DPU is too cozy with utilities it regulates

Too often the agency lets the firms investigate themselves

MASSACHUSETTS SAW an important milestone earlier this year with the passage of the Next Generation Roadmap bill, a much-needed update to the state’s evolving response to the climate crisis. The bill was passed by overwhelming margins in the House and Senate and signed into law by the governor (after vetoing it twice). That the bill was passed in the face of intense industry lobbying in opposition to climate action is a credit to climate and environmental justice advocates and our elected officials.

And yet it is perhaps telling that key opponents to climate action, like the utilities, did not go all-in against this bill. Because as important as this bill is, it still leaves much of the details of how we achieve our climate goals to the discretion of the executive branch. And as much as the utilities lobby hard against climate legislation, they also have deep, hidden influence over the work of the Baker administration, in the form of “regulatory capture” – a term describing when industries have gained effective control over the government agencies that are supposed to regulate them.

Nowhere is that capture more robust than the state’s Department of Public Utilities. The DPU is charged with regulating the state’s public utilities, private businesses that are given government-sanctioned monopolies in various territories of the state in exchange for heightened regulation in the public interest.

Yet the DPU has often been seen as a rubber stamp for the interest of the utilities. In one recent and notable example, the DPU has been criticized for allowing the construction of an electrical substation in a flood zone in an already overburdened environmental justice community. Thankfully, the new climate bill for the first time explicitly evolves the DPU to consider climate impacts as part of its official mission — coming 13 years after our state committed to decarbonizing our economy through the Global Warming Solutions Act.

But the utilities’ hold over the DPU is robust. For instance, one would think that investigations into the practices of the utilities would be conducted independently by the regulators or those they entrust with a sacred obligation to serve the public interest. Instead, there is a disturbing pattern of the regulators deferring to the utilities to hire and oversee the investigations into their own practices. Three recent examples have been uncovered, which begs the question of what other insider-trading is lurking beneath the surface.

In the wake of the tragic Merrimack Valley gas explosion, the Department of Public Utilities hired Dynamic Risk to conduct a risk assessment of Columbia Gas’s efforts to restore gas to customers, which then released a report detailing its findings. Unfortunately, Dynamic Risk was hardly a neutral observer. Dynamic Risk has a history of serving clients like Enbridge, a fracked-gas pipeline company looking to expand its operations in Massachusetts through new construction like the controversial Weymouth Compressor Station. Dynamic Risk invited Columbia Gas to review the report prior to its publication (Final Report, page 55) and unsurprisingly made no recommendations involving moving away from the climate-disrupting, highly-flammable natural gas in our state’s heating or electricity systems (Final Report, pages 53-55).

Similarly, the DPU’s response to a formal request by Massachusetts Attorney General Maura Healey wisely calling on the DPU to open an investigation into the future of the natural gas industry — given Massachusetts’ climate mandates to zero out climate pollution by no later than 2050 — was the response of an agency overly deferential to those they regulate. The DPU responded that fall by inviting the utilities to get together and develop a joint request for proposals to an “independent consultant” to study this issue and report on their findings.

After the attorney general expressed concerns in November that the very utilities being investigated should not get to select the consultants, the DPU responded with no apparent concern about conflicts of interest. When the Town of Hopkinton (representing its citizens) recently asked to see the details of the bidding process, their request was denied by the utilities. The consultant eventually chosen, Energy and Environmental Economics (E3), lists National Grid on its website as a client.

Finally, WBUR reported on a conflict of interest around a management audit of National Grid, including a focus on delays of solar project interconnections and issues with National Grid’s electric vehicle program. The DPU allowed National Grid to hire FTI Consulting to do the audit over the strong objections of the attorney general’s office over a suspected conflict of interest. Two of the individuals that FTI assigned to conduct the audits were former National Grid employees, including John Cochrane, who previously served as the chief financial officer of National Grid USA. Furthermore, FTI cited only one previous instance of a utility audit it had conducted; one of its competitors had performed more than 100 similar audits.

Healey’s office pointed to a deeper, perhaps more sinister conflict. As the New York Times reported, FTI runs secretive PR campaigns for the fossil fuel industry. Indeed, FTI seemed to have more experience operating “organizations and websites funded by energy companies that can appear to represent grass-roots support for fossil-fuel initiatives.” So why was a company whose primary expertise is using subterfuge to push pro-fossil fuel messaging awarded a competitive bid to investigate a heavily gas-reliant utility?

Well, one might look to the DPU’s leadership for starters. Dynamic Risk was selected as the vendor when the DPU was under the leadership of Angie O‘Connor. O’Connor’s previous experience included a decade as the founder and president of the New England Power Generators Association (NEPGA), an industry group representing the interests of the region’s (mostly fossil fuel) power plants, as well as serving as the vice president of energy policy for the Associated Industries of Massachusetts, a notoriously pro-gas business association that is one of the most frequent and vocal opponents of climate legislation in the Commonwealth.

O’Connor was succeeded in her post by Matt Nelson, who was previously employed by Eversource. And of course, the revolving door goes both ways. The former general counsel of the DPU, Kevin Penders, now is an attorney at Keegan Werlin, which is representing the utilities in the docket on the future of gas. O’Connor’s chief operating officer at the DPU, Daniel Collins, has since left and taken a job at NEPGA. While there may not be an explicit quid pro quo, it is an unwritten rule of such arrangements that regulators who treat industry with kid gloves can be rewarded by those same industries with golden mittens after leaving their regulatory posts in search of more lucrative private sector employment.

It is terrific that the Massachusetts Legislature has reaffirmed and deepened its commitment to climate action and environmental justice with the recent passage of the Nextgen Roadmap Climate Bill. Yet Massachusetts will never fully live up to its climate goals and its moral responsibilities to act as long as the fossil fuel foxes continue to guard the Commonwealth’s hen house.

Meet the Author

Craig S Altemose

Senior advisor, 350 Massachusetts for a Better Future
If Governor Baker and Energy and Environmental Affairs Secretary Katie Theoharides want to show that they are serious about climate action, they should instruct the DPU to actually and independently regulate the industry they are charged with regulating on behalf of the public. And if they continue to fail to do that, the public should be prepared to replace them with a governor like Ben Downing or Maura Healey who stand ready to do so.

Craig S. Altemose is the executive director of Better Future Project, a Massachusetts-based climate organization and the home of 350 Massachusetts, Divest Ed, and Communities Responding to Extreme Weather (CREW).