Behind the Meter: Understanding the Utilities We Regulate

This month's episode Understanding Utilities We Regulate, hosted by Mark Burn features Commissioner Alessandra Carreon alongside the MPSC's longest tenured employee, Paul Proudfoot. He's is the Director of the Commission's Energy Resource Division. Proudfoot shares having started working at the commission October of 1974, "The commission up until then had never really raised rates. The economies of scale in the coal fire industry had allowed them to continually lower rates but both big utilities were in nuclear programs and they were struggling to finance the build on the nuclear plants so they needed to raise rates and I was hired as a data systems analyst." As an MSU graduate Paul came on to computerize the rate case process which he shares, "at that time meant main frames and punch cards". 

Commissioner Alessandra Carreon (left) alongside Paul Proudfoot (right) Director of Energy Resource Division

Commissioner Alessandra Carreon shares more specifics about what it is the MPSC regulates today including electricity and natural gas rates, conditions of service, petroleum pipeline citing and renewable energy facility citing, fees and the rule making behind that along with certain elements of telecommunications.

Paul reflects on the contrast between today with when he started, "There was no EWR (energy waste reduction). There was no integrated resource planning (IRP). There was no renewables. There was no capacity demonstration requirements. There was no MISO. There was no regional transmission authority. The utilities owned the transmission." With working on computerization, Paul also spent some time in the telephone division when the commission regulated telecom rates more than twenty years ago. He credits the failure of the nuclear industry with the development of IRPs.

Mark shares how the work of the commission substitutes competition for the public utilities operating as monopolies in the state in order to avoid monopoly pricing and its negative effects on customers. Commissioner Carreon highlights the MPSC as a "creature of statute". With that Paul describes statute Act 3 (1939) and PA 295 as their major statues for which Act 3 interestingly, originally was "the statute to abolish the Public Utilities Commission," a point that Proudfoot encourages staff to be aware of that policy makers in the legislature continue to add statute onto.

Understanding that the state's legislature works to set policies that the MPSC works to implement, Mark points out that many policies have been a response to technological innovation; much of which has resulted in more regulation for gas and electric companies in contrast to the reduction of regulation in telecommunications due to the reduction of landlines and increase in competitors. Paul also spoke to the potential for technological advancement to bypass infrastructure investments, "it was cheaper to just retire a brand new mechanical exchange and put in a northern telecom computer to manage the system then it was to pay the maintenance." At that time the commission provided write-offs for brand new equipment to support that transition. Today with the push for electrification, adoption of EVs and other electric services like cold weather heat pumps; Paul stresses the need for a stronger electric distribution system. This will require increased investments and even as a result increased rates. 

The intergenerational nature of the commission's work is strongly reflected in this episode, highlighted this discussion between the MPSC's longest tenured employee and our most recently appointed commissioner. The commission's decisions with the support of commission staff must take historic and predictive measures into account, impacting generations beyond each of the commissioners appointments. Without the longstanding historical context of staff like Proudfoot, the commission's mission would be impossible.

"Commssioners come and go but Paul Proudfoot lasts forever."