| State Regulatory Bodies: A Proponent of Line Clearance Programs | ||||
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Whether the entity is called a Corporation Commission, a Public Utility Council, or a Public Service Commission, their primary purpose is to regulate, monitor and administrate the physical, financial, and operating conditions of the investor-owned electric utilities (IOUs) within the given state. State law empowers the State Regulatory Body to adopt and publish rules to govern proceedings and regulate the mode and manner of any valuations, tests, audits, inspections, investigations, and hearings relating to governed entities.
There are utilities in each state, however, that are not economically regulated. Examples include city-owned utilities (Muni’s), very small utilities, cable television cellular phone service and cooperatives (EMCs) unless the entity voluntarily subscribes to State regulatory programs.
The mission of any State Regulatory Agency is to protect the consumer by assuring them adequate, safe and reliable public utility services at a fair price. A regulator affects just about every resident in the state because they regulate providers of all types of utility services, including electric and natural gas, local and long distance phone companies, water and wastewater companies and rail and trucking companies.
State Regulatory Agencies are typically comprised of appointed (Chairperson and Commissioners) and at will State employees whose training and expertise afford them a unique viewpoint on how the industries they govern operate. The conventional model for a State Regulatory organization is shown below:
How State Regulators Perform Their Duties
To carry out their responsibilities regulators employ a professional staff that
includes engineers, economists, attorneys, and safety inspectors to continually
monitor the activities of utility companies. Regulators perform the majority of
their work, with these employees, utilizing one or more the following
departments.
Chief of Staff - provides the overall coordination and administration of the State Regulatory staff. In addition the Chief of Staff Office includes the Human Resources division and the Fiscal and Office Services division.
Administration Office - provides internal support, including centralizing information processing, docketing, and word processing, necessary for the day-to-day operations of the agency.
Consumer Services Department - examines the quality of service provided by utility companies to ensure that safe, dependable and quality services are being provided. The department also handles requests for information, complaints and attempts to resolve consumer problems without the need for a formal hearing. A major section of Consumer Services is the Public Interest Center. Its investigators answer and respond to the hundreds of thousands of customer complaints and requests for information received each year through the customer hotline.
Public Affairs - fosters the Regulatory Agencies image by communicating utility information to ratepayers in a timely, accurate, and understandable manner. This office typically includes the Communications Section, Legislative Section and Webmaster
Legal Department - conducts public hearings, issue procedural entries, and draft the opinions and orders issued by the Commission. The Attorney Examiners also answer inquiries about public hearings and case processing.
Utilities Department - processes utility rate change requests and performs technical investigations, develops programs, monitors marketplace development and implements policies in the regulation of gas, electric, water, wastewater, and telephone companies. The department provides technical support through its analyses, options, and recommendations on current and future regulatory issues.
Investigative Squad – Primarily field employees, who observe, comment and report back to Staff on the utility’s current programs, adherence to mandates and agreements. One-on-one interactions with utility field personnel with this group are quite common and present the utility with a valuable opportunity.
5 Ways the Regulator Works for the Consumer
Examples of State Regulatory Vegetation Management Programs and Mandates
The impact on investor-owned distribution line clearance programs across the
country is evident. California is probably the most visible and stringent case
scenario of regulatory intervention. California’s General Order 95; Rule 35
prohibits utilities from allowing vegetation foliage to enter an 18” safety
zone, and yet greater distances during fire season, surrounding an electrical
conductor. Further, California Public Resource 4293 mandates a set clearance
around the base of poles for fire protection. Violations result in financial
penalties, regulatory data requests and a considerable amount of time and effort
from both parties to resolve. In truth, each State has some semblance of
reporting necessary on vegetation management programs. These programs typically
revolve around reporting on one or more of the following distribution
measurements.
Flaws in Regulatory Mandates
Program measures, because they come from an administrator, do not always make
the strongest business case to improve reliability or save the consumer money in
the long run.
One of the real life problems associated with regulatory promulgations is inherent authority is bestowed upon the utility to carry out the practices the utility must adopt to meet the measures. In addition, budget and contract labor concerns remain up to the utility to figure out. The added financial resources may not always be recoverable therefore funding must come from other business units/programs within the utility company or from shareholder earnings. Struggling to find trained labor, without paying a premium is a difficult task. These logistical problems give further evidence that IOUs should adopt a multi-year vision for vegetation management programs.
Another inherently flawed program is that of a clearance mandate. While this certainly does promote good service reliability on calm days, it does little to address the trees outside the rights-of-way from where the majority of the outages typically originate. It evolves into a program where trees, out of fear of retribution, are pruned to get them out of the no veg zone. The utility has little time or room to negotiate removals or long-term clearance with residents, as their business plan is long and demanding. Trees end up being trimmed twice as often, thereby increasing the costs to the utility and ultimately to the consumer that the regulator is entrusted to protect.
The fixed year cycle approach is another example. Throughout the years our industry has done an excellent job of convincing regulators that a vegetation program on a fixed year cycle is industry best-in-class. Few utilities however are on a true cycle. Contract tree crews routinely drive by areas with poor reliability to clear out a neighborhood simply because a fixed time continuum has elapsed. With no budget to address off cycle work some communities needlessly suffer poor service reliability, yet the utility is in compliance because they have maintained the fixed year cycle approach.
Worst Performing Circuits (WPC) programs employ a wide variety of techniques such as percentage of total circuits, pre and post clearing reliability benchmark and combinations thereof. Logic holds there will always been worst performing circuits on a system, even those with world-class programs. At this point such utilities need to convince regulators that another approach is best implemented.
Some regulatory enacted measures embrace suspect amounts of business or financial logic. As example, some states mandate a fixed amount annually to be spent on vegetation clearing. The crux of the mandate is to spend the funds with no program parameters surrounding how, when or where the money is spent. While this empowers the utility to do what is correct in their best judgment it does not necessarily equate to improved service reliability or financial stewardship for the consumer.
Annual vegetation management program filing is probably one of the oldest forms of agreements between the state regulator and the utility. Regulators inspect and audit the IOU throughout the year seeking deviations from the program filing. Deviations are met with a flurry of data requests further taxing the resources of both parties. The truth is that program revelations occur more than once a year. A vegetation manager then wrestles with doing what is practical against what is regulated. Note that every state regulator in the US now has a transmission program description on each IOU in their state with the recent FERC filing resulting from last year’s blackout.
Finally, commission complaints often show a significant increase as utilities adopt a “take no prisoners” stance on trees in their rights-of-way in an effort to meet tighter mandates. All the peer and colleagues I have met over the years have a love and passion for trees; however a fast-growing, tall maturing tree with their rights-of-way receives little compassion. Vegetation Management programs then the face the time-worn dilemma of balancing service reliability against the concerns of the community to preserve aesthetics of the urban forest.
The purpose of pointing out these flaws is not to demean state regulatory action, but to illustrate the complexity of designing the ideal monitoring system for utility vegetation management programs. Much like the imperfections and loopholes within our legal system no State Regulatory Agency has yet devised a perfect model to monitor a utility. Nevertheless, their intervention on behalf of the consumer has increased annual vegetation program expenditures at virtually every investor-owned utility in America. In short they have succeeded in convincing senior management to allocate additional funding where many a utility forester has failed.
Evolution of a Regulatory Investigation
As goes the performance of an IOU so goes its regulatory interaction. When
programs comply, communication is meaningful and honest and a sincere effort is
made to improve pricing and service life for the IOU is good. As these items
begin to suffer and then ultimately fail regulatory intervention looms.
What’s a Utility Forester to do?
Comprehend - Know, understand and adhere to your State vegetation
management mandates. Be honest and truthful in reporting the facts and figures.
Showcase your successes. Work to resolve differences and program shortcomings
with the regulators. Regulators are approachable and open to new program
methodologies. Understand the regulatory issues of surrounding states and stay
tuned to the regulatory climate within the industry.
Communicate - Improve your program by conversing with peers on how their program adheres to, or is in violation of program standards. Many regulatory trends can be learned from free email subscriptions, attending industry events, networking with your colleagues or simply asking the regulator. Regulators frequently talk to each other and adopt or tailor other State programs and mandates. It is the regulatory version of Best Management Practices.
Simply put, educate yourself and begin to model your program after the vegetation management industry Best Management Practices. If your regulator is not yet up to speed on these practices, it then becomes your job to do just that – educate and inform. Set up communication channels and regular field visits with investigators and meetings with the Staff. Communication is the key to success.
Consider – In an effort to comply with regulators utilities may go overboard and clear rights-of way wider and deeper than necessary. Utilize available technology to pinpoint outage causes and origins. It makes little sense to trim an entire circuit when one lateral is driving the poor reliability. Spend time in the field and investigate outages, then if appropriate fight the company mindset that “trees must be the problem for this circuit’s poor reliability”. Finally, enlist the expertise of the contractors on your system who work across the nation on many utility properties for their ideas that might be incorporated. Leverage the program mandates to obtain added funding from senior management.
Comply & Catalog - Considerable resources, both with the utility and the regulator are spent on Requests for Information (RFIs) and similarly titled document shuffling. This exchange of information becomes a paper trail that is public testimony accessible through the Freedom of Information Act. It is vitally important to retain accurate records of questions asked and information supplied. If information supplied is less that accurate, for any reason, it should be noted at the time of filing. An example of this is providing previous year-end expenditures in January before the books have officially closed. Contrasting statements and data in subsequent filings are not viewed favorably by a regulator and obviously diminish the relationship between the parties.
Coach - Get in on the ground floor with regulators, if at all possible, when defining program measures. How many of us track useless data for no other worthy purpose than to report to regulators. Many vegetation program managers have been fortunate to participate with regulators in designing the initial and revising the current framework, timelines and measurements within their state. The process brings enormous satisfaction with lasting benefits as they provide progress reports against the very measures they had a hand in designing. The measures are meaningful and provide additional insight internally to the senior management about the effectiveness of the vegetation program.
Controlling - When the vegetation management programs of electric utilities fail (poor reliability, insufficient reporting) or when they are unsuccessful in educating regulators these programs then become prime ground for regulatory oversight. Put another way, when we do an inadequate job of policing ourselves we invite others to police us. Most notably, the best example of this is what the industry is currently experiencing on a national level with an accelerated FERC intervention to prevent blackouts in North America.
What’s coming next from Regulators?
The new standards are geared toward ensuring that electric utility performance
with regard to the number and duration of power outages does not decline and
toward making it easier for regulators to spot areas where service may be
slipping.
What sits on the plate of virtually every state regulator is ensuring Homeland Security. History has shown that the state regulator’s primary focus has been the distribution system. With last years blackout affecting the Northeast US and Canada state regulators have increased their attention to include the intrastate transmission grid. This oversight had heretofore been primarily been the jurisdiction of FERC, NERC and the Reliability regions that comprise the nations grid. We saw evidence of this in June of 2004 when each utility copied their state regulators with their FERC program filing about their vegetation management program.
Regulators have traditionally used system reliability, in one form or another, as a gauge of utility performance. Look for this to continue, however with new twists. Several states have begun to delve into capturing momentary outage data as yet another reliability measure. Most of the nation’s utilities currently do not have the capability to capture momentary outages – those lasting less than 5 minutes. Therefore, new or revamped outage data systems are being discussed and designed. Other states are toying with revised reliability equations in an attempt to capture opportunity cost of individual outages and the consumer disadvantage of multiple outages.
Outages classifications, deemed as reportable, will become more stringent and the threshold for declaration of a major storm may change.
New and more confining programs measures are surely being discussed and fleshed out in regulatory offices across the nation. Program facets typically overlooked by state regulators are contractor scrutiny and herbicide use. Look for the more progressive regulators to enact more comprehensive oversight programs on these elements of vegetation management programs.
Commission complaints likewise, hold potential for greater regulatory scrutiny. Most states, however still have considerable amounts of work to be done in defining, classifying and tracking complaints before such measures hold legitimate worth.
In closing, the regulations, reporting and monitoring required by State Regulatory Agencies can be controversial, burdensome and costly. Yet, the truth is that regulators have proven invaluable in convincing senior management to increase vegetation management budgets. They have held the collective feet of vegetation management programs to the fire and pushed them to greater achievements. Primarily because of regulators electric utility vegetation management is no longer a black hole where money disappears, but a thriving, sacrosanct business unit. All in all, State Regulatory Agencies have met their mission to protect the consumer by assuring them adequate, safe, and reliable electric utility services at a fair price.
*Presented at ISA’s 80th Annual Conference and Trade Show – Pittsburg, PA.
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