Who’s Enlightening the Public

By
Branko Terzic

Consider, if you are in the public utility industry, whether you believe the following statement to be true or false?

“Employees constitute well-known valuable contacts for enlightening the public about the utility’s objectives in a rate case.” 

The statement was made by Francis X. Welch, editor of Public Utility Fortnightly magazine in his book Preparing for the Utility Rate Case (Public Utility Reports Washington, DC 1954).

This is an excellent book and should be read by management of every regulated utility. Or at least it should be read by whoever is the head of the regulatory function.

My response to this question is that the statement is only “true” if the employees of the public utility are fully informed and capable of “enlightening” anyone about the “utility objectives” in a rate case.  Further, I would question how many utility employees could also answer any follow-up questions about the rate case procedure, practices or the basics of utility regulation. I would even assert that an uninformed or misinformed utility employee would be a less than “valuable contact” when it comes to explain even the basics of a rate case, much less the intricacies of state utility regulation. Still, it would be a good thing if the utility employee had the knowledge to be able to answer general questions about the utility rate case.

There is another reason that the widest number of utility employees should be familiar with the objectives and process of the rate case. This is because in the preparation of a rate case, data, information and reports are collected from throughout the entire company. A comprehensive rate case will include an analysis, by the regulator, of the entire utility operation delving into the costs and operations of every department.

Therefore, utility employees who understand what a rate case is about will be much more effective in responding to the numerous data requests which make up the interrogatories from the regulator’s staff and intervenors.  Knowing where the requested material is going and how it will be used will also allow the employees to add any additional information to clarify and explain in the hope of avoiding misinterpretation or misuse.

Many utilities have recognized the benefits of spreading rate case training widely across the company. A few may have in-house staff to provide such lesson, others send key employees to the few week-long training programs and some have used outside consultants to provide one, two or three-day training on company premises. One problem is that with retirements and turn-over the last training session may have been too long ago to have reached all who need the knowledge today.

Having personally delivered multi-day training programs to utilities in New York, Florida, Michigan and California I know that it is a major undertaking and commitment for a company. In all these cases the utilities pulled 30 to 90 people away from their regular and important duties for two or three days to become acquainted with the rate case process and essential elements of ratemaking. In my opinion, and I think Francis X. Welch would agree with me if he was around today, this was time and money well spent. I can write that with confidence because the first sentence of Welch’s preface is:

“The fixing of rates by regulatory commissions is a procedure that deals with the very financial life stream of the utility industries”. 

I cannot say it better.