Gov. Matt Bevin has ordered a reorganization of the Kentucky Public Service Commission that will shrink the agency responsible for regulating the state’s utilities and protecting their customers.
Bevin’s Nov. 18 executive order eliminated 10 of the PSC’s 85 positions. Six engineers will be transferred to the Kentucky Energy and Environment Cabinet. Four jobs vacated by retirements will be abolished, including the director of the Division of Consumer Services, which is being downsized into another division “due to a decreased workload due to changing regulations,” Bevin wrote in his order.
To make Kentucky more “business friendly,” the Bevin administration has repealed 103 state regulations so far and targeted 197 more for repeal.
State budget cuts left the PSC with $9.4 million to spend this fiscal year, down from $10.1 million last year. However, in a prepared statement on Wednesday, the PSC said the public won’t suffer from larger utility bills or worse service as a result of this “streamlining.”
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“While the budget certainly required a hard look at the structure of the PSC, these changes will more closely align the organization with its core mission of ensuring that utility service is safe and reliable, and ratepayers and utilities are given fair, just and reasonable rates,” the PSC said. “The reorganization is a strategic response to the changing nature of the PSC’s responsibility and workload, while working to create efficiencies through greater cooperation and coordination with the Energy and Environment Cabinet.”
Others in Frankfort said they worry that a weaker watchdog is bad news for Kentucky families and businesses.
The PSC regulates prices and quality of service for more than 500 electric, natural gas, telephone, water and sewage utilities. When an electric company, for example, wants to charge a higher rate, it must make its case to the PSC, which considers the company’s evidence and hears from opposing parties as well. If water customers wake up repeatedly to dry taps in their homes, the PSC is who they are supposed to call for an investigation.
“I don’t have a problem with the governor cutting red tape and unnecessary regulations, but not if it’s at the expense of the public welfare,” said state Rep. Chris Harris, D-Forest Hills, who sits on the House energy and environment committees.
In Pike County, which Harris represents, strong PSC criticism of the privately managed water district helped bring a return of public operations earlier this year.
“We know in my community how important it can be for the PSC to do its job well, every time we get a glass of water,” Harris said. “Obviously, a smaller Public Service Commission will mean less oversight, and that’s no good for us.”
Attorney General Andy Beshear, whose Office of Rate Intervention represents the interests of consumers before the PSC, said this week that he has “serious concerns” about Bevin’s order.
“Under the governor’s reorganization, the PSC will no longer employ engineers, who serve a vital role in evaluating and minimizing multi- or even hundred-million-dollar utility construction projects, the cost of which is passed on to consumers,” Beshear said. “The governor’s actions also diminish the role of the PSC’s customer service resources that are so valuable to ratepayers on utility bill concerns. A less effective PSC means utility bills will go up faster than they should, adding even more stress to Kentucky families.”
In its statement, the PSC said its four remaining employees in the Division of Consumer Services “will not be adversely affected” by their transfer into a newly established Division of General Administration, along with what had been the Division of Filings. Consumer complaints to the agency are decreasing — 2,143 last year, down from 2,741 three years earlier, the PSC said.
The PSC’s engineering function has been “restructured” into a newly established Division of Inspections, to focus on examining utilities’ operations and investigating accidents and complaints, the agency said. Partly explaining the move, the workload for PSC engineers has dropped as the PSC’s oversight narrowed, with most telecommunications and water district construction projects now removed from its authority, the agency said.
“The commission no longer relies on engineering services given the evolution of the utility industry,” Bevin wrote in his order.
The PSC is overseen by three commissioners who are named by the governor. Two of the current commissioners — Paintsville lawyer Michael Schmitt and Florence business owner Robert Cicero — were appointed this year by Bevin. The third is former Kentucky Democratic Party chairman Daniel Logsdon Jr., who was appointed last year by then-Gov. Steve Beshear.