Bill changing Tennessee Regulatory Authority's structure passes

photo Tennessee Rep. Mike McDonald
Arkansas-Tennessee Live Blog

NASHVILLE - An overhaul of the Tennessee Regulatory Authority passed Tuesday in the waning hours of the 107th General Assembly and is headed to Republican Gov. Bill Haslam's desk.

The House dropped a provision senators objected to and gave final approval 72-11 to the measure, which Haslam proposed and is expected to sign.

Haslam's bill changes the current structure of the TRA, which regulates utilities such as Tennessee American Water and Chattanooga Gas. The agency goes from a four-member, full-time board into a five-member, part-time board with a full-time executive director.

Haslam says the TRA no longer needs a full-time board because the responsibilities of the agency, which hears contested rate-hike requests by utilities, have fallen dramatically as a result of telecommunications deregulation.

Changes would result in at least $350,000 in annual savings, according to a legislative analysis.

House Democrats, however, said the agency already does its job well. Minority Leader Craig Fitzhugh, D-Ripley, unsuccessfully sought to change the bill earlier in the day to cut the number of TRA directors from four to three.

Rep. Mike McDonald, D-Portland, charged that "we're trying to fix something that's not broken. I think this legislation is very unnecessary."

Haslam has refused to release some records on the legislation requested by the Chattanooga Times Free Press. The administration did identify various entities and individuals that administration officials spoke with about the bill.

Among them were officials and lobbyists from Tennessee American, Chattanooga Gas, AT&T and other regulated utilities. The administration also contacted Tennessee Attorney General Bob Cooper and top staffers. Cooper's office runs the Consumer Advocate and Protection Division, which advocates on behalf of ratepayers.

Citing claims that some of the information about what advice administration officials got from "stakeholders" was exempt from the state Open Records Act, the administration released only limited information about advice it received.

That's OK, House Majority Leader Gerald McCormick, R-Chattanooga, said.

"Every meeting is not open," he said. "You need to be able to talk to people without expecting to read about it in the newspaper. And certainly if there's any doubt, you ought to share it."

But he said "sometimes you have conversations where you don't want it out in the media [so] people can speak freely."

He noted that House caucus meetings are closed to the press. The legislature is not covered under the Open Records Act. The executive branch is.

The four full-time TRA directors now are paid $152,400 annually plus benefits. Part-time directors would be paid $36,000 a year, plus benefits. Qualifications would include at least a bachelor's degree and three years' experience in a regulated utility industry or in "executive-level management," plus expertise in an area such as economics, law, finance, accounting or engineering.

The executive director's salary could not top $140,000 a year.

Critics say that because the TRA directors act as a quasi-judicial body in rate cases, a part-time board won't work. They note only two states in the U.S. have part-time boards and one is considering reinstituting a full-time board.

Haslam says the move will save about $350,000.

A national firm that advises investors, Baird Equity Research, has raised questions about the efficacy of a part-time board.

"We do not believe that a part-time commission serves the best interest of utilities operating in the state or consumers," the firm said in a recent report, noting the change "likely makes it difficult to attract qualified commissioners."

Haslam has dismissed the criticism, saying the TRA has had only 19 contested cases in the past five years.