Ethics, Transparency, and Public Participation in Regulatory Proceedings

Background

Commissions that regulate utility services have a huge effect on the lives of consumers. Few other government agencies compare. Their decisions affect the cost, quality, and availability of electricity, natural gas, telecommunications, and water. Vigorous oversight is essential to protecting consumer interests. This is true both in states with traditional regulation of monopoly providers and those that have introduced competition to their retail electricity or natural gas markets (see also Retail Electricity and Gas Restructuring section of this chapter).

Too often regulators make decisions without meaningful consumer input. Or worse, they act with undue influence from regulated entities or political pressure. Decisions are called into question when policymakers have a conflict of interest, or the policy process has not been transparent. 

Often the regulatory process is stacked in favor of utilities and business. Concerned citizens, consumer groups, and small businesses lack the resources, expertise, or time to take part fully. Some states have acted to expand public participation in the decision-making processes. They’ve tried to make consumer-input procedures less complex and costly. For example, some states have created programs to help pay consumer groups for attorneys and experts to participate in contested proceedings. These are called intervenor-funding programs. These programs help ensure that there is an informed and active consumer presence throughout regulatory processes. Most states also have a consumer utility advocate office (see also this chapter’s section on Consumer Utility Advocates).

ETHICS, TRANSPARENCY, AND PUBLIC PARTICIPATION IN REGULATORY PROCEEDINGS: Policy

Increasing participation

In this policy: FederalLocalState

Policymakers should adopt programs to help consumer groups take part in regulatory proceedings. They should fully fund these programs. For example, intervenor-funding programs award reasonable advocate’s fees, expert witness fees, and other costs of preparation for and participation in a utility hearing or proceeding to a customer or organization representing customers in the proceeding. Generally, states require a party receiving such funding to make a substantial contribution to the proceeding and demonstrate that participation or intervention without an award of fees or costs would impose a significant financial hardship.

Policymakers should make the regulatory and oversight process simpler and more open to enable the public and groups representing the public interest to participate. This includes reducing the complexity and cost of consumer input procedures. It also involves making regulatory proceedings and stakeholder meetings more accessible, including by allowing groups that do not have an attorney to participate. (Some states require an attorney to represent a party in a utility proceeding, while others allow non-attorneys to participate. The policy would oppose a proposal to prohibit non-attorney intervention.)

Ethics, transparency, and accountability

In this policy: FederalLocalState

Regulators should be free from conflicts of interest. They should be transparent in decision-making and accountable to the public (see also Chapter 1, Government Integrity and Civic Engagement).

Regulators should provide vigorous oversight. They must ensure fair terms, conditions, and prices for telecommunications and utility services.

The following AARP government integrity policy (from Chapter 1) should help guide our work in ensuring accountability from regulators:

Principles that apply to utilities proceedings and commissions:

Ensure transparency—campaign finance, governmental institutions, and bureaucratic processes should be transparent and open to the public view.

Promote accountability—strong ethical standards should be established and enforced to avert conflicts of interest, prevent the undue influence of special interests, and ensure the integrity of governmental decision-making.

Policy that applies to utilities proceedings:

Openness, fairness, and inclusion

Legislative and regulatory meetings and procedures should promote public participation, be fair, and ensure accountability.

Meetings should be conducted at convenient times and places, and held with adequate prior notification, except in extraordinary circumstances.

When informal off-the-record communications (sometimes called “ex-parte” communications) are permitted, they should be equally available to all parties and properly disclosed.

Administrative and legislative policies and procedures should promote fairness, openness, and accountability in public decision-making.

All state legislative and regulatory agencies should periodically review disclosure requirements and update open-records laws to keep pace with technological developments.

Regulatory agencies with jurisdiction over critical areas such as health care, utilities, transportation, and financial services should include consumer members and significant representation from the communities and individuals affected by the agencies’ decisions.

Policy that applies to utilities commissions:

Conflicts of interest

Ethics regulations should protect against conflicts of interest. Some examples are the use of independent blind trusts (in which the government official does not know or have any control over how the assets are managed) and the withdrawal of government officials from decision-making when conflicts exist.

Public officials should provide early financial disclosure as a first step in preventing conflicts of interest.

Political appointees

Nominees and appointees should be qualified for their role. They should be committed to the enforcement of the laws they administer or interpret. AARP may, on a case-by-case basis, review the nominations.

Policy that applies to elected utility commissions:

Public funding

Policymakers should enact and update public financing systems for elections to ensure qualified candidates can run for office.  This includes increasing matching funds, particularly for small-dollar donations.

Campaign funding for federal, state, and local elections, including judicial elections, should rely more on small donations matched with public funds at a multiple ratio and less on large private donations by individuals or organizations.

Media and advertising

Qualified candidates should receive free or significantly discounted media spots and postage for mailings. Providing airtime should be a condition for renewal of broadcasters’ television and radio licenses.

Policymakers should require greater transparency, clarity, and honesty in all election advertising. They should require more meaningful disclaimers that reveal the identity of an ad’s sponsor and  provide the names of top donors. They should also put in place strict penalties for false advertising.

Campaign contributions

Governments should set and strictly enforce limits on individual donations, joint fundraising, and bundled contributions to campaigns.

Contributions to PACs should face the same limits as individual contributions.

Congress and the FEC should tighten and enforce rules prohibiting coordination between candidates and super PACs.

Enforcement

Federal, state, and local governments should maintain strong penalties for violations of campaign finance. They should have sufficient resources and authority to conduct audits, adjudicate and sanction cases, file injunctions, litigate independently, and respond to complaints promptly. The IRS and the FEC should enforce the laws mandating that political activities ofADLs or Activities of Daily Living are the basic tasks of everyday life, such as eating, bathing, dressing, toileting, and transferring. IADLs or Instrumental Activities of Daily Living are activities related to independent living and include preparing meals, managing money, shopping for… 501(c)(4) social welfare organizations not be the primary activity of such groups.

Independent, nonpartisan state commissions charged with enforcing state campaign finance and election laws should have greater funding and authority.

Disclosure requirements

Government should increase disclosure requirements for all funds spent on elections or ballot initiatives. This includes identifying funders and the amounts they provide. Timely and full disclosures should occur prior to the election. States should consider creating online public databases with information on campaign contributions to candidates for state offices and ballot initiatives.

Disclosure requirements should include organizations that donate to spender organizations, including nonprofits.

Corporations, unions, and other outside groups should disclose their campaign-related expenditures to shareholders and members. They should also be required to make their political spending records available in a timely manner to the public.

States should require disclosure of independent expenditures in state elections.

Disclosure requirements should be imposed on joint fundraising and bundled campaign contributions.