NASHVILLE - Gov. Bill Haslam's proposed overhaul of the Tennessee Regulatory Authority is getting a thumbs down from a nationally respected investor-research firm.
Baird Equity Research says in a report issued Tuesday that Haslam's idea of turning the TRA from a full-time board to a part-time board could result in slower action and could depress earned returns for monopoly utilities.
"We lower our assessment of Tennessee regulation to generally constructive/declining, due to concerns regarding pending legislation, which would alter the Tennessee Regulatory Authority's (TRA) ability to adequately regulate the state's utilities," the report says.
It goes on to say "we do not believe that a part-time commission serves the best interest of utilities operating in the state or consumers. This change likely makes it difficult to attract qualified commissioners and could increase regulatory lag pressuring earned returns."
The bill is up for a Senate floor vote today.
Haslam sought to dismiss the criticisms.
"That's a real stretch," the Republican told the Knoxville News Sentinel. "If you follow that reasoning, you'd have to downgrade all the Fortune 500 companies because they have part-time boards, too."
He questioned how a "regulatory lag" could be caused by the legislation and wondered if Baird knew the TRA had only 19 rate cases in the past five years. If they had been aware of that, Haslam said, "maybe they would be comfortable."
Baird Equity Research, an arm of Robert W. Baird & Co., regularly assesses state regulatory agencies as part of its efforts when advising investors.