The Intervenor: Lone customer enters procedural fray over gas and electric rates
Retired energy analyst says customers should get more involved
Steve Wegman sips coffee and looks out the kitchen window of his home in Sioux Falls. (Joshua Haiar/South Dakota Searchlight)
As an unassuming and good-natured retiree, Steve Wegman might not seem like the type to make headlines. But he did recently, as the only “intervenor” participating in the state’s two ongoing utility rate adjustment cases with MidAmerican Energy and Xcel Energy.
MidAmerican wanted to raise customers’ natural gas bills by just over 6% but was awarded only 5.4% by state regulators, thanks in part to Wegman. Xcel is seeking about 18%.
Wegman is the first individual customer to intervene in an electric or gas rate case in years, and he said that’s for a simple reason: “The public was never educated how to.” He gained the knowledge as a former analyst for the Public Utilities Commission, often referred to as the PUC.
That’s the state regulatory agency that considers a natural gas or electric rate adjustment case. The cases determine the rates a company can charge its customers.
Similar to a court case, the utility company presents evidence to support its proposed rate increase, while other parties, such as consumers, can challenge the proposed rates. In this “courtroom,” the final decision is made by three publicly elected commissioners that serve six-year terms.
Anybody who’s a customer of the utility requesting the rate increase can email the commission and ask to be granted “intervenor” status, allowing them to participate in the process. Intervenors are entitled to receive official notices, appear at hearings, examine and cross-examine witnesses, present evidence, compel attendance of witnesses and production of evidence, submit briefs, and make and argue motions and objections.
Wegman said that by not participating, customers are assuming the Public Utilities Commission and its staff are representing them.
“The PUC’s views and the company’s views may not be the same as the customers’ views,” Wegman said. “And without the customer participation, it’s a guessing game.”
The Public Utilities Commission does not agree with that assessment.
“The commission believes that utility customers understand that the PUC has expert staff who advocate for the public interest in rate cases, which is much more efficient than individual customers intervening in rate cases,” said Leah Mohr, a PUC staff spokesperson. “It is important to note that the examination of any rate case filing is a long and difficult process even for experienced professionals.”
The PUC noted that while individual intervenors are rare, organizations sometimes intervene in utility rate cases on behalf of individual customers.
When Black Hills Energy applied to increase its electric rates in 2014, Black Hills Industrial Intervenors and Dakota Rural Action were granted intervenor status.
Additionally, there have been at least two instances in which customers filed a petition requesting a public input meeting in the last two decades. When NorthWestern Energy looked to raise its electric rates in 2015, 27 customers filed a petition requesting a public hearing. Similarly, when the company looked to raise natural gas rates in 2011, 25 customers filed a petition requesting a public hearing. Public hearings were held in both cases.
And intervening is common in other types of regulatory proceedings before the PUC. More than 500 people and organizations have standing to participate in the regulatory review of two proposed carbon-capture pipelines that would go through South Dakota.
And regardless, “Customers are not left out of the process just because they do not intervene,” Mohr said. “Many customers submit comments, and the commission considers those comments as the docket is processed.”
Wegman said some other states have a body in the Attorney General’s Office to represent customers in all rate adjustment cases.
“Something to consider,” he said.
A Pierre insider
Wegman started with energy policy under then-Governor Bill Janklow in the early 1980s as an energy policy analyst.
“I was working on energy efficiency,” Wegman said. “Changing building codes. Changing building practices. Changing curriculum in the technical schools for building homes.”
From there, Wegman began working on natural gas and geothermal projects around the state. And in the 1990s, he worked for the Public Utilities Commission as an analyst.
“What I basically worked on is energy efficiency and energy efficiency policies for utility companies,” Wegman said.
After Janklow came back for a second stint as governor in 1995, Wegman was invited back to the Governor’s Office as a special projects director.
Among other projects, Wegman worked to develop a mobile public health lab, a tattoo removal trailer for inmates, and an inmate production plant that made extremely bright lights to be used by fire departments around the state.
“That’s probably my favorite,” he said. “The firefighters still use those lights today.”
Wegman then headed back to the PUC as an analyst in the early 2000s. He has since retired but still does consulting work in renewable energy. He said his time in Pierre taught him an important lesson about elected officials.
“The only thing that matters to an elected official is that the public marks the box on the ballot,” Wegman said. “The unfortunate part is that no one follows up with those officials’ performance.”
But companies with skin in the game do.
Wegman said the public should be aware that utility companies work hard to build relationships with elected regulators – for example, by sponsoring the Governor’s Hunt to get themselves invited, or hosting a dinner for the commission and lawmakers during the legislative session.
“Rule number one in business is that in order to have a relationship with the other party, you have to have a personal relationship,” Wegman said. “And that’s what those are. It is the company building a personal relationship with a commissioner. Whether they want to admit it or not, that’s what is happening.”
PUC spokesperson Leah Mohr said it’s inaccurate to characterize those relationships as anything more than business.
“The commission is not going to raise rates in return for a free lunch,” Mohr said.
“Each commissioner understands and honors their responsibility as fair and impartial decision-makers. Naturally, commissioners have business relationships with representatives of each utility. The more a commissioner learns about a utility’s business, whether through formal avenues or informal ones, it fosters communication and understanding, which helps the commission do a better job of evaluating any request from that utility.”
And she said commissioners work to build relationships with customers, too. Commissioners attend public events throughout the year across South Dakota, including home shows in Sioux Falls and Rapid City, the South Dakota State Fair, and community gatherings.
“In contrast,” Mohr said, “meetings with utilities are relatively rare.”
How to intervene
Wegman said customers can have more influence by becoming intervenors, and he said the PUC should welcome that.
“It’s really just a lack of education upon the consumers,” Wegman said. “Should the commission spend time and resources to help the customers get educated? I always believed they should.”
The state requires utility companies to provide written notice of any proposed rate increase to all affected customers at least 30 days prior to the effective date of the increase with a statement in customers’ bills. Wegman said the low number of individual intervenors in electric and gas rate cases is a sign that the PUC isn’t doing enough to educate consumers.
“Obviously people don’t know what they can do,” Wegman said. “If people are lining up for free food, having a hard time eating, I have a hard time believing they are not struggling to pay their utility bills.”
Becoming an intervenor is simple, according to Wegman.
“All you need to do is be a customer of the company requesting the rate adjustment,” Wegman said. “Within that sign-up period that’s noted in your bill, you email the commission that you’d like to intervene. Include contact info, an address, and that’s it.”
By becoming an intervenor, Wegman was able to request information from state regulators and utility companies, participate in the case’s proceedings, and present his views to regulators on the proposed rate changes.
“We had a few phone calls. We had a few Zoom meetings,” Wegman said. “The company sent me the data that I wanted. I also asked PUC staff what questions they are asking, just to make sure the bases were being covered.”
And Wegman said he extracted some concessions.
Wegman said MidAmerican was proposing to raise a standard fee tacked on to every bill, in addition to the natural gas, from $5 to $10. “And I talked them down to $6 and some odd cents,” he said.
Wegman said the commission staff was not planning to do that. At other times he and the PUC staff shared concerns.
“MidAmerican tried to include some costs accrued in other states. Staff caught that too,” Wegman said. “We pushed back on that.”
Wegman said he is still reviewing Xcel Energy’s rate increase.
“I’m looking at their energy efficiency programs to make sure they are fair for South Dakotans,” Wegman said.
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