Ciudad de México (Redacción / Energía Hoy).- Hace unos días, el presidente Andrés Manuel López Obrador envió al Senado de la República la terna para elegir al nuevo comisionado presidente de la Comisión Reguladora de Energía (CRE).
En la terna están: María del Rosío Vargas Suárez, Alfonso López Alvarado y Leopoldo Vicente Melchi García, para ocupar el puesto que dejo vacante Guillermo García Alcocer, quien renunció en junio pasado.
Aquí surge una pregunta: Cuál va a ser el criterio para elegir al nuevo presidente de la CRE, una interesante pregunta.
Hace un par de meses Scott Hempling, colaborador de Energía Hoy, escribió sobre el tema donde aborda, un ángulo interesante: Certificar a los reguladores. ¿Por qué no?
En los texto surgen ideas o una especie de guía de cómo elegir a un Comisionado de un organismo regulador.
Aquí las dos entregas:
CERTIFICATION OF REGULATORY PROFESSIONALS: WHY NOT? (PART I)
August 2019
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 can improve if it certifies its practitioners. How we do that leads to a series of questions, explored this month and next.1
Why Certify?
Certification has a market mission and a professional mission. In the marketplace, certification protects consumers from harm, while rewarding the qualified and penalizing the unqualified. In the professions, certification defines the profession’s purpose, then establishes and upholds its standards. It answers the question, “What does it mean to be a good architect/accountant/doctor/lawyer?
These two missions, mutually reinforcing, apply equally to the regulatory profession. The purpose of regulation is performance: to induce excellence in the industries whose actors and actions we regulate. To induce excellence, regulators do three things: they set standards, apply those standards to actors and their actions, then assign consequences, positive and negative, by setting compensation and imposing penalties. For their decisions to be credible, regulators must earn trust: from the industry whose performance they judge, and from consumers whose welfare they protect.
Certification can help us earn that trust. It would act centripetally, pulling the profession—its commissioners and staff, utility executives and their employees, consultants and course providers—toward a central, common vision of excellence in industry performance.
What to Certify?
To know what to certify we must ask: In a regulatory professional, what characteristics and knowledge do we value? Of those characteristics and knowledge, which should we validate through certification? The answers then drive more practical questions: (1) Is there a core body of knowledge all regulatory professionals should have? (2) Is there also discipline-specific, industry-specific and subject-specific knowledge that professionals should master? (Examples: What should engineers know? What should telecommunications regulators know? What should rate of return experts know?) Answering these questions then helps us decide whether and how to differentiate certification. For example:
Regulation-generic mastery: Certification would cover subjects all regulatory professionals should know, such as: the purposes of regulation; market structure (e.g., distinction between monopoly markets and competitive markets, and ways to transition between them); the different types of transactions and actions that trigger commission involvement; commission powers, structures and decisionmaking processes; and (to encourage multidisciplinary knowledge) the principles that underlie each of the relevant professional disciplines (law, economics, finance, accounting, engineering, management).
Profession-specific mastery: Certification would be different for lawyers, economists, accountants, financial analysts, and engineers. A regulatory lawyer, for example, would need to master concepts common to most regulatory statutes, such as the “just and reasonable” standard, undue discrimination and retroactivity; constitutional law, such as due process, takings, interstate commerce clause, contract clause and federal-state supremacy; administrative and procedural law, such as substantial evidence, the “arbitrary and capricious” standard, due process, cross examination, and judicial review; and judicial doctrines affecting regulatory powers, such as legislative delegation, filed rate doctrine, and the “managerial prerogative.”
Industry-specific mastery: This certification would vary with each regulated industry: electricity, gas, telecommunications, water. Materials to be mastered would include: history, market structure, corporate and financial structure, transactions, state–federal regulatory relationship, and emerging issues.
Subject matter mastery: Reliability, consumer protection, rate design, competition, hearing room procedures, competitive bidding, renewable energy, universal service, integrated resource planning, competitive bidding for generation, regional transmission organizations, audits. The subjects covered by regulation are myriad and intimidating. But they can be mastered.
Role mastery: The regulatory profession includes different roles: commissioners, commission advisors, litigation attorneys, expert witnesses, administrative law judges. Each role requires mastery of certain procedures and substantive topics.
Attendance vs. Achievement
In Lima, Perú last month, I gave a lecture to a group of young professionals. These 20 attorneys, 20 economists and 20 engineers, were competitively selected from a field of 2500 applicants by OSIPTEL, Perú’s telecommunications regulator. They were spending their summer studying regulation. My hour lecture, from 11a.m. to noon, was their third of the day. I had expected to follow my talk with lunchtime conversation, but when I finished no one moved. Instead, administrators came in, passing out papers. Another lecture? No—an exam. These students will be tested throughout their three months. Achievement, not attendance.
To certify is to recognize achievement—to confirm that a person or entity has achieved some defined measure of expertise, knowledge or competence. A graduate school receives certification after objective experts monitor and review for curriculum, scholarship, teaching quality and student success. A lawyer, doctor, engineer or accountant receives certification after completing educational requirements at a certified school and taking one or more professional exams.
In the regulatory community we have dozens of conferences, seminars, professional meetings and continuing legal education. But only in rare cases, such as New Mexico State University’s master’s degree program and the Society of Utility and Regulatory Financial Analysts’ professional exam, do we certify achievement. In all other cases (including my own legal seminars), attendees merely attend. But attendance is not achievement; exposure is not mastery. And smart phones—the bane of any seminar presenter—have not helped. We need to certify not what chairs we have filled, but what material we have mastered.
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At stake is our nation’s infrastructure: our electricity, gas, telecommunications and water industries. Our goal is performance. We can rely on faith and beliefs, as in “good faith efforts” and “belief in competitive markets,” or we can insist on old-fashioned objectivity, rooted in professional training validated by certification. We license manicurists; why not regulators? Next month I will address steps we can take.
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1 This two-part series draws from writing I did while the Executive Director of the National Regulatory Research Institute.
CERTIFICATION OF REGULATORY PROFESSIONALS: WHY NOT? (PART II)
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 engineering; even cosmetology, massage therapy and tattooing. In these situations, government rules prohibit noncertified persons from performing these services—or at least claiming to be certified when they are not. In the legal profession, certification beyond the general bar exam is rare; indeed bar rules typically prohibit a lawyer from claiming to “specialize” in anything (patent law is a prominent exception).
But—news from North Carolina, from a renewables lawyer there: “A group of attorneys in North Carolina is petitioning the North Carolina State Bar to create a new area of legal specialization for utilities law, which would include practice and procedure before the North Carolina Utilities Commission, representation of clients subject to the provisions of state and federal utilities law, and representation of investors in the field.” The requirements would likely include “five years’ experience in utilities law, a minimum of 400-500 hours of practice in the area per year, CLE requirements, peer review, and passing an exam.”
Private organizations certify readiness to perform services where certification is not government-regulated. In these situations, a profession, through its organization, has determined that there is value to the public and to the service provider (in terms of market value) to create a certification process. Examples of such professions are financial planning, city planning, meeting management and religious ministry. There is the Society of Regulatory and Utility Financial Analysts, which certifies through an exam. And there is even an organization that certifies alcohol servers. See tipsalcohol.com. (TIPS stands for “Training for Intervention Procedures”—”the global leader in education and training for the responsible service, sale, and consumption of alcohol.” It provides certification “valid or accepted for use in bars and restaurants in 30+ states.” Certification, I am told, can protect a bar from lawsuits by those injured by drivers who drank there.)
The three categories of certifying entities also reflect differences in the purpose of certification. Academic certification serves the purpose of upholding academic standards. Government certification furthers public policy goals of protecting consumers where there is great differential in knowledge between provider and consumer; e.g., someone needing heart surgery is not competent to compare the skills of competing surgeons. Private sector certification focuses on practitioner skills, as a way of demonstrating to the public that skills matter in the quality of service. In contrast, noncertified professions—bicycle repair, baking, landscaping—depend on reputations created by good work and word of mouth, along with advertising.
Applying these concepts to utility regulation: The central value in certifying regulatory professionals is not that they meet “academic” requirements but that they meet practical requirements. This value suggests that the certifying entity should be an organization formed by regulators, perhaps advised by practitioners and academics.
Possible Certification Processes
Certification processes usually involve either/or (1) completing certain courses or curricula (“completing” meaning mastery, not mere attendance); and (2) passing a qualifying exam. Note the reference to “courses or curricula.” Some certifications require a single course. Others require a multicourse curriculum. Some questions to consider:
- Could there be alternatives to the qualifying exam, such as publications, testimonies or cases argued?
- Is a qualifying exam sufficient, or should there also be an experience requirement? If so, should that experience requirement consist merely of years survived, or instead require specific activities or accomplishments, such as briefs written, witnesses examined, testimony offered?
- Should there be, in addition to the qualifying exam and experience, other requirements, such as: a published paper (a nice way to enrich professional dialogue), oral interview conducted by regulatory professionals or some other contribution?
- Should certification be a one-time event (such as the lawyers’ bar exam or accountants’ CPA exam)? Or should there be required refreshers, like board-certified physicians have? Should there be opportunities for advanced certification?
- If the focus is to certify professionals, then is there a need to certify courses? Here are three alternative approaches. First, make courses optional and refrain from certifying them. Course providers would differentiate themselves in terms of how well they prepare individuals for the qualifying exam. Second, make courses optional but certify certain course providers. This is the model most often used for continuing education requirements, such as where the state bar grants continuing education credits to those who take courses from approved providers. Third, require certain courses and certify competing providers. In this context, the certifying entity requires that the individual take particular types of courses, offered by competing, certified providers.
- Common to all these questions is this foundational question: What types of mastery is certification seeking to produce?
Designing a Curriculum for Certification
Recognizing the many possibilities for a curriculum leading to certification, here are some opening thoughts.
I have defined an educated regulator as one who knows regulation’s subject areas (market structure, pricing, quality of service, physical adequacy, financial structure, corporate structure), its legal sources (substantive law, constitutional law, administrative law), its professions (law, engineering, accounting, finance, economics, management), and its procedures (information gathering, decisionmaking, enforcement).
Dr. David Boyd, former Chairman of the Minnesota Public Utilities Commission (now head of regulatory affairs at Midcontinent Independent System Operator), has suggested a three-layered curriculum. The first layer, provided to regulatory professionals from all fields, would cover generic subjects. In the second layer, people would move into their separate professional disciplines to deepen their expertise. In the third layer, all the professionals would return to a common “capstone” course that would focus on advanced, frontier concepts. This approach would cause the participating professionals to become literate in each other’s disciplines.
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How might we organize the certification infrastructure—the goals, curriculum, educational materials, courses and qualifying exams? We would need teams of professionals—of practitioners, academics, staff and commissioners—somehow representative of the many interests affected by regulation, to bring insights, experience and passion to the process. And we would need a community-wide commitment to the mission: bringing to regulation the professional excellence the public expects and deserves. Why this community-wide commitment does not exist presently—why the profession and the public it serves seem satisfied with the absence of shared standards—is the subject of a future essay.
