GOVERNMENT AGENCY PARTICIPATION IN THE REGUlATORY PROCESS

(NRRI). The views and opinions of the author do not necessarily state or reflect the views, opinions, or policies of the NRRI, NARUC, or NARUC member commissions. EXECUTIVE SUMMARY This report provides NARUC member commissions with an independent view of the frequency, nature, and effects of government agency participation in the regulatory process. The report is directed toward commissioners and regulatory staff who are experiencing (or may experience) participation and influence of other governmental units in regulatory matters. In the past decade government agencies (as large users of utility services) have become more visible participants in the regulatory process. In many cases this participation has taken the form of intervention before regulatory commissions. In the majority of these cases, formal testimony has been provided by the government agency. Issues associated with utility regulation have become increasingly divisive. Thus, it is not unanticipated that government agencies, as consumers of utility services, may perceive their interests as different from other consumers, particularly those of small users. Government agencies do not have the same characteristics and thus do not exhibit the same regulatory behavior as consumer advocates. Similarly, government agencies as nonprofit entities do not exhibit the same regulatory behavior as profit-driven industrial intervenors. Thirty-two regulatory commissions responded to a NRRI survey on government agency intervention. The most cited intervenors were the Department of Defense and the General Services Administration. The majority of the respondents listed cities and counties as intervenors. Many commissions cited state administrative agencies as intervenors. The survey indicated that the primary area addressed by agency testimony was rate design; the revenue requirement was of second importance. Some of the respondents found minimal differences between agency intervenors and other intervenors. Most commissions stated that agency intervention, for the most part, provides valuable input in the regulatory process. The "problems" most associated with agency intervention are (1) the further prolongation of already lengthy proceedings, and (2) pursuit of rate design postures that seek to shift costs from large users to captive residential customers. Fourteen cases were examined in which government agency testimony was provided. The impact of agency intervention varied substantially across the fourteen cases. Examination of the cases reconfirms several intuitive iii judgements. First, agency testimony is more influential on issues in which the interests of large users do not conflict with the interests of small users than on issues in which the interests of small and large users conflict. …