Rethinking the WV PSC’s Consumer Advocate Division

A number of events have brought me to the point of writing about the purpose of the WV PSC’s Consumer Advocate Division.

  • The current Consumer Advocate, Byron Harris, is retiring at the end of September, and will be replaced by Jacqueline Roberts, his current chief counsel.
  • At the very end of cross examination of expert witnesses at Friday’s PSC hearing on the Harrison settlement, PSC Chairman Mike Albert asked WV Citizens Action Group expert witness (This is a paraphrase from what I heard at the hearing; it is too early for a transcript yet.), “Just whose interest in this case does WV CAG represent?  Doesn’t the Consumer Advocate already represent consumers?”
  • For the second time since I have been following major cases at the WV PSC, I have seen the WV Consumer Advocate present strong and compelling arguments during a case, only to completely jettison those arguments in an agreed settlement.

Let’s start with the last item first.  Here is what WV Consumer Advocate Byron Harris said in his written testimony submitted in the Harrison case:

I believe the transaction violates the Commission order in the FE/Allegheny merger case because the price at which the Companies seek to acquire AE Supply’s interest in the Harrison units is clearly the result of the acquisition premium that FE paid for Allegheny Energy’s assets.

As I noted in this post, Mr. Harris and Billy Jack Gregg, an expert witness sponsored by the CAD, provided strong, well documented arguments, particularly concerning FirstEnergy’s attempt to “sell” the Harrison plant to WV rate payers at about twice the cost of its original cost less depreciation, which is the usual valuation standard used by the WV PSC.

The settlement before the Commission, to which Mr. Harris has agreed, still includes what Mr. Harris described in his testimony as an acquisition premium that is banned by the WV PSC’s earlier prohibition against passing any new costs from the FE/AE merger on to rate payers.  The settlement Mr. Harris agreed to reduces the original amount of FirstEnergy’s acquisition premium to $257 million above the $580 million value of the plant.  But that $257 million premium would not have been acceptable to the Byron Harris who testified just a few months ago in the case.

Not only did Mr. Harris accept the acquisition premium, but he agreed to the clause in the settlement that

Without limiting the foregoing, the Parties specifically represent that the Settlement does not include any recommended finding on or resolution of the question of whether the Transaction violates the Merger Stipulation, in whole or in part.

So Mr. Harris went from making strong recommendations based on what the settlement calls “the Merger Stipulation,” but which was in fact an order by the WV PSC, to making no recommendation at all.

Mr. Harris went through a similar transformation in the TrAIL power line case.  Mr. Harris went from being a staunch opponent of the project, to a staunch supporter after he agreed to the settlement which allowed the line to be built.  As you can see from this 2008 interview on WV Public Broadcasting, host Beth Voorhees is as puzzled as I am by Mr. Harris’s change of heart.

I am not picking on Mr. Harris here.  I cite these examples because this demonstrated tendency for resolute opposition to settlements in which all previous opposition disappears happens over and over.  Mr. Harris is very skilled and knowledgeable about the WV electricity situation, but he is always faced with a system designed to deliver the results the power companies want.  This is a systemic problem with the Consumer Advocate’s position, not a personal one.

Chairman Albert’s comment at the end of last Friday’s settlement hearing indicates another problem that has evolved with the Consumer Advocate Division.  The CAD is supposed to represent consumers in PSC cases.  The CAD is also supposed to be independent of the PSC, but how can that be possible?  The Chairman of the PSC appoints the director of the CAD.  The fact that the CAD is funded directly by the Legislature is a nice fig leaf designed to promote the idea of independence, but this is a minor point when the Consumer Advocate depends on the Chairman of the PSC for his/her job.

It was highly ironic that Mr. Albert questioned the status of the WV CAG in the Harrison case.  WV CAG was founded in 1974, six years before the WV Consumer Advocate was created.  If Mr. Albert had any question about what CAG stood for and whose interest the organization represented, all he had to do was go to their Web site where he would have found the following:

West Virginia Citizen Action Group (WV-CAG) has, since 1974, advocated for better public policy, rights of individuals, a clean environment and a stronger democratic process.

The philosophy of WV-CAG is that full-time citizen participation in the decision-making processes in our state is absolutely essential. Our main goal is to increase the voice of the average citizen in public affairs – to speak out in behalf of the consumer, to speak out in defense of a cleaner environment, and to speak out against governmental corruption.

Our staff focuses its attention on regulatory agencies, the state legislature, the courts, and the news media. WV-CAG organizes coalitions on issues and gives a voice to those who have no professional lobbyists representing them at the state legislature. It prides itself on its original research reports.

It is no surprise that Mr. Albert challenged CAG’s right to represent WV citizens in the Harrison settlement discussion.  He is a former power company lawyer from the firm of Jackson Kelly.  In the PATH case, Mr. Albert’s former Jackson Kelly colleague, Phil Melick, on behalf of AEP and Allegheny Energy, challenged most individual intervenors in the PATH case by claiming that their interests were already represented by the WV Consumer Advocate.

Here is where we see the real function of the Consumer Advocate Division at the WV PSC – to maintain the fiction that consumers’ interests are represented in PSC cases while the PSC Commissioners go about the business of granting power companies what they want.   The result is a kind of kabuki theater in which everyone has to endure some protests from the CAD when everyone already knows that there will be a settlement where the power companies get most of what they want, while giving up some insignificant concessions.  When there is money involved, such as rate cases or the recent power plant purchases, the power companies come in asking for a lot of money.  The CAD says it’s too much.  Everyone splits the difference and goes away proud of a job well done.

A key part of the CAD’s role is to keep a wide range of citizen voices out of PSC cases by maintaining the illusion that a single PSC agency, dependent on the Commission Chairman to appoint its director every two years, is already representing all consumers.

Of course, the electricity industry impacts WV citizens in many diverse ways.  Many “consumers” are now producers of electricity that interact with power companies in entirely new ways.  It is ironic that those within the PSC inner circle try to exclude real flesh and blood consumers from cases by claiming that the CAD already represents their “real” interests.  As many of us pointed out in the PATH case, we are not simply “consumers,” and we have seen enough of the WV CAD to know that this division of the PSC does not represent our interests, even when we do act solely as consumers.

The transition from one Consumer Advocate to the next is a good time for the PSC, the Legislature and the public to rethink what the CAD contributes to the PSC process.  Instead of using the CAD as a roadblock to public participation, the WV PSC, and the CAD itself, should welcome and assist participation in PSC cases.  Staff knowledge and access to expert witnesses always results in good analysis and well presented filings during cases.

In the past, Consumer Advocates have fought alone, with small budgets, and they become fatalistic when it comes time to discuss a settlement.  Commissioners are always tilted toward the companies’ point of view because of their past connections to the industry and because companies flood cases with lots of highly paid lawyers and experts.

Now, however, more and more people and organizations are beginning to intervene along side the Consumer Advocate Division in major rate cases and other high profile PSC cases.  Neither the Commission nor the CAD have adjusted to this new reality.

Chairman Albert seems to believe that the Consumer Advocate Division somehow represents all consumers at the PSC.  The Chairman should readily understand that this is simply not true, because he is the one who appoints the Consumer Advocate.  How can the Consumer Advocate represent consumers when those consumers have no role in choosing him or her?

By the same token, many intervenors in PSC cases can either be individual “consumers” who represent themselves or can be represented by organizations they choose and support to intervene on their behalf, such as the WV Citizen Action Group.  To claim the Consumer Advocate Division represents all consumers is as absurd as claiming the 20 member WV Energy Users Group represents all WV businesses at the PSC.

The Consumer Advocate deserves our support, because she is in the best position to objectively assess the impacts of WV’s two Ohio-based electricity holding companies on our state.  But she also has to realize that continually buckling under intimidation from both Commissioners and power companies does not build credibility among West Virginians.

Perhaps a solution to CAD’s problems lies in getting the agency out from under the thumb of the WV PSC Chairman.  The CAD definitely needs more funding from the Legislature, an admittedly unlikely development given the collapse of WV’s coal-dependent tax revenues.

One thing is certain, the WV PSC will continue to see more and more individual intervenors, and more intervenors like WV Citizens Action Group, in more and more cases.  Chairman Albert needs to get used to this new world, because the days of the good ole boys coming up with nice cozy settlements are gone.

One thought on “Rethinking the WV PSC’s Consumer Advocate Division

  1. That video never gets old, does it? 🙂 In representing the interests of “all” consumers, the CAD often ends up representing nobody. It’s way past time for reform to make the consumer’s advocate work for consumers instead of political or business interests. Advocate: a person who pleads on someone else’s behalf. If the advocate doesn’t know the person on whose behalf they plead, they are doomed to insignificance and failure.

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