March 5, 2007
RALEIGH – A state government agency has failed its duty by not representing N.C. electricity customers’ interests. That’s the key criticism of the Public Staff in a new John Locke Foundation Spotlight report.
Click here to view and here to listen to Daren Bakst discussing this Spotlight report.
“Consumers would be better off without the Public Staff if it continues to ignore its obligation to serve the interests of consumers,” said Daren Bakst, JLF legal and regulatory policy analyst. “By law, the Public Staff is supposed to advocate for customers. This is a role it’s not fulfilling.”
Bakst outlines two cases of the Public Staff clearly violating its duty and offers recommendations to help the agency comply with its mandate. The recommendations include term limits for the Public Staff’s executive director.
The Public Staff is an independent state agency required to represent consumers’ interests before the N.C. Utilities Commission, Bakst explains. “It is not the Public Staff’s role to represent interests of electric utilities, environmental groups, or even the general public interest,” he said. “It’s supposed to represent consumers in their role as consumers.”
The Staff failed to keep that goal in mind recently when it endorsed a new fee for electricity consumers, Bakst said. “The more electricity consumers use, the higher the proposed fee,” he said. “Quite simply, it is a tax. Instead of strongly opposing the tax as any consumer advocate would be expected to do, the Public Staff is the agency supporting the new tax.”
Rather than helping consumers, the tax or “fee” could generate as much as $181 million each year for a so-called public benefits fund, Bakst said. The fund would primarily support programs designed to reduce electricity use. “These programs are the pet projects of environmentalists, not programs designed to serve consumers’ interests.”
In a separate example, the Public Staff is ignoring consumers’ interests by supporting wind power plants, Bakst said. The Staff bases that support on alleged environmental benefits. “Recent Public Staff testimony on a wind farm focused on environmental issues and not consumers’ interests.”
“Wind power costs more money,” Bakst added. “It’s unreliable. It is hard to imagine the Public Staff finding a better example of an idea it should have opposed on behalf of consumers.”
The state could fix problems with the Public Staff by taking four steps, Bakst said. First, the governor should appoint a new consumer board made up of industrial and residential electricity consumers. State law should require the Public Staff to consult that board before making policy recommendations.
Second, the Public Staff should justify any policies that would raise consumers’ prices, Bakst said. “The Staff should be required to demonstrate a proposed increase is necessary to protect electricity availability, service, and other consumer interests,” he said. “The consumer board would have to approve the proposed price increase with a two-thirds vote.”
Third, the job of Public Staff executive director needs to change hands more often, Bakst said. Current executive director Robert Gruber has held the job since 1983. “An individual serving 24 years in what is clearly a political position is absurd,” Bakst said. “The executive director should serve a single eight-year term or no more than two six-year terms.”
Finally, a tighter state law should ensure that the Public Staff remembers its mandate to represent consumer interests, Bakst said. “The Public Staff does not need to ascribe values and benefits to consumers that have nothing to do with their role as consumers,” he said. “The Staff must not try to guess what consumers want. The Staff should worry only about commonly shared consumer interests, such as service, price, and reliability.”
Daren Bakst’s Spotlight report, “Consumer Protection Blackout: Why the Public Staff Should Be Reformed,” is available at the JLF web site. For more information, please contact Bakst at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].