Stunning story out of Wisconsin. Former PSC Commissioner Mike Huebsch has racked up over $800K in legal bills defending himself against accusations of bias in his approval of the Cardinal-Hickory Creek transmission project. The story tells us that the PSC has paid Huebsch's outside counsel to defend him, even after state attorneys bowed out of the case when it was revealed that Huebsch was trading encrypted messages with employees of the utilities proposing the project. The PSC says it could have a conflict of interest and therefore cannot defend Huebsch in-house.
PSC spokesperson Matthew Sweeney said the commission “has unique obligations and could have different interests and duties relating to transparency than former Commissioner Huebsch would have in his capacity as a private citizen,” which could have created a conflict of interest for PSC attorneys.
It would be logical, then, that Huebsch is on his own to defend his actions as a private citizen. But yet the PSC thinks it should cover his expenses under state law. The state law covers the actions of state employees "acting within the scope of employment." Is trading personal messages with utility employees a required or recommended job function of a PSC Commissioner? Regardless of whether communicating with utilities is a job function, Huebsch says the messages were of a personal nature.
Huebsch, a former state legislator who served in Gov. Scott Walker’s cabinet before joining the PSC in 2015, says the messages were purely personal exchanges with old friends and that he never discussed PSC business outside of official proceedings.
Therefore the messages were not within Huebsch's scope of employment and defending him should not be the state's financial responsibility. The law is clear.
Regardless of the results of the litigation the governmental unit, if it does not provide legal counsel to the defendant officer or employee, shall pay reasonable attorney fees and costs of defending the action, unless it is found by the court or jury that the defendant officer or employee did not act within the scope of employment.
But what does the PSC care? It thinks that it can simply shift the costs of Huebsch's legal bills onto the utilities it regulates under a different state law.
The public service commission is authorized by s. 196.85, Stats., to charge any public utility, power district, or sewerage system the expenses attributable to the performance of the commission's duties.
If the messages were personal and not part of Huebsch's job function, then the cost of defending them may not be passed to the utilities.
Huebsch makes a giant leap in logic to presume that these costs wrongly paid by the PSC and wrongly charged to the utilities would be passed through to electric ratepayers in their electric bills.
Huebsch makes a giant leap in logic to presume that these costs wrongly paid by the PSC and wrongly charged to the utilities would be passed through to electric ratepayers in their electric bills.
Through his attorney, Huebsch blamed the plaintiffs for running up the tab on utility customers who will ultimately absorb the costs of defending the PSC’s decisions.
The news article says, "Under state law, legal expenses are assessed to the utilities involved, in this case American Transmission Company, ITC Midwest and Dairyland Power Cooperative, which don’t serve retail customers but charge transmission rates that ultimately affect electricity costs."
And who has jurisdiction over transmission rates? It's not the Wisconsin PSC, it's the Federal Energy Regulatory Commission. Wisconsin has no authority to determine that these legal fees should be a ratepayer responsibility. Indeed, the case could be made that Huebsch's legal expenses to defend his personal actions while serving as PSC Commissioner do not belong in an account that is passed through to ratepayers through the utilities' formula rates. FERC administrates an accounting classification system known as the Uniform System of Accounts, which sorts utility expenditures into categories, or accounts, based on their nature and purpose. Where does Huebsch think his legal expenses belong under the USoA? Do they belong under Regulatory Commission Expenses (Account 928) or do they more properly belong in the 426 account series as a non-operating expense? An argument could be made that they are a non-operating expense. Do the utilities involved bear any responsibility for communicating with Huebsch in a secretive manner while he was considering their permit application? If the messages were not entirely personal, then they could be seen as "for the purpose of influencing the decisions of public officials", which belongs in Account 426.4. If the messages cannot be produced for judicial review, how could anyone ever know what they said? The utility could never PROVE that the messages were harmless, routine operating expenses that should be recovered from ratepayers, and the utilities have the burden of proof. They won't have enough proof to recover these expenses from electric ratepayers.
Unbelievably, Huebsch whines that nobody should be allowed to question whether his decision was biased because it's just too expensive for ratepayers.
And who has jurisdiction over transmission rates? It's not the Wisconsin PSC, it's the Federal Energy Regulatory Commission. Wisconsin has no authority to determine that these legal fees should be a ratepayer responsibility. Indeed, the case could be made that Huebsch's legal expenses to defend his personal actions while serving as PSC Commissioner do not belong in an account that is passed through to ratepayers through the utilities' formula rates. FERC administrates an accounting classification system known as the Uniform System of Accounts, which sorts utility expenditures into categories, or accounts, based on their nature and purpose. Where does Huebsch think his legal expenses belong under the USoA? Do they belong under Regulatory Commission Expenses (Account 928) or do they more properly belong in the 426 account series as a non-operating expense? An argument could be made that they are a non-operating expense. Do the utilities involved bear any responsibility for communicating with Huebsch in a secretive manner while he was considering their permit application? If the messages were not entirely personal, then they could be seen as "for the purpose of influencing the decisions of public officials", which belongs in Account 426.4. If the messages cannot be produced for judicial review, how could anyone ever know what they said? The utility could never PROVE that the messages were harmless, routine operating expenses that should be recovered from ratepayers, and the utilities have the burden of proof. They won't have enough proof to recover these expenses from electric ratepayers.
Unbelievably, Huebsch whines that nobody should be allowed to question whether his decision was biased because it's just too expensive for ratepayers.
“The best outcome for ratepayers in Wisconsin and across the country would be for this unfounded ‘bias’ claim to be dismissed as soon as possible,” Huebsch said. “Every dime they have had to pay until now — including for the co-owners’ numerous law firms and PSC legal staff — is because of the plaintiffs and their choices.”
Huebsch said if the Supreme Court doesn’t throw out the bias claim, ratepayers will end up paying to litigate an “untold number of copycat ‘bias’ lawsuits.”
Can we talk about "choices" here? Huebsch CHOSE to carry on personal conversations with employees of utilities that he regulates. That's the "choice" that has caused these costs, not the filing of lawsuits that resulted from Huebsch's "choice."
The idea that anyone affected by regulatory decisions should be prohibited from challenging those decisions in court is a non-starter, no matter who is paying.
If Huebsch was really worried about electric rates, perhaps he should have considered the cost of the project itself? It's out of his hands now, of course, but the utilities behind it continue to spend money knowing that they can apply at FERC to collect their sunk investment, plus generous double digit return, even if the project is never built (which looks like a real possibility lately).
Is this really about the ratepayers? Or is that just an excuse to shift attention away from Huebsch's personal choices?
The idea that anyone affected by regulatory decisions should be prohibited from challenging those decisions in court is a non-starter, no matter who is paying.
If Huebsch was really worried about electric rates, perhaps he should have considered the cost of the project itself? It's out of his hands now, of course, but the utilities behind it continue to spend money knowing that they can apply at FERC to collect their sunk investment, plus generous double digit return, even if the project is never built (which looks like a real possibility lately).
Is this really about the ratepayers? Or is that just an excuse to shift attention away from Huebsch's personal choices?
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