Firm Says Haslam TRA Bill Could Cause Problems for TN Utilities

A national firm that that advises investors says Gov. Bill Haslam’s proposed overhaul of the state’s utility regulating agency could mean lower earnings for the state’s utilities.
“We lower our assessment of Tennessee regulation to generally constructive/declining, due to concerns regarding pending legislation, which would alter the Tennessee Regulatory Authority’s (TRA) ability to adequately regulate the state’s utilities,” says a report issued by Baird Equity Research on Tuesday.
David E. Parker, senior utility analyst for the Baird, said in a telephone interview that “generally constructive” is the rating assigned to regulatory agencies deemed “average or slightly above average.” The report means the basic rating of the TRA is not yet changed, he said, but if the Haslam bill is enacted, it could be lowered to the next step down.
Baird Equity Research, an arm of Robert W. Baird & Co., routinely evaluates state regulatory agencies as part of its efforts in advising investors, Parker said.
The governor said today he sees nothing in the report that would change his mind about the need for passage of the legislation, (SB2247),which is up for a vote on the Senate floor later today.
The bill would increase the TRA’s board from four members to five, but make the new positions part-time. It also calls for creating a new fulltime position of executive director of the TRA.
“We do not believe that a part-tie commission serves the best interest of utilities operating in the state or consumers,” says the report. “This change likely makes it difficult to attract qualified commissioners and could increase regulatory lag pressuring earned returns.”
“That’s a real stretch,” Haslam said after reading the Baird memo. “If you follow that reasoning, you’d have to downgrade all the Fortune 500 companies because they have part-time boards, too.”
The governor, asked about the matter at a breakfast gathering for legislators at his office, questioned how a “regulatory lag” could be caused by the legislation and wondered if Baird knew the TRA had only 19 rate cases in the past five years. If aware of that, he said, “maybe they would be comfortable.”
To see the Baird report, click on this link: -UT_-_12862074[1].pdf

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