Dueling Florida Utility Commission Reform Bills Aim for Ethical, Structural Revisions

Utility regulation in Florida was criticized in October by Moody’s, which issued a report cited by House staff members in their analysis of Precourt’s bill. Moody’s cited “an indication that the political and regulatory environment for investor-owned utilities in Florida may be deteriorating. … Moody’s views political intervention in the utility regulatory process as detrimental to credit quality, sometimes resulting in adverse rate case outcomes.” The debt ratings service cited downgrades to utilities resulting from such conditions in Illinois and Maryland.

Fasano’s bill, backed by Gov. Charlie Crist, a Republican, and some commission members, is based on recommendations a grand jury made after investigating a 1992 scandal involving the commission and improper exchanges with outside parties, a Fasano spokesman told us. “The grand jury recommended a series of reforms, only one of which was adopted,” the staff member, Greg Giordano, said. “Sen. Fasano worked from that document, whose recommendations are as applicable today” as they were 18 years ago. S-1034 defines prohibited ex parte communications and stipulates that when they occur they're to be memorialized and posted to the commission website on pain of dismissal of the commissioner involved, who could face financial sanctions of as much as $5,000 per violation. Missouri’s utility commission recently adopted rules intended to rein in on inappropriate ex parte interactions.

More recent controversies in Florida also figured in Fasano’s effort. “The Public Service Commission has come under a cloud of suspicion during the past couple of years due to media reports that utilities regulated by the Commission may have gotten a leg up over their opponents by engaging in the act of ex parte communications,” Fasano said in a written statement. “This legislation will prevent that.” Prohibited communications “are spelled out very clearly in this legislation,” he said. “If a prohibited communication inadvertently occurs the onus is on the commissioner or staff member to immediately memorialize the communication and post it to the PSC’s website. So that all communications, whether written or oral, are made available for all to see the bill requires that they be posted to the website as well.” Amendments made as the bill moved through committee would require commissioners to follow the state Code of Judicial Conduct.

The bill addresses the “revolving door” effect in which commissioners or staff members leave the agency to work for or to lobby on behalf of regulated entities. Fasano’s bill originally prescribed a two-year ban on the practice. During committee hearings he doubled that to four years. “No longer should commissioners leave the PSC and take cushy jobs with an entity that they once regulated,” he said. As amended the bill would extend from two to four years -- the same tenure as utility commissioners -- the term of the state’s Public Counsel, a post whose occupant represents ratepayers in rate cases before the commission. The Public Counsel is confirmed by a joint legislative committee and the commissioners are confirmed by the Florida Senate.

Precourt’s measure would restructure the commission into two separate entities. The commission itself would be “an independent and impartial decision maker with the assistance of professional and technical advisory staff,” while a new Office of Regulatory Staff, serving under the Financial Services Commission, would advocate for the public interest before the commission and in proceedings within commission jurisdiction, said a House of Representatives staff analysis. HB-7209 would transfer the Office of Public Counsel from the control of the Legislature to the attorney general’s office.

Precourt proposes to apply “certain provisions from the Code of Judicial Conduct” to commissioners, and offers definitions of ex parte communications outlining which are are within and beyond the pale. His bill also lists in detail behaviors that would land commissioners in hot water, such as accepting “anything” from parties with proceedings before the commission, owning financial interests in regulated companies, participating in or campaigning on behalf of political parties or commenting publicly on the merits of proceedings that are under way. The bill would bar “unprofessional” behavior and “impropriety” on the part of commissioners “at all times.” Precourt didn’t respond right away to requests for comment.

HB-7209 would outlaw ex parte communications concerning “the merits, threat, or offer of reward” in proceedings. Commissioners receiving prohibited ex parte communications would be required to place in the record copies of any written correspondence or a memo stating the substance of any oral communications. Commissioners would have the option of withdrawing from the affected proceeding to eliminate the effect of receiving the communication. Anyone not a commissioner making a prohibited communication would have to submit to the commission copies of any written material and written responses or a memo on oral exchanges. All such material would be posted on the commission website.

Commissioners would have 15 days from the episode in question to get on the record with a prohibited ex parte exchange. Failure to do so would mean removal from the commission and a civil penalty of as much as $5,000. Non-commission members who engage in proscribed finagling would risk a two-year ban from practicing before the commission. Precourt’s bill also would require commission members to have at least a bachelor’s degree from an accredited college or university. If that mandate is enacted, commission chair Nancy Argenziano, a Republican member who dropped out of college, could not keep her seat, the Palm Beach Post reported Sunday.