Regulatory Hearings: Turning Adversaries into Contributors

For the state commissions of Arkansas, Hawaii, Indiana, Mississippi, and New Hampshire, I have organized and moderated regulatory hearings, both adjudicatory and rulemaking, on the following subjects:

  • certificate of convenience and necessity for major power plant
  • competitive bidding for generation
  • decoupling of rates
  • distributed generation
  • energy efficiency
  • feed-in tariffs for renewable energy
  • integrated resource planning and clean energy scenario planning
  • reliability
  • retail competition
  • revenue requirements

Regulatory hearings are critical to a commission's obligation to gather facts and insights.  But they run the risk of becoming a "tragedy of the commons":  each party exploiting its hearing time for its own advantage, leaving little time for the commission to promote the public interest.  (See my essay discussing the "tragedy of the commons" problem in the context of transmission cost allocation:  Interconnection Animus:  Do Regulatory Procedures Create a “Tragedy of the Commons”?)

Working with commissions, we have found ways to avoid this result.

Our proceedings have used a unique approach:  organizing appearances by issues rather than parties.  We take the following steps:

  1. Initiate the hearing with a research paper, written by consultants and staff, that presents all issues objectively, drawing on insights and practices from other states.  This step ensures that we frame the issues actively from a public interest perspective, rather than have the issues framed by the parties, with the commission reacting.  It helps make the difference between presiding and leading.  The paper will contain a full set of questions for the parties to address.
  2. Invite parties' comments (and replies) on the staff research paper and its questions.  This step ensures that parties can bring their own practical expertise, perspectives, and concerns into the record.
  3. Based on all the issues exposed by the first two steps, sketch a tentative table of contents for the commission's order.  This table of contents then serves as the agenda for organizing the issue panels.  This step ensures that the hearing is organized to produce the insights necessary to draft the order.
  4. Invite parties' comments on the table of contents and agenda, to ensure that no relevant issue is omitted.  At this point the table of contents is not fixed in concrete because the hearing itself can produce more insights, but it does become a common guide for all parties.
  5. Create a schedule for the week of hearings, allocating hours to each subject in rough proportion to its importance or complexity.  Doing so—and then adhering to the schedule—ensures that early-scheduled subjects do not over-consume limited time.
  6. With a hearing schedule organized by issue, we have all witnesses addressing that issue subject appear on a panel simultaneously.

Each panel begins with questions asked by the moderator on behalf of the commission.  To develop these questions, the moderator works with commissioners and staff to identify, from the submissions, areas where more facts and insights are needed.  The questions tend to focus on solutions, asking witnesses for reactions and suggestions for improvement.  In this way, the hearing continuously focuses on the commission's obligation to improve market performance, rather than on parties' pecuniary goals.  The moderator is making every witness a resource to the commission rather than an advocate for a single party.  These questions can go to any witness at any time, with opportunities for other witnesses to chime in.  Since no witness knows when he or she will be called on to respond, the state of alertness is high throughout.  There are no dull moments.  Often the moderator asks other witnesses to comment on a prior witness's statement.

When the moderator has completed his questions (which are timed to fit within the scheduled period and to leave parties time to ask their own question), each party's lawyer has an opportunity to examine other witnesses.  Given the comprehensiveness of the moderator's questions, the lawyers tend not to have many questions.  This saves everyone time.  The moderator's non-adversarial questioning tends to produce answers faster than adversarial lawyer questioning.

At the end of the week, we give all parties, either through their lawyers or their experts, an opportunity to make closing statements.  This step ensures that the commission hears about anything that might have been omitted during the hearing.  We usually find that because of the extensive dialogue that has occurred during the week, most parties have little to add in these closing statements.

This approach has the following advantages over the conventional one-party-at-a-time, one-witness-at-a-time approach:

  • a dynamic conversation throughout, in which witnesses find themselves focusing on increasing the commission's mastery rather than defending themselves against adversarial lawyer questioning
  • a focus on questions of importance to the commission
  • a disciplined effort to bring out the best from each witness
  • an opportunity for witnesses to comment immediately on each other's statements
  • an organized transcript, in which all conversation about a particular topic appears in the same place, rather than scattered among days based on witness appearances
  • an opportunity for each party's lawyers to question other witnesses, after the commission's moderator has completed questions in an area
  • an opportunity for commissioners to inject questions at any time