State utility commissions are quasi-judicial agencies that were created to, among other things, oversee the rates charged by the electric, gas and water utilities, which are essentially government-sanctioned monopolies. At the federal level, the Federal Energy Regulatory Commission plays a similar role.
Maintaining constructive relationships with regulators is key to the utilities' financial performance. The tenor of these relationships can be greatly impacted by the method and timing of the selection of individuals to serve on these agencies. Out of the 54 regulatory commissions followed by Regulatory Research Associates, in 39 the members are appointed, while in 15 the members are elected in some fashion.
Commissioners serving at 35 state-level utility regulatory agencies nationwide are selected by the state's governor; in the District of Columbia, commissioners are selected by the mayor; the U.S. president selects the members of the Federal Energy Regulatory Commission; and in two jurisdictions, Massachusetts and Tennessee, commissioners are appointed by individuals other than the chief executive of the jurisdiction.
The commissioners at seven agencies are selected through statewide direct voter elections, while commissioners in six jurisdictions are elected by district. Commissioners in two jurisdictions, South Carolina and Virginia, are elected by the General Assembly.
Various trends regarding utility commissions
Commission composition — Within the last 12 months, 45 commissioners began serving new terms. Within the next 12 months, 32 commissioner terms are set to expire. Eight commissioners are serving beyond their term expiration dates, and there are currently three vacancies.
Party affiliation — Within the 54 commissions specified in this report, 95 commissioners are Republicans, 67 are Democrats and 7 are Independents. There are 44 commissioners who do not disclose their political affiliation.
Commissioner selection — Commissioners serving at 35 state-level utility regulatory agencies nationwide are selected by the state's governor. In the District of Columbia, commissioners are selected by the mayor. The president selects the members of the Federal Energy Regulatory Commission. Commissioners in two jurisdictions are elected by the General Assembly. The commissioners at seven agencies are selected through statewide direct voter elections, while commissioners in six jurisdictions are elected by district. At 28 state agencies, including the District of Columbia, and at FERC, the chairman is designated by the chief executive of the jurisdiction.
Commissioner membership — A total of 216 commissioner positions are encompassed within the 54 commissions followed by Regulatory Research Associates. There are 30 three-member commissions, 21 five-member agencies and three seven-member bodies. In 17 agencies, commissioners serve four-year terms. Commissioners serve five-year terms at six agencies. In 31 agencies, commissioners serve six-year terms.
All else being equal, there is a greater degree of investor risk to jurisdictions in which commissioners are elected rather than appointed. Generally, energy regulatory issues are less politicized when they are not subject to debate in the context of an election. Realistically, a candidate for commissioner who is sympathetic to the utilities and/or appears to be amenable to rate increases is not likely to be popular with the voting public. A high degree of turnover can also make for increased regulatory risk.
Contact us to learn about corresponding data or more on the selection processes at state and federal utility regulatory agencies, including the D.C. Public Service Commission and the New Orleans City Council.