The power and the politics have always been there, but for many years, the public officials who set utility rates in Maryland, Virginia and the District of Columbia did so largely outside of the consciousness of the consumers who paid them.
Now, with higher rates and major shifts in the nature of the utility industry under deregulation, those same officials are encountering more pressure and publicity -- and in some cases finding themselves in the middle of controversy as they sort out the increasingly complicated issues resulting from deregulation.
"It's getting more difficult because the consumer has gotten accustomed to one set of rates and to stability, and the ratepayer is very confused about what he is entitled to," said Maryland Public Service Commissioner Claude M. Ligon, the newest addition to the Maryland body.
"Utilities are branching out into unregulated areas. . . . We all are being exposed to ways of doing things we haven't been accustomed to in the past," he said.
In addition to having a more complicated job, commissioners are subjected to greater scrutiny when they are appointed to the post.
Consumer groups and state legislators have grown increasingly ready to challenge appointees viewed as pro-utility or otherwise unacceptable. In just the last year, controversies have arisen in the District, Virginia and Maryland over utility commission appointments.
The utility commissions were set up at the turn of the century to regulate natural monopolies such as gas, electric and phone companies -- industries that are undergoing fundamental change.
"The issues have become more complex," said Michael Foley, director of finance for the National Association of Regulatory Utility Commissioners (NARUC). "The divestiture of American Telephone & Telegraph Co., deregulation of natural gas and diversification of electric utilities, accounting and finance has made the job more difficult."
Telephone and electric companies are starting to diversify into new lines of business that do not fall under the umbrella of monopoly services, making the job of public service commissioners tougher and generating new issues for them.
Telephone deregulation and higher prices have raised the question of whether to provide "lifeline service" -- minimal telephone service for those unable to pay -- through subsidies that result in higher rates for other consumers. Yet another thorny issue is whether to allow telephone companies to subsidize lower rates for business by charging higher rates to residential customers. Otherwise, residents would have to pay even higher rates if the business customers left the system, the telephone companies argue.
In the case of electric utilities and gas companies, the issues are just as tough. In addition to the lifeline issue -- how to avoid cutting off the heat and endangering the lives of nonpaying customers -- commissioners in different jurisdictions have been faced with the question of whether utility shareholders or ratepayers should bear the costs of bad decisions that result in cost overruns in construction. Commissioners also are trying to decide how much to enforce conservation to avoid new construction and higher utility costs.
The commissions that regulate utilities in the Washington area are Virginia's State Corporation Commission and Maryland's and the District's Public Service Commissions.
The Virginia State Corporation Commission is by far the most powerful regulatory agency of the three.
The SCC approves or disapproves billions of dollars in rate-hike requests from 14 electric companies, 14 gas companies and 21 telephone companies, in addition to regulating the state's insurance, banking and transportation industries and 100,000 incorporated businesses. Three commissioners sit on the SCC and oversee a staff of 475.
"They are absolutely powerful," said Helen Savage, president of the Virginia Citizens Consumer Council. "They determine the cost and availability of so many commodities and services consumers need, they regulate consumer rates and have a profound influence on consumer pocketbooks."
The District, which has three commissioners, and Maryland, which has five, have more traditional utility commissions that regulate only natural monopolies. Even so, they preside over millions of dollars in rate increases a year in each state.
The District PSC, with a staff of 56, regulates three utilities -- Washington Gas Light Co., Potomac Electric Power Co. and the Chesapeake & Potomac Telephone Co. -- as well as taxi rates and tour boats on the Potomac. The Maryland PSC, with a staff of 123, regulates 10 electric companies, 10 gas companies and two telephone companies.
In a quasi-judicial role, public service commissioners must walk a tightrope between a consumer's right to reasonable rates and a utility's right to earn a reasonable rate of return -- while making sure revenue from monopoly services does not subsidize a utility's competitive business ventures.
"The public interest is a balancing between the needs of the consumer and the utility to be able to produce the quality of service needed," said D.C. Commissioner Wesley H. Long. "That's the great tension: Where do you find the point between those that serves the public interest? I think pretty much our PSC has done that."
Commissioners' salaries are in the mid-$50,000 range in Maryland and the District and in the mid-$60,000 range in Virginia. The jobs are political appointments, and utility commissioners need not have any special training for the job or even a college degree, according to NARUC. Only the Virginia State Corporation Commission requires that one member be qualified to be a state judge -- essentially, to have a law degree. Commissioners in Maryland, Virginia and the District have diverse backgrounds, and include lawyers, teachers, business people and former county commissioners.
Because commissioners can learn extraordinary amounts about rate regulation and have expert staffs to rely on, good judgment is the most important qualification, said Baltimore Gas & Electric Co. general counsel David Brune. "It's like selecting someone for the football team -- you want someone honest, intelligent and objective."
"In all three states it the appointment process is highly political, and so the quality of appointments in the sense of competence in the field are virtually happenstance," said Samuel A. Simon, president of the Telecommunications Research & Action Center (TRAC), a consumer group. "If the experience and the politics happen to match, then you could get a good commissioner."
In 11 states, public service commissioners are elected. In the District, the mayor appoints a commissioner with the City Council's approval. In Virginia, the state legislature elects a commissioner, and if its members cannot agree, the governor makes an appointment. Anyone can submit names of candidates to the mayor, governor or state legislature. In Maryland, the governor appoints commissioners and the state legislature approves their nominations
The way consumer groups in Maryland, Virginia and the District view the commissions varies widely, but all agree getting commissioners who represent consumer interests appointed to the commissions is an uphill battle.
More often, commissioners "tend to be very prominent businessmen or former legislators," said the Virginia Consumer Council's Savage. "They aren't people who set out on their agenda for their career to work in the consumer field."
"Virginia is an old-boy network," said TRAC's Simon. "When the last position came open, I made inquiries on how to influence that and I was told, 'A current or former state legislator gets it and that's part of the political spoils -- go home.' "
Simon said that the D.C. commission is "pro-consumer and responsive to community pressure." But others disagree. "There is a perception in the community that the public service commission is in the utility's back pocket," said an aide to a City Council member who asked not to be identified. "That has been the perception for a number of years, and the frustration has led to some people proposing that commission officials be elected."
"I think the whole public service commission needs a good look at their professional qualifications. . . . There are no requirements," said Maryland State Sen. Victor Cushwa (D-Washington County). "It can be a political crony to the governor or a contributor to the governor."
BG&E counsel Brune said he views the Maryland PSC as neither pro-consumer nor pro-utility. "They tend to be objective," Brune said. "I don't look for a commissioner to be pro-utility or pro-consumer, just intelligent." Officials of other area utilities declined to comment.
The qualifications of commissioners have been debated in recent weeks in disputes over new appointments in Maryland and Virginia. The same issues have come up in the District.
Last week, Maryland Commissioner Wayne B. Hamilton, supported for reappointment by Gov. Harry Hughes, met with defeat at the hands of the Maryland Senate's executive nominations committee, which rejected Hamilton's renomination by a vote of 10 to 8.
Western Maryland legislators, led by Cushwa, fought to remove Hamilton, saying he was biased in favor of utilities and insensitive to the public.
Cushwa described Hamilton, a former retail furniture businessman and Garrett County commissioner, as "over his head as far as the process [of regulation] goes. He talks down to the public as if they don't know anything and only the pin-striped attorneys are the ones who know anything."
"As I understand it from people in Western Maryland, Hamilton was indeed an early contributor and promoter of Harry Hughes back when Hughes was a dark horse," said Tom Chalkley, staff organizer for the Maryland Citizen Action Coalition.
At the same time, the candidate proposed by both consumer groups and state legislators, Sylvia Hancock, has been virtually ignored by Hughes, according to Cushwa and consumer groups.
"We offered her to the governor. . . . He said no way would he consider her," said Cushwa. Hancock, a former consumer activist, has worked for the Fairfax Board of Supervisors, studied PSC law, and is now a senior associate with Whitfield Russell Associates, a utility consulting firm in Washington.
Hughes, who maintains Hamilton had done a good job of balancing consumer and utility interests, has withdrawn his nomination but has yet to nominate another candidate for the job when Hamilton's interim term expires later this year.
In Virginia, a political dogfight and deadlock between the House and Senate over whether to appoint former Fairfax legislator James M. (Big Jim) Thomson to a coveted and vacant SCC slot led to the ground-breaking appointment of the first woman to the seat by Gov. Charles S. Robb.
Consumer groups have lauded the appointment of Deputy Attorney General Elizabeth Bermingham Lacy of Richmond to the seat formerly held by commissioner Junie L. Bradshaw, who left to pursue business.
"Her background demonstrates knowledge of consumer protection issues, and we have found that consistently lacking among the SCC commissioners," said Savage of the Virginia Citizens Consumer Council.
In the District, consumer and labor groups claim to have been brushed aside by Mayor Marion Barry, who they say reneged on a political agreement.
When Commissioner Ruth Hankins-Nesbitt came up for reappointment in 1984, labor and consumer groups believed they had an agreement from Barry that their candidate, Wilhelmina Cook, a senior attorney with the Citizens Communications Center, would get the job in exchange for the groups' support of the appointment of Frederick Dorsey to the Office of the People's Counsel, said George Strick, vice president for Region 2 of the Communications Workers of America.
The OPC represents the consumer's interest in rate cases before the commission. Labor and consumer groups had supported the reappointment of Brian Lederer to that slot, but shifted, believing that they had a deal, Strick said.
"He told me [Cook] wasn't political and hadn't been involved in politics," said Strick. "I understood that real well -- he helps those who work for him and gets rid of those who don't." Barry was out of town and could not be reached for comment.
Mark Plotkin, a consumer activist who favors elections rather than appointments of commissioners, called the D.C. system "a polite clubby process, where the mayor appoints and the city approves . . . behind closed doors.
"Next time," said Plotkin, "we are going to make public nominations."