Public Service Commissioner Stripped Reform Proposals From Self-Assessment Report

Mar 22, 2016

The commissioner of the Department of Public Service stripped key criticisms and recommendations for legislative reform from the department’s self-assessment earlier this year, overruling suggestions from top staff, documents show.

The department is charged with representing the “public interest” in utility regulation cases before the Public Service Board and also conducts energy and telecommunications planning. But in 2015 the Legislature wanted a detailed assessment of how it delivers on its prime public interest mission. Lawmakers ordered Commissioner Chris Recchia’s department to produce a report that included “any recommendations on how to improve the structure and effectiveness of the Division for Public Advocacy within the Department of Public Service.”

The legislation came after years of public criticism directed at the department, with residents and local governments alleging the regulatory system is stacked in favor of utilities and doesn't give the public enough of a voice. Most recently, that criticism has been related to the Vermont Gas pipeline, which faces heavy opposition from some residents along its route, and with the siting of renewable energy projects.

The legislation, Act 56, directed the Department of Public Service to figure out how well it serves the public, and if it could do better.

Wayne Jortner, a department staffer, was assigned to research and write the early drafts of the report using public input received through written comments, about 30 hours of interviews with experts and four public hearings around the state.

In November, Jortner sent the department’s top officials an early draft of the report, scheduled for public release Jan. 8. After some edits, the department had a draft report ready on Jan. 7. On the second page, it referenced a common criticism of the department: “The key criticism that we heard from members of the public was exemplified by the following concise statement of an experienced and active critic of the department,” it said.

Below was a paragraph excerpted from an Oct. 21, 2015 letter from James Dumont, an experienced litigator based in Bristol who has represented clients before the Public Service Board for decades. Dumont’s letter said the way the department is organized poses an inherent conflict of interest for attorneys working in the public advocate’s office:

The focus on the Director of Public Advocacy appears to be misplaced. Vermont statutes mandate that the Director must represent the Commissioner. The Commissioner is the client of the lawyers within the Director of Public Advocacy’s office. A lawyer must, under our code of ethics, represent the wishes of the client, with limited exceptions not relevant here. Much of the dissatisfaction that I believe the public has had with the regulatory process arises out of the decisions made by the Director of Public Advocacy’s client, not by lawyers. I believe it is high time for the legislature to re-examine whether ratepayer advocacy should be directed by a person who is appointed by the Governor, serves at the pleasure of the Governor, and, in my experience over the past 26 years, in some major cases has been ordered or strongly urged to make decisions based on the wishes of the Governor without regard to the expertise and opinions of the professional staff and lawyers within the Department.

The Jan. 7 draft repeatedly mentions concerns about the chain of authority governing the public advocacy division. It said the most common criticism of the department’s work is that “its positions appear to be politically determined. The common view presupposes that the public advocacy function in Vermont should be carried out in a manner that is more independent of the DPS Commissioner and the Governor who appoints him or her.”

Later, the draft report suggests that political influence is built into the very structure of the regulatory system.

As stated above, the statutory scheme that creates the public advocacy function of the Department is not one that evidences any legislative intent to provide the public advocate with independence from the rest of state government, the Governor, or the Department’s Commissioner. To the contrary, given that the public advocate serves at the pleasure of the governor, combined with the inclusion of the public advocacy division within a broader agency that is obligated to create, follow and promote state energy and telecommunications policies, there is a strong suggestion that the original intent of the statutory scheme did not include independence of the public advocate.

Near the end, the January draft report had a section entitled “Potential Reforms,” which included ideas for legislative action.

The draft suggested “that new legislation in Vermont could more clearly define the intended object of the fiduciary duty of the Department’s public advocacy division.”

The draft also recommended specific ways to make the advocacy more independent, such as setting term limits independent of political elections or a prohibition on firing the public advocate except for cause.

It also had a specific recommendation to make negotiated agreements between the department and utilities more open to public input and scrutiny, including specific language borrowed from the state of Maine to help lawmakers accomplish that.

The draft suggested “intervenor funding,” a mechanism that would provide funding for ratepayers and citizens to pay for help in representing themselves before the board. The report noted that California has a similar program that estimates say “has saved billions of dollars for consumers in that state.”

In its conclusion, the Jan. 7 draft report says, in part, “we recommend that the Legislature consider amending Title 30 by adding language that clarifies the duty of the public advocacy division of the Department of Public Service.”

"We have not proposed specific structural reforms as we do not believe that there is an inherently better model for Vermont ratepayers." - Department of Public Service Act 56 Report, Feb. 22, 2016

In essence, the draft report described the statutory language that governs the department and compared that to other states’ systems. The report determined that the department is doing the job it was given by the Legislature, but recognized criticisms of the department’s advocacy and offered suggestions that could help bring that advocacy more in line with critics’ expectations, if that’s what lawmakers decided to do.

That version of the report was not publicly disclosed until the department released it in response to a public records request from VPR. None of the specific recommendations in the Jan. 7 draft report were included in the final version of the report. In fact, the final report had no specific recommendations. It concluded that Vermont already has an ideal system of utility regulation.

“We have not proposed specific structural reforms as we do not believe that there is an inherently better model for Vermont ratepayers,” the report concluded.

‘Chris is essentially taking it over’

At 9:16 a.m. on Jan. 8, the day the draft report was set to be released, the report’s author, Wayne Jortner, sent out an email.

“Chris [Recchia] decided to delay the posting of our draft for a week,” Jortner wrote. The email didn’t say why the draft was delayed, or what would happen during the extra week.

In an interview Tuesday, Recchia explained why the department needed an extra week.

“At the tail end of this, we did feel like we did need to restructure it a bit and to make it more readable, and so we really just needed the extra time,” he said. “But, you know, I want to emphasize that the initial finding of this report has not changed, and did not change throughout the report, which was that the structure is not inherently the issue. And that was a constant theme from all the reviewers that looked at this and participated.”

Recchia pushed the release date back on Friday, Jan. 8. The following Monday, Jan. 11, Geoff Commons, the director of the public advocacy division on which the report focused, sent an email to Wayne Jortner.

“I spoke with Chris [Recchia] and [Deputy Commissioner] Jon [Copans] today about the Act 56 draft,” Commons wrote. “Chris is essentially taking it over, which is fine with me.”

In an email about the Act 56 draft from Director of Public Advocacy Geoff Commons to department staffer Wayne Jortner, Commons says Commissioner Chris Recchia was "essentially taking it over."

Recchia disagrees with that characterization. He says the Jan. 11 email was a reference to the shift from researching to writing a public draft.

“No, I did not take it over. Again, a group effort. It changed from the research that Wayne [Jortner] was doing to writing based on a Vermont-specific understanding of what our charge was and what our responsibilities were which was really primarily done by [Regional Policy Director] Ed McNamara, but I still was not – other than the group discussing what should be in the report and how it should be structured – I did not weigh in on the content at that point.”

The day after Commons’ email, according to records released by the department, Recchia’s comments appeared on a markup of the Jan. 7 draft. The notes make clear that Recchia knew about Dumont’s letter, which was ultimately omitted from the report. Recchia’s comments and highlights appeared on the draft in a light blue color. He highlighted Dumont’s words and commented: “Really?”

In an interview, Recchia said his problem with the Dumont quote was the context in which it was presented.

“Jim Dumont’s response was stating opinion as fact, and it was repeated in the earlier versions of the report as such,” Recchia said. “I definitely felt like we should acknowledge the comments and the theme and the concern, but not relay them as: ‘Okay because people have these opinions, that is the factual case: That there is influence from the governor’s office, through me, to the public advocate.’ That has not occurred other than through conversations that would normally occur between upper management and staff that are working on them.”

Throughout the Jan. 12 markup, Recchia’s comments repeatedly challenge, downplay or strike the notion that political forces influence the department’s work, even as his staff’s report clearly states that political influence is a product of the structure of the department.

“In Vermont,” the Jan. 7 draft said, “V.S.A. Title 30 clearly provides a chain of authority from the Governor who appoints the Commissioner of the Department, and in turn, from the Commissioner who appoints, and may remove, the Director of the Public Advocacy Division. For many of the experts who generously gave their time to contribute to the thinking behind this Report, that hierarchical structure is largely determinative of the question of the identity of the ‘client’ of the public advocate.”

Recchia highlighted this last part – “'client' of the public advocate” – and commented “The client is the Public and in the performance of our duties in the interest of the public.” The above paragraph outlining the structural concerns did not appear in the final report.

Elsewhere in the draft, there’s an entire section crossed out. The stricken text begins, “A key question is whether the public advocate should be granted a degree of independence from the State’s political hierarchy.”

Recchia’s comment on the crossed out section: “What is intended here? Independence from whom??”

That section, including the excerpt that suggests lawmakers never designed the system to be independent from political influence, didn’t appear in the final report.

"All references to the Gas Pipeline should be removed." - Public Service Commissioner Chris Recchia, commenting on a draft self-assessment by his department

Another subject that repeatedly came up in early drafts but less in the final report was the Vermont Gas pipeline to Addison County. Many people who attended public hearings to provide input for the report were dissatisfied with the department’s handling of the Vermont Gas pipeline, and the draft quoted one of them.

Recchia highlighted the comment and wrote: “All references to the Gas Pipeline should be removed.”

Ed McNamara, the department’s top policy advisor, also commented.

“Disagree,” McNamara wrote. “It’s going to come up anyway, might as well face it head on.”

In a draft of the Act 56 report with a file name dated Jan. 12, Public Service Commissioner Chris Recchia tells his staff to remove all references to the ongoing Vermont Gas Systems pipeline construction project.
Credit Department of Public Service

Ultimately, the reference to the pipeline stayed in the report. Another staff suggestion didn’t.

Staffer Wayne Jortner repeatedly recommended including a specific recommendation to reform the department’s process for forming agreements with utilities, often called a “memorandum of understanding” or MOU. Jortner suggested a model to make the process more open by adopting Maine’s system, which allows for a more public participation as the agreements are shaped. That suggestion was removed from the report. Jortner later commented on the section of a draft copy of the report that mentioned the agreements more generally.

“Obviously,” Jortner wrote, “I like this one an [sic] recommend that it be a concrete proposal. The Maine rule could be in a footnote illustrating how it might work.”

There was no recommendation about adopting the Maine model for agreements with utilities in the final version of the report.

The Jan. 12 draft also has a red line through a sentence that suggests political pressure is simply a reality of politics.

“Inevitably,” it said, “even in the case of a free standing public advocate office with a direct statutory mission that suggests [emphasis in original] a mission that is independent of the state government administration, conflicts can arise where state officials, from the governor on down, choose to affect the positions and actions of the public advocate.”

Elsewhere in Recchia’s marked-up draft, a line of light blue highlights the text, “The vast majority of experts who provided input for this Report noted substantial advantages of Vermont’s structure…”

“Empasize [sic] this point,” Recchia commented in the margin.

Recchia denies softening the criticism represented in the report, and says all criticisms and potential improvements are included in the final version. The way he puts it, long-time senior staff took over for Jortner – who was hired from Maine more recently – to finalize the report.

“What happened in the context of this was we had researchers that were kind of putting together all the different ideas, and then we had, really, experts who have been working in Vermont for a very long time to consolidate that and make it a readable report. Those ideas I think still carry forward. They’re in the summary of some of the states that we were looking at in terms of models, but certainly the MOU [reform idea] and some of the other ideas did come through," Recchia said.

Recchia says he is confident the department's final report filled the legislature's requirements.

"This was a report that was requested of me to provide to the Senate Finance Committee and to the House Commerce Committee on how our model compared to others," he said. "It wasn’t to be fixing all the problems that people in the comments had identified as their opinions of what needed to happen. So we really did focus on the substance of our structure, how it compared to others, and what the benefits and detriments were.”

Asked why early drafts recommended legislative clarification of the law governing the department and public drafts didn’t, Recchia disagreed.

“It was definitely in my testimony” before lawmakers, he said Tuesday. “We feel we were analyzing what our charge was. We included the statutes associated with that, and it’s comprehensive in terms of public advocacy. And if they really wanted an independent ratepayer advocacy that they needed to change the statute to accommodate that, and we discussed that thoroughly in the context of the hearing.”

‘That was entirely a staff interpretation decision’

The public draft of the report was released Jan. 15 and finalized Feb. 22. The public draft and the final version of the report contained none of the specific policy recommendations of earlier versions, didn’t mention Dumont or his letter. The report said there was “no indication that the current structure of the Department creates any real or inherent conflicts of interest.”

Later that week, Recchia and a number of utilities advocates and experts were called to testify on the report before the Senate Finance Committee. One of the experts was Dumont, who told the committee about his letter.

"My staff just misinterpreted Mr. Dumont's request in his letter about providing formal comments." - Public Service Commissioner Chris Recchia

“Just before the department’s draft report was due, I was told by a member of the department that my letter was not only welcome, but that it had raised important issues and would be specifically discussed in the report,” Dumont said as Recchia looked on from the edge of the committee room. “You all have the report. The report lists all the comments. My letter is not mentioned. It’s not listed in the comments. And as the commissioner said to you twice today, all the comments were posted on the board’s website. My letter is not on the board’s website.”

The next day, Recchia explained the omission to the Senate committee and in an interview with VPR.

“My staff just misinterpreted Mr. Dumont’s request in his letter about providing formal comments,” Recchia said. “They thought that he did not wish to include those. Obviously after yesterday [we know] he did want them included, and we have posted those since then on the website, but that was entirely a staff interpretation decision based on their conversations with him, and I respect the fact that checking it out today, that’s what they told me.”

In an interview Tuesday, Recchia said the staff member he asked about Dumont’s letter was Wayne Jortner.

Documents from the department tell a different story. Multiple drafts of the report from before Jan. 8 include Dumont’s letter and reference it repeatedly. Recchia himself commented on the content of Dumont’s letter when it appeared in the Jan. 7 draft. After Recchia’s markup of that draft, the comment didn’t appear in new drafts of the report.

But Recchia’s staff thought Dumont’s comments were important enough to mention again. On Feb. 19 – a week before Recchia told the Senate Finance Committee that his staff mistakenly thought the letter should not be included – a member of Recchia’s staff emailed him to suggest that an excerpt of the letter be included in the report.

Wayne Jortner wrote to Recchia and other top officials in the department:

Chris,

Here is the concise comment of Jim Dumont, which he explicitly declined to present on behalf of AARP or any other client. I thought this summarized well the broad public dissatisfaction that I heard. You can decide whether to present it and respond. This comment essentially supports our view that we are operating appropriately under the existing statutory framework. He proposes a different framework. I mention this only because this seems to get to the heart of the controversy. In this sense, the blame is directed at the Legislature, not the Department.

The email then quotes the same section of Dumont’s letter that was included in earlier drafts of the report.

One week before Commissioner Chris Recchia told the Senate Finance Committee that a member of his staff omitted attorney Jim Dumont's criticism of a report, that staff-member told Recchia in an email that the criticism could be included.
Credit Department of Public Service

According to Recchia’s version of events, the staffer who sent him an email to say “you can decide whether to present it and respond,” told Recchia less than a week later that he’d been under the impression the letter should not be included.

When he was asked to clarify how that could happen, Recchia said all comments and concerns were represented in the final report.

“When we were trying to figure out what happened – these were to be posted on the website, but there’s a difference between having comments included on the website and including them verbatim in the report, and for a variety of reasons it was felt we should be summarizing things in thematic form for the comments we heard, and not the specific comments included in quotations in the report."

Recchia pointed out the fact that Dumont's quote wasn't the only one removed.

"And we did that with several of them. So there is no difference here about the process or how things occurred. We have a final report that has the themes acknowledged, addressed. I don’t think we shied away from the criticisms that were made through all of the public comments that we had received and all the meetings that we had, and those things were included in their entirety on the website.”

But before Dumont raised the issue in the Senate Finance Committee, his letter was not posted on the website. Asked about that detail, Recchia had a shorter explanation.

“That was a mistake,” he said.