To start out can you describe what the Michigan Public Service Commission (MPSC) is and what are some of its goals?
The MPSC is an independent state regulatory agency. We have close to 200 staff underneath it. It’s operated by 3 commissioners who are appointed by the governor. We each serve 6 year terms that rotate so our 6 year terms expire at different periods. Our primary goal is to ensure that we have safe energy services for the state and we also monitor issues dealing with motor carrier and telecommunications in the state as well. One of our primary objectives is to truly ensure that we have policies in place that help build economic development in each of these areas and also ensure that customers, whether they be residential customers or business customers have accesses to the services that they need in order to operate.
So when you said you ensure consumer protection, do you do that through regulations in prices or in regulatory policies within the industries?
It varies in each industry. For example, in the telecommunications industry, there are certain provisions in law that prescribe certain items for consumer protections. For example, years ago there were laws set in place to prevent “slamming” and “cramming.” That was the unauthorized billing of certain services on customer’s bills. So if you didn’t sign up for a certain service you couldn’t receive billing for those services unless you actually authorized it. So there are some things that are prescribed legislatively. We don’t do a lot of rate regulation within the telecommunication sector. We do regulate one rate, but on the energy side we do rate regulations. So for natural gas services there are natural gas regulations and there are price regulations as well as on the electricity side as well.
Is there a specific way that MPSC interacts with the legislature of Michigan? Do you have input on any of the laws that are passed?
Yes we, like many state agencies, we have someone who actually is considered a liaison to the legislature so that individual works with the legislature. If there are complaints, like customer complaints, we can help remedy through that system. We also make sure we monitor all the legislation that is ongoing within the legislature. So if the legislature has questions for example, about a specific policy or they’re working on some legislation and they need some expertise, they can always contact us and we’re available to help them in their decision making. Our goal is to provide them with as much information as possible so they can make the decisions that they need to do.
Is there a certain process through which these policies are put in place or is it specific to each sector? Is there a general policy in making these regulations or is it very specific?
Many times it is very specific. Our agency really gets its duties and its authorities through the legislation. So we have several sections of law and acts that pertain to what our agency does. So in many cases we have to look to the law. For example, on the telecommunications side, we’ll look to the Michigan Telecommunications Act. It provides direction in what we can and can’t do. So in many cases we look at the law and see what it asks us to do. For example, one of the things the telecommunications law specifically says is that we cannot have any oversight over wireless communications. So we don’t do anything on the wireless side. We take complaints, if individuals have complaints, and we try to help them work through or navigate the system. But really that’s something that the law says, no you can’t do that. So in many ways we get our policy direction from the law that was set up from the legislature.
One of the areas you focus on is energy efficiency. Are there specific ways that the MPSC is focusing on to promote energy efficiency as of right now?
Absolutely. We’re doing several things. One of the things we’re required to do by the legislation is to make sure that all electric providers within the state have an energy efficiency plan. So all the providers needed to have a plan in place to describe how they were going to meet the goals of the legislation. The legislation requires that at different time periods, on an annual basis, that providers have to achieve energy savings. So there are certain energy savings requirement for electric for energy providers and certain energy savings requirements for actual gas providers. So what our goal was to do was to review all of their plans just to see if it would accomplish what they wanted to accomplish. Last year we approved all of their initial plans. We’ll be approving them every 2 years so we’ll be looking at them. One of the things that our agency does is try to make sure people know that there are energy efficiency programs out there offered by their utility. One of the jobs that we find underneath our rule is to get the word out. So one of the things we are doing this fall is consumer forums where we are outreaching with groups of customers throughout the state to share with them some basic information on utility assistance and energy efficiency programs. The other thing that our agency is doing is actually working in partnership with the utilities in what we call a third party vendor. Some utilities in the process did not want to be doing the energy efficiency programs themselves because they saw them as being costly or there could be other efficiency gains by teaming up with someone else who is going to do a larger program. It’s similar to if you were going to buy a CFL bulb if you buy a batch of 2000 it’s going to be cheaper than if you go out and buy one. So there were some utilities that could opt into this third party program where they simply provide the money for the programs but this third party actually runs it. So we do have that third party entity and our staff works with that third party entity in the utilities to make sure they have the support that they need in order to accomplish the goals of the legislation.
Sounds like lots of energy efficient programs!
It is! It’s an exciting time because people can kind of bring energy under their own control. They can do energy efficiency and we’re finding that the more outreach that we’re doing in that-everyone has heard of “energy efficiency”. So we’re doing more and more outreach but the big question we always come to, even at our consumer forums, is there are still people who have not even installed one energy efficient light bulb. And often at the forums there are free efficient light bulbs being given out! We sort of think that if we’re going to give you one for free, let’s go ahead and use it! It’s a win-win situation for everybody. And we’re also trying to reach out more to the commercial customers. One of my favorite things to do today whenever I’m somewhere in the location of a business, is to look at what type of lighting they have. One of the places I have noticed is El Azteco in Lansing. I am always impressed because every time I go in there they have CFLs and it just tells me that as a business they are trying to be efficient. And obviously we can’t see their heating and cooling systems, but it’s always fun to see if there are businesses taking steps and actions to help them save too. And they probably have their lights on quite a bit! And so hopefully they’re getting some savings out of it!
As far as the natural gas sector, is that mostly regulation through the prices or do you work through the companies directly with that?
There are regulations through the prices. So when companies want to increase the price, they come to us for permission to do so. So natural gas is a little bit different because we actually have choice in some of our natural gas suppliers. Customers, especially on the residential side, can choose an alternative supplier who we license but we don’t regulate their rates. They can choose them as their supplier however there is still a distribution company like Consumers Energy that operates the lines to your home and do the metering. So that rate is regulated as well. For those regulated utilities, we regulate the rate of natural gas. But if the customer wants to use a different supplier they can get it from somewhere else and that rate isn’t regulated. But they would still get the distribution service from one company.
So is there a lot of competition in the telecommunications and energy sectors?
Yes, very much so in the telecommunications sector. For telecommunications they can choose an alternative provider but today with technology we find there are so many more people using wireless. There are many households in this state that don’t even have a land line. Especially young people who have a cell phone and aren’t even connecting to a land line. So we’re finding that with technology it’s not just on the communications side, that it’s not just competition in the land line services but it’s competition in the kind of service you get. Because communication services are so varied today, that’s where we’re seeing a lot of the competition today. There are more wireless service customers in Michigan than there are land line customers. We’ve well surpassed that by twice as many users. So that’s the difference. On the electricity side, the legislation actually capped the number of customers that could choose in the retail market. They capped it at 10% of people that can go out and choose. So not as many people get to take that opportunity but a lot of that varies with market prices. When market prices are low, there are a lot of people that want to choose but when the market prices are high, they all want to come back to regulated rates. We’re seeing that dynamic and I’m sure the legislature will constantly be revisiting all of these policy issues.
Would you describe MPSC as mainly an organization that protects the consumers or one that fields complaints and keep them from initially having problems?
I think we try to do both however I think our other rule really is, by nature and law, is to make sure we have just and reasonable rates and that’s a little bit different from what we consider to be a consumer advocate. For example, when there is a rate increase request, the attorney general intervenes on behalf of the consumer so the attorney general actually has the job of being the consumer advocate in our state. So our job is to ensure that there’s fairness and justice in the system. It’s really about balancing both sides. In our world, who really wants to give a rate increase? No one does. But sometimes it’s necessary for the business to make the necessary investments for environmental compliance or other items and we need to make sure we’re balancing the interest of the business and the consumer. In many ways we also act as that important liaison and the first stop of dealing with consumer complaints. We have a whole service quality division within our office. Part of that is because one of our goals is to ensure safe and reliable electricity, gas, and telecommunications. If one of their resources is not running, that kind of defeats one of our purposes that the legislature really asks us to do, which is to make those services up and running for everyone in Michigan.
Do you see outsourcing to countries like China, or even to other states, affecting the regulations that happen in Michigan? Do you see that affecting the MPSC in any direct way?
The big issue, of course, depends on the type of company. In the energy sector and even in some cases telecommunications, but more so on the energy side, it’s something that is actually a cost of doing business. In many cases, we will be asked by our Michigan Economic Development Corporation and other entities within the state that are working heavily on economic development to get businesses to move to or stay in Michigan to really focus on energy prices. One of the things we try to do is make sure our prices are affordable, but it’s always a competition. Whether it’s someone going to China or whether we’re competing for businesses that are going to move to West Virginia or Kentucky, if what it takes to produce their products requires a lot of energy and energy prices are cheaper elsewhere, that may be one of their considerations when choosing to keep their business within the state. So we have to keep that in the back of our mind because that is a central goal. We want to make sure there are businesses, homes, and people here in the state of Michigan.
As a commissioner, what are some of your daily objectives or some of the duties that you do?
I do lots of reading! On a regular basis, we have commission meetings, so today was one of our commission meetings. We had cases that ranged from a variety of issues. Some of them were intercommunication agreements and amendments happening on the telecommunications side. Some of them dealt with gas cost recovery clauses on the natural gas side. We also had a decision today on an electric rate case order. So part of what my day to day duties are going to be is to review all those documents, which are available online and anybody can check them out. But it’s really about reviewing and examining all of the exhibits and all of the testimony that’s put into those cases so we can formulate our decisions on these issues. So that’s a big part of our time. The other source of time is working with other partners within the state and regionally and nationally. So when we think about energy, our borders don’t stop at the edge of Michigan. The electricity lines run through. We all remember the blackout of 2003 because that affected the whole grid. So some of the things we do affect the grid and still have a good benefit for our citizens but it requires us to work with our neighboring partners whether they be Canada or in parts of the Midwest or other parts of the nation. We need to work with them on those policy issues as well.
How has some of your previous experience helped you get to where you are now, as a commissioner of MPSC?
I think the primary piece is really decision making and also having an understanding of some of the issues that we’re facing, of not only the industry but also the customers. When I was on policy staff, I helped work with the legislature to create some of the policy and legislation that was coming out of the Senate energy and technologies committee at the time. So having that understanding from that big policy position is very important because as you said, when you talk about regulation there is an economic development factor. Sometimes I think someone is in a position and gets focused on the narrowness and miss that big picture. At the end of the day, that big picture has to be for the benefit and welfare of the overall state. So that means how do our decisions impact jobs? How do our decisions impact economic development? Those are things we need to take into consideration. But if I was solely focused on what this extra million is going to cost, or focusing only on doing the mathematics, it may not give me that general broad solution. So working in other positions has helped me to broaden my scope and helps me bring a greater wealth of knowledge to the commission.
Are there any issues that you wish to be addressed by the MPSC that haven’t been yet or do you have any personal goals you would like to achieve before your term is up?
I think the one issue is the affordability of energy. When we talk about just and reasonable rates, it doesn’t always mean the rates are affordable. And I mean this for everybody, whether they’re residential customers, business customers, or industrial customers. I think people really have to work together to figure out how we can make energy affordable. For example, if someone is low income and they’re only at the 100-150% poverty level, their income is much less and so even if they’re living in an apartment next to someone who makes more money, the amount of money they have to spend on energy is more of their income. And so, how do we recognize this issue? In our state right now, with all the challenges we are facing, we are seeing numerous people resort to energy theft in some of our communities. It also means that if someone is stealing, that you and I are paying for the energy because we’re actually paying for our bills. Eventually that gets rolled into it. I think one of the things is energy affordability. That also means to make our prices competitive and make prices affordable for businesses. Business is a different type of affordability because so many people have this notion that the last people we should worry about are businesses, but we need business in order to create jobs. So that affordability piece is important on the business side as well and we need to make sure that our utility companies are being as efficient as they can and doing all the right things to ensure that we have the most affordable energy prices for all customers. So that’s one of the last things that I’m continuing to work on.