AG: Haslam Bill Makes It Easier for Utilities to Raise Rates

Attorney General Bob Cooper’s office warned Wednesday that Gov. Bill Haslam’s plan to streamline rate setting for utilities shifts their “business risks” onto households and businesses, effectively making them guarantee the monopolies’ profits, reports Andy Sher.
“What this does in our opinion is make it more likely that rates will increase for business and households,” Assistant Attorney General Vance Broemel told House Business and Utilities Committee members Wednesday.
Broemel is the chief attorney in the attorney general’s Consumer Advocate Division, which often intervenes in rate hearings on increases sought by utilities.
But Tennessee Regulatory Chairman Jim Allison sought to assure lawmakers, saying similar changes have been put into place in states like Georgia. Tens of thousands of customers served by companies like Tennessee American Water and Chattanooga Gas need not be fearful, he said.
“The attorney general is focused in a very narrow sense on the rate of return” for utilities, Allison said. “But what they’ve missed is before TRA will allow anyone to enter into one of these, we have to go into a process to establish that this is in the public interest.”
The panel approved the administration bill, sponsored by House Majority Leader Gerald McCormick, R-Chattanooga, on a voice vote.
Haslam’s bill, developed in conjunction with the governor’s recently reshaped TRA, creates a new regulatory framework for dozens of investor-owned utilities.
It won’t apply to public power distributors or AT&T and some other telecommunications companies under “market regulation.” The bill also cuts regulatory fees paid to the state by some companies, including AT&T, while increasing them for others like the water and gas utilities.
Lowered fees will reduce TRA’s revenues for operations by an estimated $1.1 million annually and result in staff reductions, according to a fiscal note on the bill.
The bill creates “alternative regulatory” methods that can be used instead of full-blown rate hearings utilities now must go through. But it keeps such hearings for utilities that wish to continue them.


See also The Tennessean report. An excerpt:
In his Tuesday letter to the House Business and Utilities Committee, the attorney general said the bill would effectively shift the utilities’ “business risks to Tennessee households and businesses,” ensuring that the companies make “monopoly profits” regardless of how well they are managed.
“Furthermore, under the proposed annual rate review mechanism, utility customers who have enjoyed rate stability under the current system can expect yearly rate increases in many cases,” Cooper wrote.
Despite Cooper’s warning, the bill was cleared by the committee Wednesday on a voice vote and was sent to the House Finance Committee. The companion Senate bill has yet to see any movement, the attorney general’s office said Thursday
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