The Public Regulation Commission's recent foibles have frazzled the nerves of members and foes alike, but will they lead to the utility watchdog's undoing?

By Dan Shingler
Tribune Reporter

Five years after it was formed, the Public Regulation Commission of New Mexico has become as well known for vitriolic in-fighting, perennial budget woes and embarrassing run-ins with the attorney general as it has for its control over some of the state's most important industries.

Now the PRC, the elected body whose main job is to regulate the state's telephone, gas and electric utilities, has a year and a half to improve its image, or legislators might try to curtail its power.

In the meantime, the PRC might have hurt its chances of getting budgetary relief from the Legislative Finance Committee when it asks that body for more money this fall, said state Rep. Ted Hobbs, an Albuquerque Republican.

Legislative threat

Hobbs, one of the PRC's harshest critics, said he'll wait until the 2005 session to introduce legislation to reduce the commission's authority.

"I'll try it again in the next 60-day session. I don't think it's appropriate for a 30-day session (in 2004)," Hobbs said. "They're safe for a while."

Hobbs led an unsuccessful effort in this year's legislative session to curtail the PRC's authority. Now he says the commission is building support for his cause with its continued bungles and, perhaps more importantly, its inability to work within its budget.

Despite being short-staffed and its desire to do more outreach to far-flung constituents, the PRC announced in July that it is instituting a hiring freeze and a ban on travel. The commission's five members and their staff simply have too many things to do - some of them forced upon it by state and federal mandates - and not enough money for the employees it needs to keep up with its workload, commission Chairwoman Lynda Lovejoy said.

Hobbs agrees the PRC can't handle its workload.

"What I want to do is take away some responsibility and give them a plate they can handle," Hobbs said.

Hobbs, who sat on a legislative oversight committee critical of the PRC during the 2003 Legislature, wants to move the regulation of insurance, ambulance services and possibly other functions to other state departments. If the commission continues to act as it has, he said, he might have the support he needs to pass such measures the next time around.

"I think most legislators think (the PRC) has too much responsibility," Hobbs said. "Legislators aren't too happy with the PRC in general."

The sources of the PRC's problems are part personality conflict and part systemic, say many who observe and interact with the agency.

Personal differences

On a personal level, as of late, the source of contention has been an ongoing conflict between Lovejoy, a Crownpoint Democrat, and freshman Commissioner Shirley Baca, a Las Cruces Democrat.

Lovejoy has repeatedly criticized Baca for what she sees as personal attacks on her leadership and actions designed to frustrate and anger Lovejoy in her role as chairwoman.

Perhaps most notably, Lovejoy became angry when Baca tried to open a district office in Las Cruces. Though Baca said she was opening the office without incurring rent or other expenses, Lovejoy said legislators had specifically warned the PRC against using its budget to staff such offices. Lovejoy was on the commission when it was called to task for such spending by the Legislature's oversight committee, prior to Baca taking office this year.

Baca, on the other hand, said she believes Lovejoy does not give her adequate input into the agency's agenda and claims she is shut out of some of the commission's decision-making processes.

Baca complained when Lovejoy and other commissioners appointed a new head of the PRC's transportation division at a meeting she could not attend in April. She told the state Attorney General's Office that Lovejoy had violated the state's open meeting laws by failing to properly list the appointment on the meeting's agenda.

The attorney general agreed with Baca and cited the PRC for violation of the law, further angering Lovejoy and widening the rift between her and Baca.

Bob Perls, a former Democratic legislator from Rio Rancho who drafted the legislation that created the PRC, has has said he will run for a seat on the commission next year largely so he can mediate differences between Baca and Lovejoy, both former state legislators.

"My primary mandate would be to mediate between the commissioners and provide some vision," Perls said.

Baca said that, while she would like to get along better with Lovejoy - she said commission members are trying harder to get along - she's more concerned with her own ability to function as a commissioner.

"The public didn't elect us to love each other, but the public did elect us to be productive," Baca said.

Baca is often portrayed as the instigator in the feud between her and Lovejoy - Hobbs referred to her as a "bomb thrower" - but she is also credited by some industry executives as the most savvy commissioner on complex regulatory issues.

She said she takes some responsibility for the strained relationship with Lovejoy.

"I'm not going to say I haven't been flippant," Baca said. "I have to behave better myself."

Lightening the load

Baca and Lovejoy don't always disagree. Both say the commission's budget woes are the result of unfunded mandates. And Baca says Hobbs' approach of taking away commission responsibility will not solve the budget problem.

Moving responsibilities to other state agencies or departments will only move the costs associated with those responsibilities, not eliminate them, Baca said.

"That's all they're doing - is moving the costs and shuffling them around. But they're not addressing the real issue of regulatory authority and oversight," she said.

Baca and Lovejoy say the Federal Communications Commission forced the PRC to work overtime on Qwest's successful bid to enter the long-distance telephone market. They also say the state Legislature's mandate that the PRC work on electricity deregulation added substantially to demands on the commission's staff and drove up its staffing costs.

Lovejoy said the commission likely will ask the Legislature for about $300,000 in additional funding this fall.

Financial progress

Freshman Commissioner David King, an Alamogordo Republican and former state treasurer, said he believes the PRC has made substantial progress this year concerning budgetary matters.

King said the PRC issued its first audited financial statement this year and reverted nearly $1.5 million to the state's general fund. That money represents funds identified as savings from the merging of the former State Corporation Commission and the Public Utilities Commission, which merged to form the PRC in 1998.

The $1.5 million is on top of the $140 million in fees and other regulatory revenues the PRC expects to collect from its regulated industries and contribute to state coffers later this year - up from $132 million last year, King said.

"I think we're functioning much better in the first six months of this year than they used to," King said.

Fans and detractors

When it comes to its ability to regulate, the PRC isn't without its fans.

Public Service Company of New Mexico, the state's largest regulated utility, believes the commission does a good job, said PNM's outgoing vice president of regulatory affairs Cindy McGill.

"I think, right now, the PRC is operating very efficiently," McGill said. "I look at the bottom line - are they making effective decisions in a timely manner? - and I think they are."

Consumer advocates also generally give the PRC high marks, including Jeane Bassett, executive director of the New Mexico Public Interest Research Group, and Mike Donnelly, associate director in charge of advocacy for the AARP in New Mexico.

Bassett, whose group is particularly concerned with environmental issues, said she's very pleased that the PRC passed a mandate requiring electric utilities in the state to generate 10 percent of their power with renewable power sources such as wind, solar or biomass energy generation.

Donnelly, who is more concerned with keeping utility rates low for seniors on fixed incomes, said "rates have been pretty good" in New Mexico under the PRC.

The PRC is supposed to balance the interests of utility companies' shareholders with those of ratepayers, and Donnelly and Bassett said they believe it fulfills that mission.

Others, including utility executives who declined to criticize the PRC publicly, disagree. They say commissioners delegate too much authority to the commission staff, and that staff is anti-industry and sees its role purely as that of consumer advocate.

Tony Shaefer, a former PRC commissioner and chairman, said he agrees with that assessment.

Schaefer said commissioners either refuse to do the work necessary to understand complex regulatory issues or are incapable of doing so. As a result, he said, they rely almost solely on the advice of their staff, which he said is often clearly anti-industry.

"My honest assessment is that the commission has had members of staff, both now and in the past, who would best be described as communists," Schaefer said. "With one exception, I've never heard staff take the side of shareholders. It's a real problem."

Elected vs. appointed

Schaefer said having commissioners elected rather than appointed is largely to blame.

"The only requirement is that commissioners be 18 years of age and reside in their district," he said. "If the issues are as complicated and weighty as they are, then certainly the position demands a high level of expertise that's not satisfied by a simple requirement of 18 years of age and residency in the district."

Hobbs said he agrees that commissioners should be appointed, because voters don't follow the actions of the PRC closely enough for elections to be effective.

"How many voters really have an awareness of the candidates in their district to make that decision?" he said.

But all the commissioners, the consumer advocates and McGill of PNM said they believe the commission functions well with elected commissioners.

Perls, broadly credited with creating the commission, said that elected officials are a must and that "every election cycle, we're going to get stronger and stronger commissioners" as the public becomes more aware of the PRC and its effect on important issues.

"The Legislature needs to give the PRC a chance to mature," he said.

But he also said the agency needs to improve substantially.

"I would not be running (for PRC commissioner) if I thought it was running well," Perls said.

Hobbs is more blunt.

"We created a monster," he said. "I voted for (its creation), so I'm part of the problem. Now I want to be part of the solution."

WELL PAID

Members of the Public Regulation Commission are some of the highest paid elected officials in New Mexico. Each commissioner makes more in a year than the lieutenant governor or secretary of state.

State office Annual salary

Governor $110,000

Attorney General $95,000

PRC Commissioner $90,000

Public Lands Commissioner $90,000

Lieutenant Governor $85,000

Secretary of State $85,000

State Auditor $85,000

State Treasurer $85,000

Source:New Mexico Department of Finance and Administration

PRC commissioners

Herb Hughes

Republican, Albuquerque

District I

David King

Republican, Alamogordo

District II

Jerome D. Block

Democrat, Santa Fe

District III

Lynda M. Lovejoy

Democrat, Crownpoint

District IV

Shirley Baca

Democrat, Las Cruces

District V

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