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With an appreciative nod from Connecticut Governor Ned Lamont, Marissa Gillett, has now challenged energy providers in Connecticut to accept what she regards as a fait accompli: swallow losses without raising your prices. Gillett, the head of Connecticut’s Public Utilities Regulatory Authority (PURA), might very well be the point of a neo-progressive spear in the northeast should she remain untethered to economic reality.
PURA was instituted to oversee energy prices in Connecticut. Gillett and other price control advocates in the state believe the regulatory agency has in the past operated as a regulation umpire standing between energy producers and energy consumers calling balls and strikes on price increases.
An early interview with Gillett featured in Voltz may seem to the average energy consumer unfamiliar with regulatory jargon unnecessarily obtuse, but here and there Gillett’s program lifts its head above the dense verbiage. Gillett’s recent effort as head of PURA has been focused on price controls for energy distributors.
Gillett's interviewer, David Roberts, points disapprovingly to a longstanding conspiracy between former, pre-Gillett PURA regulators and Connecticut’s energy industry: “In Connecticut, as in many other states, regulated monopoly utilities have traditionally enjoyed a comfortable, even cozy, regulatory environment. They have longstanding social, political, and financial relationships with regulators and legislators; they frequently employ former legislative and regulatory staff. (For instance, the former chair of the House energy committee is now the VP of government relations at Avangrid, one of Connecticut’s two big investor-owned utilities.) Utilities get the rate hikes and high guaranteed rates of return they ask for; in exchange, regulators and legislators and their staffs can look forward to financial support and cushy lobbying jobs.”
Enter Gillett: “She was hired as a reformer and wasted no time. She has tightened and actually enforced rules meant to shield PURA employees from utility influence and — most unforgivable from the utilities’ perspective — she has denied or scaled back utility requests for extravagant rate increases.”
The companies involved will, of course, quarrel with the use of the word “extravagant.” But Gillett is very firm in her distinctions.
“I think,” she says, “there's a real distinction between a regulator viewing themselves as someone who's simply calling balls and strikes versus a regulator who's like, ‘Wait a second, I need to be not just the umpire but the first base coach.’ It's just like a very different way of thinking about your role [i.e. the role of the regulator] in the whole construct...
“And I think that's fundamentally where folks don't understand my regulatory philosophy. Like, I see a lot of quotes from utility executives who think that my job is to balance what is fair for the utility and for the ratepayer, and I reject that characterization. I think what PURA's role is, is to serve in place of the free market. [emphasis mine].”
But of course: The whole purpose of a regulator is to regulate prices, and this requires a certain command authority. Connecticut’s legislature and governor have festooned PURA with a command authority, and by deciding what the price of energy in Connecticut should be Gillett is simply doing her job.
It cannot too often be stressed that in a vibrant republic the question “Who decides” is every bit as important as the question “What shall be done?” -- the tile of V.I. Lenin’s most important pamphlet. This question often is left unanswered by autocrats who managed the command state in republics.
Gillett’s answer to this all-important question is unambiguous: Economic decisions left to the free market and the iron laws of supply and demand may better be made by the administrative state – in the case under discussion, PURA.
When Gillett says PURA's role is to serve in place of the free market, she is not whistling Dixie. Her administrative apparat has driven back price increases for energy supplies in Connecticut several years after having decided a corrupt pricing architecture always has been too expensive. Energy suppliers have responded to the administrative impositions by cutting back maintenance services to recover income denied to their industry. Energy producers regard their current price structure and price increases as being necessary for maintenance and expansion of products and services.
Bottom line: If PURA succeeds in imposing price controls on the energy industry, electrical outages in the frigid winter now descending on Connecticut will be more prevalent and longer lasting.
On Thursday, two days into the New Year. “Spanish multinational electric company Iberdrola SA, majority owner of Avangrid Inc. [which manages the distribution of energy in Connecticut and other New England states] said it is taking the Connecticut subsidiary private after purchase of the 18.4 percent of stock it did not already own,” according to a Hartford Courant story.
Apparently, some free marketers are unwilling to abandon the illusion of a market economy in which business decisions affecting the life and death of companies are made by the owners and stockholders of the companies affected.
Connecticut Attorney General William Tong has set up a howl against the notion. When this Winter energy is cut because maintenance workers have been discharged in an effort to satisfy the effronteries of PURA’s Marissa Gillett, perhaps frozen fingered consumers of energy in “the land of steady habits” might consider making a protest call to Lamont.
