Research Note: who are the commissioners and how are they chosen?

While there are many aspects of institutional design to consider with Public Service Commissions (PSCs), like jurisdiction, responsibilities, and agency structure, the commissioner selection process is the most important because it affects who leads the agencies. Should decision-makers be representatives of the people’s will, political appointees who understand the broader system, or knowledgeable technocrats? State governments across the US have taken different approaches to these issues. In this research note, I will highlight and analyze different methods of commissioner selection and then provide a recent example of PSC reform in another state.

Election by Voters

Commissioners in 11 state commissions are chosen in direct elections in the same way as a governor or state legislator. Five of those states’ agencies (including Nebraska’s Public Service Commission) are elected by representative districts. In comparison, six agencies (including the South Dakota Public Utilities Commission) are elected at large by the entire state. Electing commissioners by equivalent districts ensures they are closely accountable to the people and represent different viewpoints, but it may come at the cost of candidate quality. Statewide elections may increase candidate quality but at the cost of diversity. Overall, general elections require knowledgeable voters, may incentivize commissions to respond more favorably to the people’s concerns, and may encourage partisan commissioners.

 Appointment by Governor with Legislature Confirmation

Commissioners in 33 agencies are appointed to staggered terms by the state’s governor and then confirmed by either the state’s senate or the entire legislature. This method treats commissioners like most other appointed positions, where the legislative branch checks executive power. However, not all legislators may be knowledgeable of or pay attention to a nondescript agency like a PSC, which may reduce the effectiveness of the confirmation process. Likewise, efficient confirmation practices may be hindered in part-time legislatures that meet only a few months out of the year.

While appointment has the potential to improve commissioner quality by appointing those with expertise in the industries regulated, it may also favor politically connected candidates, lead commissioners to be overly favorable to the governor instead of being independent, and increase the opportunity for regulatory capture, where regulators are overly influenced by the industries they regulate.

Special Nominating Bodies

Six states utilize either a nominating council or committee to screen candidates before they are appointed by the governor (or, in South Carolina’s case, the legislature). Nominating bodies range from 7 to 12 members and are generally appointed by the governor, both houses of the state legislature, and other related interests. Indiana and Ohio have especially interesting processes; Indiana’s council is appointed entirely by the governor to represent economic interests in each of the 9 congressional districts, while Ohio gives spots on the council to heads of other organizations, like the presidents of the accountancy board, state bar association, and municipal league. While a nominating body may be an effective way to enforce qualification requirements and improve commissioner quality, it may also lead to a drawn-out nomination process, be subject to political sway depending on control of the executive and legislative branches, and lead to unnecessary expenditures required for funding.

Other Selection Processes

Three states utilize alternative methods to choose commissioners. Virginia elects commissioners to its State Corporation Commission through a vote by the General Assembly, which is composed of the House of Delegates and the Senate. In Massachusetts, the Secretary of the Executive Office of Energy and Environmental Affairs appoints commissioners with approval of the governor to its Commonwealth Utilities Commission, which oversees the Department of Public Utilities. In Tennessee, two commissioners each are appointed by the governor, speaker of the senate, and speaker of the house, with one more being appointed by all three jointly.

Qualification Requirements

Most states require that commissioners not have any ownership interest or employment in the firms they are regulating, though requirements differ on waiting periods (if any) from previous affiliation. Some states, like Nebraska, completely restrict commissioners from having any other occupation or political office, though some part time work, like farming, may be acceptable. States have other differing requirements on minimum age, length of residency, and voting qualification.

Some states have requirements for commissioners to have knowledge and experience in fields like economics, finance, engineering, energy, natural resource conservation, public affairs, or law. While experience requirements in most states can be subjectively interpreted, others establish a minimum number of years of experience. Some commissions are required to have at least one member of a certain field, most commonly law.

Some states have requirements that up to 2/3 of commissioners may be from the same political party, which ensures diversity of perspectives on the commission. Other states prohibit commissioners from being actively affiliated with political organizations, meaning that commissioners cannot serve as representatives, officers, or employees of any political party, committee, organization, or association.

Recent Reforms

New Mexico is the most recent state to enact broad structural reforms to its PSC; it did so through 2020’s Constitutional Amendment 1. This amendment reduced the number of commissioners on the New Mexico Public Regulation Commission from 5 to 3 and changed the process of commissioner selection from voter election by district to the use of a nominating committee and governor appointment with senate confirmation. The initiative also ensured that no more than 2 commissioners would be from the same party and that they would be limited to 2 consecutive terms in office. Lastly, the constitutional scope of regulation was limited specifically to public utilities, allowing other functions to be assigned by the legislature; this allowed for oversight of transportation to be removed from the commission and assigned to the Department of Transportation through 2023’s Senate Bill 160.

Sources

https://ballotpedia.org/

https://www.nmlegis.gov/Publications/New_Mexico_State_Government/Constitutional_Amendment/Constitutional_Amendments_2020.pdf

https://www.abqjournal.com/business/prc-transportation-division-to-move-to-nmdot/article_88249550-2386-11ef-abb5-cb80bb158af6.html