martinez: Okay. Fair enough. Well, lately Daren, there have been some actions by the Public Staff that have caused some concern among some groups and analysts. One of them is you. You are the legal and regulatory policy analyst for the Locke Foundation. You have looked at some of their actions and said it appears to you that perhaps the Public Staff is now taking a side with environmental groups, which you believe is not necessarily in the best interest of North Carolina electricity consumers. Tell us why.
Bakst: Yes, there’s a couple of reasons, but I want to stress the importance of the Public Staff. Not only do they represent consumers before the Utilities Commission, but if there is an issue, let’s say before the legislature, the legislature may look to the Public Staff and see what they have to say.
Martinez: That’s a key point.
Bakst: So if the Public Staff isn’t really representing consumer interests, then the consumer concerns aren’t going to be heard. And this is a big problem because the Utilities Commission and legislators and the Environmental Management Commission, for some reason they think that the stakeholders — on issues such as electricity — there’s only two stakeholders: the utilities and the environmental groups. And guess who they forget? The consumers.
Martinez: The consumers — those of us who are paying those electric rates.
Bakst: Right. And so it’s kind of a disservice to have a Public Staff that is supposed to represent consumers but really isn’t representing us. In fact, it’s actually — it would be better not to have the Public Staff. At least we wouldn’t have some pretense that we are being protected. But there are two specific examples.
Martinez: And in fact, Daren, you have written about those two examples in your new Spotlight paper called “Consumer Protection Blackout.” Daren, explain to us these two examples. Let’s talk about the first one that raised your eyebrows on this. You talk about new taxes. What happened?
Bakst: Yeah, there is a proposed new tax on electricity consumers that is being considered by the Utilities Commission and by the legislature. It would be an extra fee on top of the rates that electricity consumers have to pay now. This tax could be as high as $181 million potentially, each year, and that’s just using national averages based on the state energy office’s numbers. So, it’s a pretty modest number, actually.
Martinez: So, if that were to take place then, you’re saying that North Carolina consumers would be paying that money on top of their rates.
Bakst: Absolutely, they would be paying that. And here is the big problem — that the Public Staff is the government agency that is recommending this tax. Now, to me, consumers aren’t exactly being benefited by having to pay extra taxes. So, either the Public Staff is just completely out of touch, or they — well, they are just completely out of touch. We’ll leave it at that.
Martinez: Daren, the second example you write about in your Spotlight paper has to do with wind power — wind turbines — proposed in Ashe County.
Bakst: Right. The Public Staff has stated that they would support this wind farm in Ashe County if it were not for a law called the Ridge Law that prohibits the building — that probably prohibits the building of these massive wind turbines in Ashe County. And when I say massive, I’m talking about — like 40-story buildings basically.
Martinez: They are huge.
Bakst: They are huge. People will think of these cute, little, quaint windmills — Dutch windmills. That’s not what we’re talking about. We’re talking about 25 to 28 gigantic, industrial wind turbines. So, that’s a problem for the mountains, but they may be protected because of this Ridge Law. People on the coast, however, may not be so lucky because if we are going to ever have wind energy in this state, it’s going to come from the mountains or the coast. The mountains are protected by this Ridge Law, and they should be protected from these massive wind turbines. But people on the coast, beware: You are not protected from these massive wind turbines. So, if you walk down the beach one day, and you’re looking out to beautiful ocean, and then you see, one mile offshore, about 50, 40-story wind turbines, it’s because of the wind power. And basically the Public Staff is recommending — well, they’ve shown, expressed support for wind energy. And the problem, from the consumer standpoint, is that wind energy costs more, and also it achieves nothing because it doesn’t replace any existing need for conventional sources of energy.
Martinez: Daren, as we wind down here, you suggest some reforms to the Public Staff. What are they?
Bakst: Well, since the Public Staff is supposed to represent consumer interests, there needs to be some type of consumer oversight of the Public Staff. There should be some type of consumer governing body. That would be the first thing. The other thing would be to clarify the Public Utilities Act to make sure that the Public Staff really is representing consumers and that the Public Staff is not kind of imposing their own values on what consumers actually think.
Martinez: And then term limits. You think there should be (those) as well?
Bakst: I think one of the key recommendations is term limits. We have an executive director of the Public Staff who has been in that position for 24 years. That’s ridiculous in this type of political position. We need to have term limits.