The "Public Interest": Who Has a Definition?

Regulatory statutes direct commissions to act in the “public interest.” Rarely do statutes, commissions or applicants define the term. Lacking definition, this statutory phrase risks becoming, in utility applications, a label attached to an applicant’s desires rather than a discipline on those desires; and in regulatory decisions, a label attached to a commission’s preferred outcome rather than principles that produce the right outcome.

Without a common definition we cannot have a common purpose. I suggest defining “public interest” as a composite of five goals: economic efficiency, alignment of shareholder and ratepayer interests, replication of competitive outcomes, respect for legitimate expectations, and diversity among each utility’s employees. The first four are entirely conventional, rooted in the elementary economic principles and longstanding regulatory practice. The fifth is an immediate necessity because of our national emergency. All five are mutually consistent and mutually reinforcing.

Economic efficiency: Economic efficiency means biggest bang for the buck. It means no waste. Investors seek the highest return for a given level of risk. Consumers seek the lowest price for a given quality of product. Business managers seek the highest possible output for a given level of input. As long as all bear the costs they cause, these rational actions lead to these results: benefits go to benefit-creators, costs are borne by cost-causers, and rewards repay risks. Each action makes someone better off and no one worse off; no benefit-creating opportunity is foregone. . . . 


Testimony, Papers, and Presentations

The testimony relates to AltaGas’s proposed acquisition of WGL Holdings, Inc. and Washington Gas Light Company.
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.

Books by Hempling

Regulating Public Utility Performance

“[A] comprehensive regulatory treatise …. In all respects, it merits comparison with Kahn and Phillips."

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

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Preside or Lead

Preside or Lead?
The Attributes and Actions of Effective Regulators

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Hempling Appearances

Energy Bar Association
Panel on Practice Principles for New Regulatory Lawyers

UDC Law School Panel
Is the Exelon Takeover of Pepco in the Public Interest?

Nigeria Electricity Regulatory Commission
3rd Judges’ Seminar

Telecom Forum
Asamblea Plenaria REGULATEL

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While we will dearly miss you as NRRI's Executive Director—where you have been so invaluable—I am delighted that you will now be in the classroom enlightening and sparking the interest of the next generation.
— Paul J. Roberti, Commissioner, Rhode Island Public Utilities Commission