How Public Utilities Commissions Can Impact You (Now & Later)

What they are, when we notice them, and how they can help in reaching a clean energy grid.

There are a lot of different pieces of government that go about their business and impact your life. Of course, frequently we aren’t really aware of what is doing what and how it’s doing it, particularly if the people that run the “what” aren’t on a ballot.

Here’s one example: public utilities commissions (PUCs). Although not the most essential part of government, PUCs fulfill an important role in our lives when they work properly. They can also be a useful tool in our growing efforts to address climate change. Let’s take the dive into PUCs.

Public utilities commissions and how they impact you

PUCs are state-based entities that regulate private utility companies (depending on the state’s commission, this would include electricity, water, natural gas, telecommunications), primarily to make sure residents aren’t getting price gouged or otherwise harmed by these services.

Basically, states allow private utilities to operate as monopolies/near-monopolies within their borders or in certain regions of the state, and in return these commissions are in charge of ensuring fair rates and reliable services for customers.

“They’re important economic regulators for states,” said Dr. Ken Rose when I talked to him last December. He’s a professor at DePaul University’s School of Public Service and a Senior Fellow with the Institute of Public Utilities at Michigan State University.

“A lot of commissions started as state railroad commissions,” Rose explained. These were bodies that were made to oversee railroad rate setting responsibilities (say that five times fast) that were originally under state legislatures’ purview. Over time, these took on other utilities and eventually transitioned into the PUCs we have today.

(Texas’ railroad commission is actually still around, though it regulates oil and gas utilities rather than railroads. To make this more confusing, this is a separate body from the Public Utility Commission of Texas that regulates electric, water, and telecommunication stuff.)

PUCs aren’t entities of absolute power when it comes to utilities, Rose explained. “They don’t legislate. They’re rate-making bodies, not policy or rule-making ones.” That’s an important distinction; the policies are actually determined elsewhere, usually by state legislatures, whereas PUCs are charged with the implementation.

“From my perspective, that’s not a totally bad thing,” Rose said. “If commissions ‘go too far’ or are simply ambitious, they’d likely be challenged by utilities in court frequently.”

Constant litigation would almost definitely slow down a PUCs operations, Rose went on. While this might freeze any changes (including beneficial ones) commissions want to carry out, business as usual would probably continue for these utility companies. In other words, PUCs might be drowning in lawsuits while utilities that can better afford the suits could carry on without much of a worry.

Still, the existing role of PUCs—execution of these rules—isn’t something to overlook. A good analogy for PUCs is a scale: They implement the rules set by their states to balance the needs and rights of their constituents and the utility companies.

A PUC’s implementation is where the rubber meets the road, and here we’re talking about an 18-wheeler. Here’s how Vermont’s describes its responsibilities for just electricity:

• Rates paid by consumers
• Quality of service
• Net-metering
• Siting and construction of generation and transmission facilities
• Line extensions
• Service disconnection
• Safety
• Energy efficiency programs
• Long-term out-of-state power purchase agreements
• Some long-term contracts for in-state renewable energy resources
• Long-term resource planning
• Utility franchise territory boundaries
• Rates paid to independent power producers
• Intrastate interconnection of transmission or distribution facilities
• Compliance with State statutes and Commission orders

The commission also notes that it doesn’t regulate transmission or electricity wholesale in interstate commerce, both of which are handled at the federal level. (More on that later.)

Anyway, all of these are important and impact you. How much you pay for electricity or where your state places a hydroelectric dam is determined in some capacity by a PUC.

More specifically, these are determined by the people who serve on these commissions. All told, there are 52 PUCs—Washington State has two, and D.C. has its own—and states differ on how commissioners are selected. Most states have commissioners appointed (by the governor in 39 states, by the legislature in two), but several elect them (at large in 10 states, by district in one).

It’s reasonable to say that part of why PUCs don’t get a lot of attention is because commissioners/members aren’t typically elected. You don’t find them on your ballot, so they can easily fly under the radar. Of course, popularly electing members is not a definitive way to prompt interest in PUCs—people tend to ignore other state and elections anyway (2020 notwithstanding).

However, when we do notice PUCs is frequently not cause for celebration.

When and why we notice PUCs

As argued, public utilities commissions are influential and impact individuals and entire communities. As levers of power (literally), they’re sometimes targets for or involved in shady business deals or scandals. Utility companies might lobby for appointments of commissioners who would favor the companies’ interests over the consumers’, legislators might even accept bribes to do so, stuff like that.

In Ohio last year, federal investigators found that a $1 billion bailout of two nuclear power plants by the state involved a large kickback for state lawmakers and officials. Long story short, the Ohio House speaker and others accepted bribes from an energy company and in turn OK’d this bailout. The speaker had also set up a dark money group to funnel the $60 million in bribes to his and allies’ campaigns and to launch a public campaign advocating for the bailout.

This is where a PUC would come in and do its own investigation. That’s what happened: The Public Utilities Commission of Ohio announced it would audit the deal and related legislation …but then the commission’s chair resigned after he was implicated in the scandal. The FBI raided his house shortly after the commission announced its investigation.

This isn’t unique to Ohio. Illinois is dealing with its own House speaker-involved scandal thanks to a federal investigation uncovering a years-long kickback and patronage scheme with a private utility. The investigation implicated other public officials, including a former Chicago alderman and his son who currently serves as a state legislator. Here’s the rub: The state’s PUC, which wanted to meet with the utility to seek more answers, is chaired by the son’s wife who chose not to recuse herself. (I should note, she actually hasn’t been implicated in the scandal.)

Both of these have been heavily reported and gained a lot of attention in their states, which helps make the case that people typically aren’t aware PUCs exist, or they’re made aware of PUCs because of gross misconduct.

Luckily, there are opportunities for PUCs to boost their images.

The role PUCs can play in addressing climate change

To meet any goals of lowering carbon emissions, the U.S. needs to make big changes to an energy sector that relies heavily on fossil fuels. Plus, changes in the weather and the higher frequency of extreme weather events—all of which are directly impacted by the warming of the planet—will increase the demand for energy. There are several ways to meet the moment, some of which involve PUCs.

While this would require a departure from PUCs’ traditional role as a solely-economic regulator (e.g., a heavy focus on rate setting), this is not a stretch. After all, PUCs already play a significant role in siting—where utility infrastructure like generators and power lines are placed—and assessing the quality of the utility services. Some PUCs are already taking this different approach:

• Connecticut’s Public Utility Regulatory Authority is statutorily required to include considerations for how the state will meet its renewable energy goals when reviewing all existing and future energy strategies. For instance, updating Connecticut’s grid must involve more energy from renewable sources and include more efficient technology.

• California’s Public Utilities Commission requires utility companies in the state to internally monitor “climate vulnerability assessments of their infrastructure and of their ability to reliably serve all customers, especially California’s disadvantaged communities.” By accounting for these vulnerabilities, the utilities must consider climate change’s impact on their services and energy infrastructure.

• New York’s Public Service Commission is considering a requirement of private utilities to annually disclose their climate change-related risks. This would help the state better plan improvements and upgrades to its energy infrastructure.

Meanwhile, environmental groups are proposing other ways for PUCs to get involved. One new report recommended Pennsylvania’s legislature should pass a bill that would direct the state’s PUC to “create guidelines for utility companies developing electrification infrastructure for school buses and transit buses.” Additionally, a group suggested Rhode Island’s commission and others in the northeast should include state climate goals when conducting a complete assessment of benefits for utility customers. (Cleaner air and a planet that isn’t melting are big benefits to customers, I’d say.)

Updating how the U.S. produces and transmits energy will be tough, notably because of the 50-plus PUCs, the private utility companies, and the other entities involved in the existing grid system. With so many actors and a decentralized system, any meaningful change could easily be slowed to a crawl.

Direction from the federal government would obviously help, but there’s a snag here when it comes to jurisdiction. For instance, we might want strong actions taken by the Federal Energy Regulatory Commission (FERC), which oversees wholesale and transmission of electricity and natural gas for interstate commerce. But in practice FERC’s role is limited due to the menagerie of state and private actors in the existing grid system, per the U.S. Government Accountability Office in 2014.

This isn’t to say the federal gov’s hands are completely tied, but rather that a chunk of administrative and policy changes would need to happen before an entity like FERC could take the wheel. Until then, states and their PUCs are in the driver’s seat.

Despite garnering little attention, public utilities commissions have a significant impact on you. They’re the difference in how much you pay for your electricity, they deal with private utilities in other capacities on your behalf, and they can play a crucial role in how we decarbonize our grid and meet future demand. They’re worth our attention outside of episodes of misconduct.

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Related reading on PUCs, FERC, and climate change:

• If you’re interested more in how PUCs and FERC interact (and don’t) with regards to the electric grid, check out this 2016 paper from Payal Nanavati and Justin Gundlach.
• If you’re looking solely at FERC’s role in reaching a zero-carbon grid, check out this 2020 paper from Avi Zevin, Sam Walsh, Isabel Carey, and Gundlach.
• Climate policy analyst and reporter David Roberts recently started a series on the U.S. transmission grid and some hurdles to updating it: part I, part II, and part III.