Will tension between lawmakers and regulators hamstring the Clean Power Plan?

By Emily Holden | 06/29/2015 08:01 AM EDT

Faced with whittled-down budgets and a growing pile of federal mandates, state lawmakers and energy and environment regulators grappling with immense industry changes don’t always get along. Feuds between the groups have always waxed and waned, flaring up as new technologies or environmental standards emerge and spur political backlash. But U.S. EPA’s rule to reduce carbon dioxide emissions from the power sector stands to exacerbate that friction in many states.

Faced with whittled-down budgets and a growing pile of federal mandates, state lawmakers and energy and environment regulators grappling with immense industry changes don’t always get along.

Feuds between the groups have always waxed and waned, flaring up as new technologies or environmental standards emerge and spur political backlash.

But U.S. EPA’s rule to reduce carbon dioxide emissions from the power sector stands to exacerbate that friction in many states.


With so many cooks in the kitchen, the process of responding to the regulation could easily get messy.

"Personally, I support the outcomes of the Clean Power Plan," said Jeff Morris, a Democratic member of the Washington House of Representatives. "But the construct’s horrible."

That’s why "smart governors are bringing everybody to the table," said Morris, also a member of the National Conference of State Legislatures’ Executive Committee.

The Clean Power Plan sets individual emissions rates for each state and tasks air officials with writing sweeping compliance plans that could determine the future of coal, natural gas and renewable energy.

In most states, air officials will be sharing turf with the electric regulators that will eventually have to sign off on program costs and legislators who are hesitant to stand by and watch others chart out the state’s energy path.

Even before the Clean Power Plan, many regulators said lawmakers didn’t consult them or give them enough guidance or funding to do their jobs. Now, there are also concerns that elected officials may limit options for keeping electricity costs down in an attempt to retain control over how to react to the rule.

"I’m not sure how to get through to them," said T.W. Patch, a member of the Regulatory Commission of Alaska, about long-standing tensions with legislators. "But more often than not, I think I’ve failed."

A slew of anti-EPA bills

Many state legislators — who are vulnerable to political reactions to the rule — feel an obligation to be involved in Clean Power Plan proposals, which could set the energy courses in their states for years to come.

In Kansas, the Legislature passed a bill requiring the state’s Department of Health and Environment to consult with a legislative study committee as it works on a compliance plan, yet lawmakers stopped short of demanding an opportunity to sign off on the documents. Insiders have said that law and other similar efforts around the country were the result of a campaign by the conservative American Legislative Exchange Council.

Some legislatures have gone further, restricting plan-writing options. Governors in Texas, Indiana and Oklahoma have said their states will not write implementation proposals at all.

Tom Sloan, a Republican member of the Kansas House, says the pushback is worsened by a trend toward shrinking government, "compounded by anti-EPA feelings."

In the last election, Republicans took control of the most legislatures in a century, and they now hold a near record number of governors’ seats.

"Kansas and other states essentially don’t believe government should be involved in regulatory areas," he said. At the same time, "federal regulation and law trumps state regulation and law."

"So the fact that we might object to a plan that’s put together by our state agency in consultation with the utilities naturally doesn’t mean it’s not a good plan and not going to be approved by EPA," Sloan said.

Bill Becker, executive director of the National Association of Clean Air Agencies, said some legislatures are "taking on an increasingly more intimate role in the day-to-day decisions that air pollution agencies make, especially with regard to the Clean Power Plan."

"It has serious political and technical issues that bring into play some other issues of affordability and reliability," Becker said. "It’s not surprising that in some states, legislatures are insisting upon a great role in the review of some of those plans."

He respects that authority, but he worries that the wrong kind of involvement might lead to higher costs for customers.

"A state legislature that limits the ability of the state to comply is taking away any flexibility that EPA worked hard to place in the program," Becker said.

Regulators realize they will likely need to collaborate with lawmakers to get legislation in place to implement energy plans.

The National Association of Regulatory Utility Commissioners on Friday sent out final guidelines for multi-state coordination under the Clean Power Plan, including a section written by the National Conference of State Legislatures.

Released by NARUC’s Eastern Interconnection States Planning Council, the document provides examples of legislation that could be necessary to regional approaches and a checklist of policies lawmakers might need to enact.

"The role of state legislatures in this process is critical, even though it may not be obvious," the guidelines say. "State legislatures across the nation are taking a more active role in shaping state and regional energy systems affecting energy generation, efficiency and grid infrastructure. They create the regulatory framework and enforcement authority for public utility commissions, air offices and other state agencies. Legislative action will likely be required to effectively meet Clean Power Plan requirements and to engage in multi-state compliance efforts."

‘They don’t have all the facts’

In some states, regulators are trying to strengthen relationships with legislators on top of a turbulent history, said Patch, of the Regulatory Commission of Alaska, during a roundtable of state commissioners at a meeting in Phoenix earlier this month.

"In the iterations of utility governance, we have had three different commissions," Patch said. "Our legislature has never been ashamed to fire us all and start again."

Even when regulators and lawmakers do communicate well, tensions can rise when the legislative session ends and they head back to their districts.

"Once they are home, they are very far-flung from where we are located, which means that the conversations often end," said Idaho Public Utilities Commissioner Kristine Raper at that same meeting in Phoenix.

The legislators then comment on regulatory cases based on what constituents have said, without consulting the regulators, Raper said.

"They send it in on letterhead, and it has three or four different legislators’ signatures at the bottom of it, and they never asked a question before they sent in the letter, so they don’t have all the facts," she said.

Lawmakers, on the other hand, say regulators could do a better job of reaching out and educating them about what policy changes might mean to electric costs and grid reliability.

"Most legislators were flower shop owners one day or firemen, and the next day they’re trying to decide interconnection standards for the smart grid or something," Morris explains. The National Conference of State Legislatures is trying to address that problem with energy policy immersion courses for newly elected officials, he said.

Squeezing air agency budgets

Complicating matters, regulatory work is becoming increasingly politicized, and so is regulatory agency funding.

Under the Clean Air Act, the federal government can give state air agencies up to 60 percent of the money needed to implement federal regulations like the Clean Power Plan.

Becker said states have been receiving closer to 25 percent.

Republicans in Congress have denied the White House’s attempts to increase the funding, and state legislators who oppose the Obama administration’s climate actions are loath to continue to pay to implement the programs, Becker said.

"For some people, this is religion … notwithstanding the science," Becker said. "Top political leaders have been terribly critical of this program and strongly advocating states stand down and ignore the law. Other state bodies can’t help but hear that."

And after years of slow economic recovery, many states are facing huge budget gaps at a time when electric regulators are seeking money to hire experienced staff to oversee an increasingly complex industry. Commissions get most of their funding from fees on the industry, which must be approved by the legislature. About one-fifth of electric regulators are elected, rather than appointed by the governor, but they are still affected by lawmakers’ decisions.

In Washington, utility commission staff are on the same civil service pay schedule as park personnel and prison guards, Morris said.

An attorney with any experience with utility regulation could easily make $140,000 per year as an associate at a major law firm, Morris said, but regulatory positions in Washington top out at $100,000.

"We regularly lose people even to public power agencies because they can pay so much more than we can," Morris said.

In a meeting earlier this month on a complicated solar energy bill, there were about 70 lobbyists in the room and just one electric regulator, he said. "They just can’t cover that many different special-interest groups contacting legislators."

A bright spot?

In Montana, the Legislature has over several years enacted a 6 percent across-the-board spending reduction through staff vacancies, including at the Public Service Commission.

"Our argument to the Legislature was not that we wanted to grow our staff but simply maintain the 35 [full-time employees] that we had had since before 1997 — maintain that level of staffing so we could maintain the level of service and functionality that we had been providing," said Commissioner Brad Johnson, who is also running for governor.

Johnson joked that he told the speaker of the Montana House of Representatives that although the state constitution requires the Legislature to meet 90 days every two years, "two days every 90 years would be beneficial to the people of Montana." It’s routine for power regulators to kid that they would be better off if the politicians just went home.

Johnson admitted that "the relationship between our commission and the Legislature really is a two-way street" and "the commission is not without at least some indirect blame." He said the Montana PSC is working on a broad strategic plan that will address ways to be more proactive with lawmakers.

Of course, the story isn’t the same in all 50 states.

New York is getting an early look at what it is like to implement broad changes to the energy world. The governor’s office and regulators are overhauling energy efficiency and renewable energy programs in the Reforming the Energy Vision, or REV, process. Assembly Energy Committee Chairwoman Amy Paulin, a Democrat, said the Public Service Commission has kept lawmakers informed about the process.

"I do feel included," Paulin said. "Because I’m a legislator, I’m not an energy expert. As far as detail to the plan, I’m not sure that I even would have specific suggestions." Republican lawmakers in New York have not necessarily felt the same and have urged regulators to consider the cost impacts of the plan.

In Ohio, legislators agreed not to intervene with state compliance options for the Clean Power Plan, at least until after EPA issues a final rule.

And Becker says that while times might be tough between regulators and lawmakers, there is one bright spot. Air and electric regulators are interacting more and getting along better than ever because of coordinating efforts by national organizations and because they realize they "owe it to the citizens to do this in a cost-effective and fair way," he said.