The Respectful Regulator

The insights from sociobiology and evolutionary psychology are genuine.  No doubt human beings have deeply entrenched inclinations to delineate groups, to identify with and value members of their own group, and to adopt a cautious if not antagonistic tone to other comparable groups, however defined and constituted.  But such biologically accented explanations have limitations.... [E]ven if biological bases can be found for dichotomization, stereotypy, or prejudice, human beings in every generation must attempt to deal with these proclivities and, when possible, to mute or overcome them.

Howard Gardner, Five Minds for the Future (Harvard Business School Press, 2008) at p. 105

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Prior essays have urged alternatives to divisiveness, provincialism, and zero-sumsmanship.  They have emphasized regulators' responsibility to establish a public-interest polestar, a centrifugal force that draws private interests toward the common good.

In this effort, what is the role of the respectful regulator?  The question is not how to show respect; I know no regulators who do not.  The question is how to get opposing economic interests to show respect—for each other and for the regulatory purpose.  “Respect” here refers not to social etiquette, but to appreciating the value brought to regulation by “others.”  What are the benefits of this respect, what do we lose by its absence, and how can a regulator encourage and sustain it?

Regulatory Disrespect:  Across Industries and Decades

I have seen inter-party disrespect from my earliest days in regulation.  It is not a pretty sight.  Nuclear power opponents in the 1970s and 1980s were labeled “tree huggers,” “anti-growth,” “anti-jobs.”   Independent co-generators in the 1980s and 1990s were derided as “fly-by-nighters” and “PURPA machines,” certain to shut down at the first hint of high winds.  For several decades prior to FERC's landmark Order No. 888 (1996), proponents of transmission access—mostly small municipal utilities—were caricatured as opportunistic cream skimmers insensitive to reliability.

How about the hearing rooms, which bring out the adversaries in all of us. . .

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The testimony addresses the following: the effect of the transaction on consumers, including: (1) reasonableness of the purchase price, including whether the purchase price was reasonable in light of the savings that can be demonstrated from the merger and whether the purchase price is within a reasonable range; (2) whether ratepayer benefits . . .
Testimony addresses the issues of whether the proposed transaction affects the interests of ratepayers; the ability of JCP&L and MAIT to provide safe, adequate, and proper utility service at just and reasonable rates; and whether the proposed transaction is in the public interest.
This expert report was submitted to a federal trial court in May 2016 on behalf of City of Jacksonville, Florida. The litigation, and report, involve a 1943 disaffiliation of a gas corporation from its holding company, as mandated by the Public Utility Holding Company Act of 1935. The report explains why the disaffiliation did not prevent liability for the costs of environmental cleanup, if such liability exists under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, from passing to the new corporation.

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Regulating Public Utility Performance

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Regulating Public Utility Performance:  The Law of Market Structure, Pricing and Jurisdiction

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Preside or Lead?
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