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Sunday, March 26, 2006

Regulatory Overload

I'm going to try to get caught up on a few things today - starting with this.

I work in an industry that is regulated by the Public Utilities Commission. I am well aware of the regulatory burden that is put on utilities by the State of Minnesota. Apparently Mike Hatch (current Attorney General and DFL candidate for governor) now wants add another layer to that burden...approval by the Attorney General's office.

We all know that energy rates have gone up. It is evident every time we go to the gas station. These rising costs are also affecting the cost of lights and heat - especially for those of us in Minnesota! So it should come as no surprise that CenterPoint Energy (gas) and Xcel Energy (electric) want PUC approval to raise their rates in the middle of a set tariff year.

There were a couple of lines though, that should raise lots of red flags among the electorate.

"First, the PUC must set rates that encourage conservation."

I have to respectfully disagree with the esteemed Attorney General. The PUC's job is to set rates that are fair for ALL users! Here in Minnesota, gas for heat is a necessity! There is no way that someone can do without heat in Minnesota in January. People should not have to choose between food and heat. It is the PUC's job to balance the needs of the consumer with the needs of the company!

"Interestingly, while Xcel wants to collect more money from ratepayers, it plans to return more money to its shareholders."

Well no kidding! It's called showing a fiduciary responsibility to the shareholders! It is what a publicly traded company is expected to do...MAKE A PROFIT!!!! If they are not making a profit, then the company is taken to court by said shareholders, because if they are not making money, then the company is either being grossly mismanaged or management is stealing from the company...and who would prosecute the case if it is theft? It couldn't be the Attorney General's office now, could it?

Now there is one thing that AG Hatch makes a good point on.

"CenterPoint also wants to charge ratepayers for the replacement of defective gas line couplings that caused two recent explosions. These couplings must be replaced. The issue is whether ratepayers should have to pay for CenterPoint's failure to investigate the natural gas line system before purchasing it. As troubling, CenterPoint hasn't calculated the exact costs of the project. CenterPoint acknowledges that some of the costs may be covered by insurance or recovered through litigation. These issues must be resolved before CenterPoint asks to pass these costs onto consumers. "

The AG is correct - CenterPoint needs to determine what costs (if any) are recoverable before they determine how much they need to pass on to the consumer. When CenterPoint Energy purchased Northern States Power approximately 3 years ago, neither company had a clue that there were problems with these couplings, or if NSP was aware of this pending problem, they should have disclosed it to CenterPoint during their purchase negotiations. If CenterPoint can prove malfeasance from the former NSP officers, then they may have a legal case and should be able to recover some of the costs of replacing those couplings.

The thing that bothers me the most about this is that the AG is using his office to campaign for Governor and the Star Tribune seems to not mind giving him this kind of unpaid advertising. The DFL has contended that Governor Pawlenty needs to give up his radio program on WCCO as it provides him with a campaign advantage. If (following the DFL's "logic") WCCO should be forced to cancel the program or provide equal time to the Governor's challengers, then shouldn't the Star Tribune be forced to offer AG Hatch's opponents equal time?


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