Your many duties include appointing and confirming economic regulators. In the utility sector, they are responsible for inducing high-quality performance by providers of electric, gas, water, and telecommunications service. Their decisions will affect millions of consumers; billions of investor dollars; the local, regional, and national economies; and our air, land, and water. Here are nine thoughts on producing top-notch results.
1. Appointments rooted in principle
“Regulation” is not a political whipping boy, something to campaign against. Nor is it a unidimensional spectrum on which “more” is better than “less.” Serious regulators do not debate oversimplifications like “command and control” versus “light-handed” regulation. (The regulatory legend Peter Bradford once noted, “I've heard of light-headed regulation, light-fingered regulation, and red-handed regulation; I know little of light-handed regulation.”) The purpose of regulation performance—aligning utilities' behavior with the public's needs. Principled regulators ask five questions: (1) What outcomes do we seek? (2) What behaviors, engaged in by whom, impede those outcomes? (3) What behaviors, engaged in by whom, achieve those outcomes? (4) To prevent the negatives and promote the positives, what actions must regulators take?
2. A multi-dimensional job
Utility regulation used to be straightforward. Utilities built infrastructure, sold products and services and proposed rate increases. Commissions approved projects and set rates. Their central aim was to protect customers from monopoly abuse—imprudent investments, inefficient operations, and undue discrimination against choiceless customers—while setting rates that gave investors a fair shot at a reasonable return.
Today's regulators do much more . . .