Miami Herald: Troubled PSC ignored past reforms

This article was published by the Miami Herald on September 13, 2009

BY MARY ELLEN KLAS
Herald/Times Tallahassee Bureau

For weeks, the Public Service Commission is pummeled with allegations: too-cozy relationships with the utilities it regulates, clandestine communications and undue influence by Florida Power & Light.

The accusations sound like the charges facing today’s PSC. But it was 1992, when cellphones were the size of bricks and the Internet was still in its infancy.

A statewide grand jury recommended eight reforms to force the PSC and its staff to conduct all business with utilities in the open, with a written record or advance notice. Only one idea was enacted. The others — some of which might have been able to address the issues bedeviling the PSC now — were shelved.

“Many of the very same issues that prompted that recommendation, still remain,” said PSC Commissioner Nancy Argenziano, a critic of her own agency who has written Leon County State Attorney Willie Meggs urging him to call another grand jury investigation.

As the PSC considers two of the largest rate cases in its history, the agency once again has been riddled with accusations that its staff is too close to electric company officials.

But for Argenziano, the lack of action after the 1992 grand jury report has her wondering if there’s a better way to force reform.

“If another grand jury produces the same results and nothing is done, maybe it’s time to go farther — to the FBI,” she said.

HISTORY REPEATING In the past three weeks, the Florida Department of Law Enforcement has been investigating the PSC for what some say are potential ethics allegations; a state senator has called for reforms; three staff members were asked to resign or placed on administrative leave for giving their private messaging codes to FPL, and the PSC’s lobbyist resigned under fire for partying at the home of an FPL executive while overseeing the company’s pipeline request.

In 1992, the PSC generated another series of bad headlines. Then, Southern Bell Telephone Co. was accused of cheating customers out of millions of dollars in refunds. FPL was in the news, too, when PSC Commissioner Mike Wilson quit to take a job as president of an FPL affiliate company.

The grand jury tried to determine if those decisions had been discussed at private meetings, dinners and even on trips and vacations where utility executives wined and dined regulators. (A Gulf Power Co. lobbyist once charged $152 worth of liquor to the corporate account for a party at Wilson’s home).

NOT UNREASONABLE The 1992 grand jury didn’t find anything criminal, but reached one important conclusion: Any communication between a regulated utility and a commissioner or staff member of the PSC should be open.

The report even recommended that verbal conversations between staff and utilities be written down, and any other communication should be banned. Violators should be fined, the report said.

“It is not unreasonable to require PSC employees to prepare and maintain a written summary of regulatory communications with regulated utilities,” the report said, noting that such recording was “a regular business practice in the modern world.”

As statewide prosecutor Melanie Ann Hines noted at the time, there were “too many loopholes, too many doors to walk through.”

As the grand jury tried to crack down on communication, two state legislators worked to halt the revolving door between utility companies and the PSC. Rep. Sandy Safley, R-Clearwater, and Sen. Curt Kiser, R-Largo, sponsored a bill to prohibit former commissioners from being hired or paid by utilities for two years after leaving office.

It passed in 1993 — but only after exempting the commissioners sitting on the PSC at the time.

“The idea was to demonstrate to the public that there was not this immediacy of a quid pro quo that was taking place,” Safley, now a lobbyist, said Friday. “If you are going to be compensated for working for the very entities you’ve been sitting in judgment of, you’re going to have to take a time out.”

Since the law passed, two commissioners on the PSC in 1993, Susan Clark and Terry Deason, have gone to work for FPL. Clark is the lead attorney in FPL’s $1.3 billion rate case and Deason is its expert witness. Other commissioners that have joined the FPL payroll after leaving the commission include Julia Johnson and Lila Jaber.

Legislators were even less receptive to the grand jury report than they had been to Safley and Kiser’s bill. Rather than pass a law, lawmakers decided in 1992 to let the PSC write its own rules on communicating with utility companies.

The St. Petersburg Times reported then that the PSC threw out all but one of the reforms: the one backed by utility lobbyists and lawyers that banned PSC staff members from directly or indirectly passing information to a commissioner from anyone participating in a pending case. Even then, utility lobbyists argued against it, saying the rules would slow the rate review process and possibly make it more costly.

LOSING INTEGRITY Since then, the PSC has continued to come under fire for its associations with utilities.

In 2005, PSC Chairman Braulio Baez and Commissioner Rudy Bradley were slammed with an unsuccessful ethics complaint for failing to fully disclose a 2002 dinner with an FPL executive.

In 2007, Bradley was fined $5,000 for accepting a memo written by Verizon as part of a rate hearing, and then reading from it to argue the utility’s position but not disclosing its origins.

In April, PSC Commissioner Lisa Edgar was hit with an ethics complaint alleging that she violated the “ex-parte” ban, which prohibits communication with one side of a case without the other side being present. She was also accused of breaking the rule banning aides from serving as intermediaries when her staff aide Roberta Bass delivered a message to her from FPL attorney Ken Hoffman during a pending case. The ethics commission dismissed the case Friday.

In May, PSC Director of Strategic Affairs Ryder Rudd attended a Kentucky Derby party at the home of FPL vice president Ed Tancer. When the Herald/Times called Rudd in August, he acknowledged attending the party. The PSC then removed him from FPL cases. He resigned last week.

Rudd was also among PSC staff members who received e-mail from FPL attorney Natalie Smith, seeking private BlackBerry messaging codes. The codes, known as PINs, allow BlackBerry users to communicate directly with each other, bypassing the state’s e-mail server and a paper trail.

Records show that at least three other staffers provided their PINs to Smith. Bass, Edgar’s aide, even gave the FPL attorney Edgar’s PIN.

State Sen. Mike Fasano, the Legislature’s loudest critic of the PSC, believes “the integrity of the commission has been brought into question.”

Commissioners have begun grasping for solutions. Argenziano wants an investigation and “complete overhaul of the system.” Commission Chairman Matthew Sullivan disabled the instant messaging functions of the state-supplied BlackBerrys used by the PSC and called for a review of the policy.

Commissioner Lisa Edgar is urging a review of PSC communications policies, while Commissioner Katrina McMurrian has proposed a lengthy set of rule changes, including requiring all future communication between the PSC and utilities be written down.

And Commissioner Nathan Skop wants new controls on electronic communications and a return to the recommendations of the 1992 grand jury report. “I would support those findings.”

Mary Ellen Klas can be reached at meklas@MiamiHerald.com