The Committee of Inconsistent Capitalists:
Is Your Utility a Member?

          Capitalism, defined objectively, is an economic system that seeks to serve consumers by channeling private capital to the most efficient producers. Our utilities’ lifeblood is private capital, yet some are hostile to capitalism. How well do we address this irony?

          As customers, utilities favor capitalism. Needing underwriters to market their bonds and their shares, they select these sellers competitively. But when they seek new customers, their commitment to capitalism weakens. As shown by the examples below, they want regulators to channel capital not to the most productive actors but to their own favored ventures. It’s back to the 1950s—choosing the boss’s kid over the best candidate.

          Isn’t pursuit of self-interest the core of capitalism? Yes—but only in true capitalism, where the pursuer is disciplined by effective competition. A typical utility is not disciplined by effective competition. When it competes in new markets, it enjoys unearned advantages because it faces no competition in its home market. Freedom from competition is not true capitalism. It means that the utility’s claimed strengths—its brand, its access to capital and its employees’ readiness—are all assisted by its monopoly position: a century-long position not earned by merit but granted by government.

          No business gives up its advantages, earned or unearned, voluntarily. For utilities, that self-interest leads to inconsistency. For while when raising capital they depend on capitalism, when seeking regulatory support they oppose capitalism—routinely and unembarrassedly. Consider five examples. . .

Services

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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Testimonials

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