Gov. Jay Nixon appointed attorney Robert Kenney as chairman of the five-member Public Service Commission on March 1. The commission is the state agency responsible for the economic and safety regulations on the state’s investor-owned public utilities. This includes gas, electric, water and sewer. Kenney recently sat down with The St. Louis American to talk about his new position.
St. Louis American: Why should readers care about the Public Service Commission?
Commissioner Robert Kenney: We virtually touch every household in the state of Missouri. Seventy percent of the electricity that’s sold in Missouri is sold by investor-owned utilities. And we are the agency that’s responsible for setting the rates they are going to charge consumers.
The American: Would you be able to discuss a case or two that has public interest?
Commissioner Kenney: We recently issued an order to approve a portfolio of energy-efficiency programs that Ameren will be promoting in the next several years. The utilities are in the business of selling electricity, so it’s not always in their financial interest to promote decreased usage of their product. But in an effort to encourage the utility to get into the business of promoting energy efficiency, we recently approved a proposal by Ameren and consumer advocate groups. It’s relatively historic in that Ameren is going to spend a host of money to promote energy efficiency.
The American: Discuss your relationship with the governor.
Commissioner Kenney: My relationship with the governor begins in 2000 when I was assistant attorney general. And Gov. Nixon was then attorney general. He was attorney general at time when the telemarketing “no call” law had just passed. And I was given a fantastic opportunity with two other lawyers to file the first lawsuits to enforce the telemarketing law.
I left the AG office and went to the private sector. I was a partner at the Polsinelli firm up until 2009. I was Attorney General Chris Koster’s chief of staff from January to July 2009. And Gov. Nixon remembered me and asked if I would be interested in doing this.
He was aware of my work for him in consumer protection and aware of my work in private practice representing businesses. I think his thinking was that those two perspectives of representing both consumers and businesses would be valuable in doing the work of a public service commissioner because we have to balance the interest of the consumers and the public utilities.
The American: Do you have an elevator speech of how people’s rates are decided?
Commissioner Kenney: The first question people always ask is: why does a state agency regulate public utilities? The answer to that is the utilities are natural monopoly. Because of high capital cost of entry, it’s more efficient for one company to build pipes underground or electric lines in the air. Recognizing that a natural monopoly left to its own devices would engage in monopoly pricing, society has decided that they should be subject to regulation.
Our job is to ensure the utility charges a rate that is sufficient enough to provide safe, adequate service with sufficient enough profit to attract capital in the market. We do that by examining their books and records to ensure that their expenditures are prudent and just and reasonable. We do an analysis of what we think a proper rate of return would be to maintain financial health.
Part of the process of how we are structured – appointed by the governor and then confirmed by the Senate for six-year terms – is supposed to make us independent of the executive or legislative branch so that we are making our decisions independently. When we are deciding rate cases, we are acting as judges and we make a decision based on the evidence and the facts.
The American: What do you think the federal government can do to get states to use more renewable energy?
Commissioner Kenney: We don’t have a national energy policy. We don’t have a national renewable portfolio standard. We have a state standard that dictates that our utility should generate certain percentages of our electricity from renewable resources. In Missouri, the percentage starts at two percent by 2011 and escalates up to 15 percent by 2020. And 29 states have some renewable portfolios. But we don’t have a national standard.
The federal government needs to spend its money more wisely in research and development. If you were to dump a whole bunch of money into research and development on large-scale battery storage, it would help us quite a bit. Electricity can’t be stored for long periods of time. We have to generate enough electricity to be used on instantaneous demand. What do you do when there is no wind and no sun? If you had large-scale batteries, then when it is windy you can store it and use it at another time. It would bend the cost of wind and solar energy.
We also need more research and development regarding clean coal technology. You have some folks who say we shouldn’t be using coal-fired plants at all. I don’t subscribe to that because we have a lot of coal. We have technology that would allow us to use that coal more cleanly. The federal government could accelerate research in this area. It would allow us to continue to use cheap coal, but use it in a way that’s clean.
The American: Does it get boring doing this kind of thing?
Commissioner Kenney: You would think that it would, but it hasn’t. I’ve been a lawyer for 15 years and I’ve been involved in state and local public policy work since the early 1990s. This is some of the most intellectually challenging and intellectually interesting work that I’ve done. And I’ve done some good work.
Energy policy and dealing with energy efficiency is timely and it’s topical. And the traditional work we do in determining energy rates is highly complex. We are dealing with hundreds of billions of dollar investments. You know you are doing important work because we’ve touched virtually every household and business in the state. There are economic consequences to the decisions we make. It doesn’t get boring.
