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Commissioner Tony Clark Statement
February 29, 2016
Docket No.
ER16-561-000 PDF

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Dissent in PJM Consumer Advocate Funding

"This Commission has not before endorsed the policy that the activities of non-decisional intervenor groups be funded through a dedicated utility tariff under the auspices of the FPA. Yet here we are doing exactly that. Today’s order is couched in the language of good intentions, but I find it troubling precedent as both a matter of policy and prudence.

“Today’s action comes not as a result of any argument that the members of the Consumer Advocates of PJM States (CAPS) are not allowed to participate in the PJM stakeholder process; rather, CAPS members are concerned that they will no longer have the financial resources to staff and travel to various stakeholder meetings.

“Since 2012, CAPS members have had access to $1.2 million in funding1 provided as the result of a Stipulation and Consent Agreement entered into by FERC’s Office of Enforcement (OE) and Constellation Energy Commodities Group, which resolved an investigation under Part 1b of the Commission’s regulations.2 The fact that the well is now dry should impose no obligation on this Commission to conscript electricity consumers in a plan to create a permanent revenue stream to replenish those funds allocated from the disgorgement of monies OE alleged were improperly earned through market manipulation of the wholesale markets. No other region of the country has a similarly situated regional committee of consumer advocates so funded, but today’s order makes it exceedingly likely such publicly funded groups will now proliferate.

“While it is commendable that these groups wish to participate in regional stakeholder events, their participation should not be funded through a FERC-approved “utility tax,” but through the regular appropriations process that takes place in every state legislature in America.3

“My public policy concern is that there is little that meaningfully differentiates these organizations from a myriad of other state agencies and not-for-profit governmental organizations or other interest groups that will now say, “what about my piece of the pie?” CAPS entities argue they are uniquely situated. But aren’t state energy offices, in their own way, also uniquely situated? What about state departments of environmental quality? Do they, too, deserve a Regional Transmission Organization (RTO) funded organization to finance their participation in stakeholder meetings? Furthermore, given that CAPS includes at least one non-governmental non-profit, we now have cracked-open the lid of Pandora’s Box just a little wider yet. What is to stop any of the countless groups that intersect with the regulatory world from arguing that they are also uniquely situated to speak for any number of communities of interest?

“Furthermore, as this RTO funded model spreads to other regions, as it is sure to do, FERC will be left to resolve other thorny issues. For example, unlike state regulatory commissions, which are a state governance model adopted universally, not all states have separate offices of consumer advocates or Attorneys General that practice before state utility commissions. Some states organize their regulatory regime as does FERC; they have advocacy staff embedded within the Commission itself. Like FERC’s Office of Administrative Litigation, their job is to advocate for the “public interest.”4 By going down the path we have chosen today, FERC will eventually need to answer how it will require consumers in one set of states that do not have consumer advocate offices, to fund the regional participation of other states that do have them.

“The backers of this proposal would argue FERC has already permitted a similar funding stream for OPSI. It has indeed, but the differences between RSCs, like OPSI, and all other groups are vast. As the Commission explains in PJM Interconnection, L.L.C., 113 FERC ¶ 61,292 (2005), OPSI was eligible for funding due to its status as an RSC. This is not a minor discrepancy. The rationale for an RSC is deeply embedded within Order No. 2000.5 State commission engagement with RTO’s is not just desirable, it is a near necessity. It only makes sense FERC would have recognized this. The formation of RTOs would have been incalculably more difficult without the formal and informal participation, approval and acquiescence of state commissions. State commissions exert express regulatory authority over utilities in ways that can enhance or degrade wholesale markets. It should go without saying, but the reason state commissions are different than any other group is because state commissions hold decisional authority over various portions of the electricity delivery system. Institutionalizing a regional state consumer advocacy/Attorneys General group as the equal of RSCs, devalues the special relationship that FERC created when it recognized RSCs.

“This filing also fails as a matter of prudence. There is, of course, no such thing as a free ride. These dollars are ultimately paid by consumers, just like all other RTO fees and recovery charges. This filing calls for an initial $450,000 annual appropriation, subject to annual adjustments. So long as CAPS’ budget does not increase more than 7.5 percent in any given year no section 205 filing would be required. As protesters have noted, if CAPS seeks an annual budget increase of up to 7.5 percent per year, this provision could, within the span of just 10 years, more than double CAPS’ budget to nearly $1 million a year.6 This authorized 7.5 percent annual increase is described in the filing as a way to “promote fiscal restraint.”7 Only in government could a budget that allows for a near doubling every decade be considered parsimonious.

“I realize it can be tough to say no. Consumer advocates and Attorneys General often make the case that other parties do not. I want them to be as involved in RTO stakeholder processes as they can be. But in this case, the Commission would do well to hold the line. The proper source of funding for these activities is through the states themselves. To the degree they are unable to convince their legislatures to support such appropriations, it should not fall to this Commission to find alternative sources of revenue through the FPA.

"For these reasons, I respectfully dissent."




                                               

    1 Constellation Energy Commodities Group, Inc., Order Confirming Rulings from October 4, 2012 Oral Argument, Docket No. IN12-7-000 (October 10, 2012) (unpublished order); Constellation Energy Commodities Group, Inc., Order Approving PJM State Agencies Request for Adjustment to Authorized Allocation and Distribution Proposal, Docket No. IN12-7-000 (November 5, 2012) (unpublished order).
    2 Constellation Energy Commodities Group, Inc., 138 FERC ¶ 61,168 (2012).
    3 While the majority of CAPS entities are either affiliated with a state Attorney General or a state office of consumer counsel, I note the Illinois Citizens Utility Board is not an agency of state government, but rather, an independent non-profit entity created by the Illinois legislature to advocate for consumer interests in various venues. Using monies generated through a dedicated RTO tariff provision to pay the participation expenses of an independent non-profit entity should raise even more red flags for this Commission. Acknowledging this outlier would lay bare the inappropriate suggestion that CAPS funding is the equivalent to funding received by the Organization of PJM States, Inc. (OPSI), a FERC-recognized regional state committee (RSC).
    4 I view protecting the “public interest” as a somewhat broader mission than “consumer advocacy.” The former suggests balancing the legitimate needs of all stakeholders, including consumers and the utilities that serve them. The latter typically focuses on the more discrete concerns of consumers specifically.
    5 Regional Transmission Organizations, Order No. 2000, FERC Stats. & Regs. ¶ 31,089 (1999).
    6 PJM Power Providers Group, the Talen Companies, and the Essential Power PJM Companies’ Protest at 26-27.
    7 PJM Transmittal at 8. “In order to promote fiscal restraint and rate certainty, schedule 9- CAPS provides that any budget submitted for a calendar year that includes an increase in excess of seven and one-half percent of the budget on file for the current calendar year will require the Commission’s approval by means of a subsequent Section 205 filing by PJM. CAPS elected to include this limitation in the instant rate schedule in order to provide to PJM and its Members additional comfort that its costs would be kept in check.”