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January 26, 2010

     
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State Regulatory Relations


NARUC Water Committee Gains New Members

Commissioner Bryan Beatty

North Carolina Commissioner Bryan Beatty and Florida Commissioner David Klement are the newest members of the NARUC Water Committee.

Commissioner Beatty was appointed to the North Carolina Utilities Commission by Gov. Mike Easley for a term that commenced on Jan. 7, 2009, and expired on June 30, 2009. Gov. Beverly Perdue reappointed him for the term that commenced on July 1, 2009, and ends on June 30, 2017.

Born in Englewood, N.J., he earned his B.A. in political science from the State University of New York at Stony Brook in 1980. Commissioner Beatty received his Juris Doctorate in 1987 from the University of North Carolina School of Law and is a 1981 graduate of the North Carolina State Bureau of Investigation Academy at Salemburg.

Commissioner Beatty served as the Secretary of the N.C. Department of Crime Control and Public Safety from 2001 until 2009 and was in charge of the state’s homeland security coordination. He also served as director of the State Bureau of Investigation from October 1999 to January 2001.

During his tenure at the Department of Justice, he also served as an SBI agent, an associate attorney general representing the UNC Hospital System, an assistant attorney general in the Motor Vehicles section, the state’s first inspector general, and deputy attorney general for policy and planning.

Commissioner Beatty is the immediate past chair of the State Emergency Response Commission and served on the N.C. Lottery Commission. He has also served as a member of the Governor’s Crime Commission, on the Board of Directors of the Criminal Justice Information Network, and as chair of the Governor’s Terrorism Preparedness Task Force.

Commissioner Beatty received the National Governors’ Association Award for Distinguished Service to State Government in August 2003 for his leadership in North Carolina’s terrorism preparedness efforts. In November 2002, he was honored by the University of North Carolina at Chapel Hill with the Harvey E. Beech Outstanding Alumni Award, established to recognize black alumni who are "stellar leaders within the University community or in his or her local community." In 2005, Commissioner Beatty received the Charles Dick Medal of Merit Award from the National Guard Association of the United States. Also, in 2005, he received the Distinguished Civilian Service Award from the State of North Carolina.

In 2008, Gov. Mike Easley awarded Beatty the Order of the Long Leaf Pine, the highest service award that can be given to a North Carolina citizen.

Commissioner David Klement

As reported in the Jan. 12 edition of NewsFlow, David E. Klement was recently sworn in as commissioner on the Florida Public Service Commission (PSC). Gov. Charlie Crist appointed Commissioner Klement to the PSC in September 2009 and, in October, chose him to fill a vacant PSC Commissioner seat before serving his four-year term beginning in January 2010.

Commissioner Klement formerly served as director of the Institute for Public Policy & Leadership at the University of South Florida. He brings a journalism career spanning more than four decades to the commission, serving in several editor positions at The Bradenton Herald. He was also an editor at The Detroit Free Press and The Daily Oklahoman.

Commissioner Klement received a bachelor’s degree in journalism from the University of North Texas, a master’s degree in mass communications from the University of South Florida, and he is a graduate of Leadership Florida. He is a member of both the Manatee and the Sarasota Chambers of Commerce and serves on the boards of the U.S. Green Building Council, Myakka River Branch, and Manatee Educational Television.

For a complete list of members on the NARUC Committee on Water please click here.

 

NARUC Selects New Treasurer

Commissioner Colette Honorable

The National Association of Regulatory Utility Commissioners President David Coen of Vermont appointed Commissioner Colette Honorable of Arkansas to serve as the association’s treasurer.

Commissioner Honorable, a member of the Arkansas Public Service Commission, will replace outgoing Treasurer Charles Box of Illinois, who is leaving regulation.

As treasurer, Commissioner Honorable is responsible for overseeing the association’s budget and the development and implementation of financial policies and procedures. In this role, she will also serve on the NARUC Executive Committee, the board of directors and as chairman of the association’s Investment and Audit committees. NARUC’s Executive Committee consists of the association’s chief officers — President, First Vice President, Second Vice President, and Treasurer — and additional members to ensure that each NARUC region is represented.

“Commissioner Honorable brings exceptional skills in communications and critical thinking to the Executive Committee and NARUC during this crucial time,” President Coen said. “She has a wealth of experience and an enthusiastic commitment to public service. I look forward to working with her in this new role. I also want to thank Chairman Box for his service to NARUC, Illinois, and the ratepayers all over the country. His dedication to public service has made NARUC a stronger organization.”

Commissioner Honorable was appointed to the Arkansas PSC by Gov. Mike Beebe in October 2007 and designated interim chairman from January through August 2008. Commissioner Honorable previously served as executive director of the Arkansas Workforce Investment Board. Prior to her gubernatorial appointments, Honorable served as chief of staff for Attorney General Mike Beebe. She worked in the Attorney General’s Office for more than five years, serving as an assistant attorney general in the Consumer and Civil Litigation Departments, and as senior assistant attorney general in Medicaid Fraud. Her previous work experience includes serving as a staff attorney at the Center for Arkansas Legal Services, as a judicial law clerk at the Arkansas Court of Appeals and as an assistant public defender. She obtained her Juris Doctor from the University of Arkansas at Little Rock School of Law.

In addition to serving as treasurer, Commissioner Honorable is a co-vice chair of the Committee on Gas and chairs the “Anybody Can Serve, So Let’s Conserve” energy efficiency campaign.

 

Court Ruling Imperils Landmark Water Sharing Agreement

In a decision released on Jan. 14, 2010, California Superior Court Judge Roland Candee invalidated a series of compacts, collectively referred to as the 2003 Quantification Settlement Agreement, which was designed to keep California from exceeding its allotment of Colorado River water. Among its other provisions, the 2003 agreement called for the transfer of substantial quantities of water from Southern California farms to San Diego and the Coachella Valley in return for the state’s commitment to help restore the Salton Sea. Judge Candee determined that the state’s funding obligation was too open-ended and could violate the California Constitution’s prohibition against the state taking on unfunded liabilities above a certain limit. It is unclear what impact the decision, which undoubtedly will be appealed, will have on California’s mounting water supply problems or on the other six states that rely heavily on the Colorado River as a water supply source.

 

Connecticut DPUC Imputes Hypothetical Capital Structure

The Connecticut Department of Public Utility Control (DPUC), in granting a small water utility an approximate 3.7 percent rate increase, rejected the company’s proposed use of its actual capitalization for purposes of developing an overall rate of return, and instead imputed a capital structure that it considered to be more representative of the industry as a whole. Application of the Hazardville Water Company, Docket No. 09-06-10 (Dec. 23, 2009). In explaining its action, the DPUC reasoned as follows:

There is no argument as to Hazardville Water’s actual capitalization mix of 60.16% Common Equity. The issue before the Department is whether this actual mix is proper for ratemaking purposes. The role of economic regulator is to ensure a company’s proposals are in-line with industry practice and are reasonable. In several recent Decisions, the Department has recognized that Connecticut’s regulated utilities must operate with an eye to industry practice with regards to the capitalization mix used for ratemaking. [citation omitted]. When a company’s proposed capitalization mix deviates from the industry average, the Department has imposed a ratemaking capitalization mix such that it is closer to the average industry mix at the time of the proceeding.

• • •

Based upon the record and past precedent, the Department rejects the Company’s proposed ratemaking capitalization ratio of 60.16% Common Equity as equity rich and inefficient. Given the Department has practiced constraint in past Decisions regarding merely applying a simply industry average, the Department rejects the OCC’s proposal for 50% Common Equity. In this case, Department review finds that 54% represents the highest common equity ratio of the water companies followed by AUS. The Department’s allowed ratemaking capitalization mix is 54% Common Equity to 46% Long-term Debt. This represents a conservative capitalization mix, yet one that is more in-line with industry practice. It is less equity rich than the Company’s proposal and results in a lower weighted average cost of capital and revenue requirements.