Florida's attorney general should investigate suspicious actions that preceded regulators' decision to give Progress Energy an $18-million break.
Published June 5, 2003
The state's rebate case against Progress Energy raises disturbing questions about the regulatory process. The central question - why Florida's Public Service Commission backed off requiring the company to make a large refund to its customers - is now secondary to the larger concern over contacts between regulators and company representatives. Florida's attorney general needs to examine - before the rate case is resolved - whether those contacts were proper and whether regulators conducted public business appropriately.
The rebate is called for in a rate-reduction settlement that Progress Energy Florida reached with the Office of Public Counsel last year. But the two sides disagree on revenue figures used to calculate rebate amounts. Initially, the PSC staff sided with the public counsel, finding that Progress owed its customers $23-million in rebates for 2002. The company put the figure at $5-million. The staff's acceptance of the public counsel's position bode well for consumer interests.
But the professional staff changed course after two politically appointed commissioners got involved. The commission's top attorney, Harold McLean, said in a deposition that he asked the staff to change the recommendation after commissioners Rudy Bradley and Charles Davidson said they preferred a range of options. The two commissioners also did not want the staff to express any preference, McLean said.
It is troubling to imagine even a single commissioner trying to manipulate the policy options presented to the five-member board. Why were these discussions aimed at denying the full board the staff's best professional judgment? Why did senior staff members sign off on it? McLean, the PSC attorney, disclosed in his deposition that he effectively told Bradley and Davidson what the staff would recommend. How much more could the agency's decisionmaking process be undercut and prejudiced?
Julia Johnson, a former PSC commissioner now working for Progress, also reportedly sent materials related to the dispute to the offices of Bradley and Davidson. Commissioners are barred from communicating outside a public forum with anyone who has an issue before them. Davidson and Bradley, in written statements, said they did not see any outside communications in this case. Davidson said his aide - as is allowed - intercepted the material.
But there are many red flags in even the most generous explanations of how the reversal came about. Three issues need to be resolved. First, what is the state's best judgment about what Progress Energy owes? Two, did the process for arriving at a staff recommendation become so corrupted by internal meddling that it unfairly worked against consumers? Finally, were any communications improper, and what effect, if any, did they have?
Florida Attorney General Charlie Crist has already entered the case on behalf of consumers, but there are larger questions involved than the amount of the rebate. The PSC should delay resolving the case until these questions are addressed. Meanwhile, Progress Energy should drop its objection to having two senior company executives deposed. The public deserves to know whether something went wrong, or whether this sordid picture of policymaking is merely business as usual.
