Autor: Scott Hempling

Scott Hempling  Attorney at Law LLC Effective Regulation of Public Utilities Marzo 2020 My third book, Regulating Mergers and Acquisitions of U.S. Electric Utilities: Industry Concentration and Corporate Complication, will be published by Edward Elgar Publishing in Fall 2020. (Click here for a Summary of Contents.) From February 2020 through March 2021, each monthly essay will excerpt a book chapter. Last month’s excerpt, of the Preface, is available here. This month is Chapter 1. I hope this essay series, and the book, will stimulate a community-wide discussion on this crucial topic. *  *  *           A utility gets its earnings…

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Scott Hempling  Attorney at Law LLC Effective Regulation of Public Utilities  My third book, Regulating Mergers and Acquisitions of U.S. Electric Utilities:  Industry Concentration and Corporate Complication, will be published by Edward Elgar Publishing around October 2020. Each of my next 14 essays will excerpt from the book’s 13 chapters, in sequence starting with the Preface. (Click here for a Summary of Contents.) I hope this essay series, and the book, will stimulate a community-wide discussion on this crucial topic. Preface            What happens when electric utility monopolies pursue their acquisition interests—undisciplined by competition, and insufficiently disciplined…

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Scott Hempling  Attorney at Law LLC Effective Regulation of Public Utilities January 2020 Political philosophers ask this question:  Suppose that at the time of your birth, you did not know your future:  whether you would grow up to be a utility CEO, a coal-company shareholder, a gas pipeline owner, a renewable energy developer, a regulatory professional, a small residential consumer or a major automobile manufacturer.  You knew not if you would be rich or poor.  Now suppose that in that condition of utter ignorance, you could choose the principles that would apply to regulated industries.  What principles would you choose,…

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Scott Hempling  Attorney at Law LLC Effective Regulation of Public Utilities December 2019 Each November, families give thanks for what enriches their personal lives.  For those of us in utility regulation, there also are many thanks to give.  Here are ten examples: Ownership diversity:  We have utilities owned by investors, by consumers, and by federal, state, county, city, and town governments.  In their scatterplot of failures and successes, no data point is static. This gives the lie to worn-out rhetoric about “public vs. private,” and induces humility in those who are certain of solutions (like some of Montgomery County, Maryland’s…

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Scott Hempling  Attorney at Law LLC Effective Regulation of Public Utilities September 2019 Last month’s essay argued for certification—or at least for sustained conversation about certification. This month, I offer thoughts and questions about how certification might work.  I focus on possible certifying entities, processes and curricula for supporting courses. Possible Certifying Entities Certifying entities fall into three categories:  academic, government and private. Academic institutions certify acquisition of knowledge by granting degrees.  The requirements vary widely by institution and subject matter. Government bodies certify readiness to perform specific services that government has determined require certification, such as law, pharmacy, medicine, realty sales and…

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Scott Hempling Attorney at Law LLC Effective Regulation of Public Utilities Accountants, architects, barbers, cosmetologists, crane operators, dentists, docking masters, doctors, electricians, engineers, foresters, home inspectors, interior designers, landscape architects, lawyers, land surveyors, pilots, plumbers, private detectives, real estate appraisers, real estate brokers, security systems technicians, security guards and tax preparers. These are among the professions my state of Maryland certifies. Most states have similar lists. And missing from every state’s list is “utility regulators.” Having practiced within this field in multiple roles—as a hearing room litigant, appellate lawyer, commission advisor, opinion-drafter, legislation-drafter and expert witness—I am convinced that regulation…

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Scott Hempling  Attorney at Law LLC Effective Regulation of Public Utilities I recently came across this quote: There is … a long-standing, but unwritten, rule that governs cost recovery and lies at the heart of establishing regulated prices. This rule is known as the regulatory compact. Under the regulatory compact, the regulator grants the company a protected monopoly, essentially a franchise, for the sale and distribution of electricity or natural gas to customers in its defined service territory. In return, the company commits to supply the full quantities demanded by those customers at a price calculated to cover all operating…

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Scott Hempling  Attorney at Law LLC Effective Regulation of Public Utilities I recently came across this quote: There is … a long-standing, but unwritten, rule that governs cost recovery and lies at the heart of establishing regulated prices. This rule is known as the regulatory compact. Under the regulatory compact, the regulator grants the company a protected monopoly, essentially a franchise, for the sale and distribution of electricity or natural gas to customers in its defined service territory. In return, the company commits to supply the full quantities demanded by those customers at a price calculated to cover all operating…

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Scott Hempling June 2019           Mergers and acquisitions have come to the water industry.  The targets are small companies—some private, some municipally owned, each a monopoly.  Some are merging with each other; others are being acquired by large investor-owned companies.  As infrastructure ages, environmental costs rise, and population grows, economies of scale may justify larger service territories.  But as with all M&A activity in monopoly markets, these transactions display tension between the parties’ strategic objectives and the public’s long-term interests. Price prevailing over performance Here’s what’s happening in State X:  State law lets investor-owned acquirers and municipal…

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Scott Hempling Attorney at Law LLC Effective Regulation of Public Utilities Last month’s essay, Commissions are not Courts; Regulators are Not Judges, argued against regulatory reactivity.  Courts exercise judicial power, addressing only the parties’ pleas; commissions exercise legislative power, making policy to serve the public.  The difference is profound.  A commission that addresses only the parties’ self-interests will fail to achieve the larger public interest. Yet some regulators do see themselves as judges.  They wait for disputes to resolve rather than look for problems to solve.  Their choice is rooted in personal preference, because it has no statutory basis.  And it cannot…

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