Governor Martin O’Malley has nominated Anne Hoskins to the Public Services Commission, which regulates and sets rates for utilities in the State of Maryland. The nomination is controversial for several reasons despite efforts to highlight her environmental credentials.
First, Ms. Hoskins resides in New Jersey, though she now plans to live in Baltimore City. Many qualified Marylanders applied for the position, so it seems unusual to go with someone out of state.
Second, Ms. Hoskins will be coming directly from industry. Her previous employer was Public Service Enterprise Group (PSEG), a major New Jersey power company, and she has made clear that she leans towards the position of the utility companies on many key issues recently before the PSC.
As a result, tonight’s confirmation hearing before the Senate Executive Nominations Committee is garnering scrutiny. Surprisingly, given the interest, the Committee has decided not to permit public testimony, which must now be submitted in writing. Abbe Milstein, who founded Powerupmoco to promote greater power reliability after the 2012 derecho, has come out strongly against the nomination:
Applied in Maryland, the utility industry in our state has co-opted the Public Service Commission. Power companies and other utilities determine the Commissions’ decisions in their favor, as opposed to the Commission putting the interests of the consumers first. . . .
The Commission granted Pepco its unprecedented GRC surcharge and an increase in rates despite the Commission’s own findings in very recent earlier rate cases of Pepco’s imprudence, negligence and mismanagement. How can this be? By stacking the Commission with Commissioners whose interests align with utility companies, no matter how highly educated the Commissioners themselves are, utility customers end up with anti-consumer decisions such as Pepco’s granting of a $24 million tracker in Case No. 0311 and Order No. 86060 from Case No. 9326 where Ms. Hoskins sided with two pro-utility Commissioners in approving a tracker for BGE. Approval of these surcharges is contrary to the precedent established by our Commission as well as sound regulatory policy. These surcharges will unfairly shift risks that are properly borne by Company shareholders to ratepayers, based on a multi-year forecast of plants that have not been demonstrated to be used or useful and estimated expenses that are not known and measurable. The decision in Case No. 9311 is so controversial that it is currently under appeal in the Baltimore County Courts.
After my two and one-half hour discussion with Anne Hoskins last fall, it became abundantly clear that Ms. Hoskins, though highly educated and a charming mother of four, overwhelmingly approved of the granting of trackers as a method for utility companies to recover costs from ratepayers and could think of three examples during our conversation where she would implement these surcharges.
In Commissioner Harold Williams’ dissenting opinion from Case No. 9311 he discussed his view of trackers and that he “cannot justify the fundamental shift from long-standing rate-making principles merely to enable Pepco to begin recovering the cost of this project from ratepayers even before the Company begins spending it. … “We explained that ‘surcharges guarantee dollar-for-dollar recovery of specific costs, diminish the Company’s incentive to control those costs, and exclude classic, ongoing utility expenses from the standard, contextual ratemaking analysis.”
As a utility executive from power company Public Service Energy Group of New Jersey whose history of Nuclear Regulatory Commission violations for improper management of its nuclear plants is the foundation for serving on the Public Service Commission of Maryland, Anne Hoskins does not the fit the profile for the class of Commissioner Maryland consumers need or want serving on our Public Service Commission. Please DO NOT confirm Anne Hoskins to the Public Service Commission of Maryland.
For the uninitiated, trackers are when a power company gets to charge fees ahead of time to pay for improvements. Past practice has traditionally been for companies to come before the PSC and request rate increases based on their expenses.
Tracker opponents argue that they allow the company to maintain a nice bottom line as they don’t have to invest their past profits to invest in infrastructure. Additionally, they reduce incentives to keep costs down as the company doesn’t have to prove or to justify its expenses after the fact.
People are still watching the PSC closely after past frustrating power fiascoes. The demands for better and greater scrutiny of regulatory structures that are perceived to have failed the community will continue.