November 22, 2017
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Expert who served 4 Maine governors: Mixing politics, energy regulation is bad for business

By Darren Fishell, BDN Staff
Updated:
Courtesy of the Maine Public Utilities Commission | BDN
Courtesy of the Maine Public Utilities Commission | BDN
Tom Welch

PORTLAND, Maine — Over a solar power policy, Gov. Paul LePage said he would fire his three appointees to the Maine Public Utilities Commission, if he could. But there’s a good reason the governor can’t do that, according to the commission’s former chairman.

“The irony is that it’s a very business-friendly approach to have that kind of stability,” Tom Welch, a three-term PUC member and energy attorney who represented Central Maine Power Co., said in a telephone interview Thursday.

Since retiring early in 2014 from his third term on the commission — as LePage’s first PUC appointee — Welch has served as a consultant on projects in eastern Europe, with the general aim of helping to create a “climate of independence” for utilities regulators in countries including Albania and Moldova.

There, he said, the first question investors want to know is how insulated utilities regulators are against changing political winds.

That’s because investors’ recovery of their costs depends, at times, on the commission making an unpopular decision, such as raising electric rates to cover costs it finds are necessary to maintain a safe and reliable electric system for all consumers — even those in the most remote service areas.

“If [a government] ministry can reverse or remove the decision, then the investors will say why would we ever invest here?” Welch said. “People are going to put money where they see predictability and a higher value for cost recovery. And if you don’t have those two things, then you’re going to get an inadequate system. End of story.”

The situation can make for tension between regulators and the governor, lawmakers and politically motivated interest groups, but Welch said that’s natural because regulators have a different role.

“Inevitably, somebody’s ox is going to get gored in a decision, and they are going to claim — if they believe it’s to their political advantage — any number of things,” Welch said. “The commission has developed kind of a thick skin about that.”

Welch, who served two consecutive PUC terms from 1993 to 2005 and part of a third from 2011 to 2014, said every governor he’s dealt with — two Republicans, a Democrat and an independent — at times had frustrations with the commission and the slowness of crafting energy policy.

Maine makes up about 10 percent of the load on a regionally managed electric grid, making it hard for state policy to influence any larger shakeups in the market.

“I can fully understand the frustration,” Welch said. “Governors I worked with typically did it privately, but they railed that it was very hard to get things done.”

The commissioners and the PUC spokesman declined to comment on the governor’s remarks. But five months into taking over as chairman for Welch, Mark Vannoy commented to the Bangor Daily News on the relationship between the commissioners and the governor.

“My term will extend beyond the sitting governor, and there’s very little ability for the governor or anyone else to influence the decisions here,” Vannoy said at the time, noting that’s not the case in other states where commissioners are elected or can be fired by the governor.

But in a key difference from the current state of affairs, Vannoy at the time was deflecting criticism from the other side of the aisle, as Democrats alleged LePage’s appointees were colluding with an anti-wind governor.

Vannoy noted the Maine commission’s independence and structure isn’t just about it’s top executive.

“It helps insulate this job from the political pressures that exist in Augusta,” Vannoy said. “There are a lot of big decisions that are made here, and there are a lot of people who would like to influence those decisions, from businesses to environmental groups to individual legislators and the list goes on.”

Maine energy regulators serve staggered six-year terms, with one commissioner up for reappointment every two years. It’s out of sync with the four-year governorship.

LePage’s next appointment — for the term expiring March 31 — will be his last, with a term expiring in 2023, out of reach even of his successor’s first term. LePage’s successor eventually will consider reappointment of Chairman Vannoy and Commissioner Bruce Williamson.

While appointed by the governor, the commissioners are subject to approval by the Legislature’s energy committee and then the Maine Senate. And what results is a “quasi-judicial regulatory agency” where, after confirmation, commissioners act more like judges, Welch said.

In 15 years as a commissioner, Welch said none of his colleagues who shared that quasi-judicial role “ever made decisions worrying about whether we would be reappointed.”

There’s no motive for that, he said.

“You’re pretty employable after the fact,” said Welch, who worked in private practice after his first two terms on the PUC. “It’s not as if you’re going to starve.”

 


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