Wisconsin Public Service Commission Controversies and Ex Parte Violations
Maintaining impartiality is a cornerstone of regulatory oversight. In Wisconsin, the Public Service Commission is governed by statutes that strictly prohibit Commissioners from communicating with parties who have a substantial interest in the outcome of a pending case. These restrictions, often referred to as ex parte rules (communications made by one party without the presence or knowledge of others), are designed to ensure fair and unbiased decision-making.
Despite these legal safeguards, the Commission has faced significant scrutiny following two major scandals involving violations of these laws, both of which centered on the utility company We Energies.
Key Facts
- Wisconsin law prohibits Commissioners from communicating with interested parties during pending cases.
- Two major scandals involving We Energies have highlighted violations of these impartiality laws.
- The 1997 controversy involved a utility merger between Wisconsin Energy Corp. and Northern States Power.
- The 2014 controversy involved Commissioner Ellen Nowak and a We Energies rate case.
- Ratepayers and advocacy groups have previously demanded commissioner recusal to maintain regulatory integrity.
The 1997 Merger Controversy
The first major instance of regulatory friction occurred in 1997 during a pending utility merger between Wisconsin Energy Corp. and Northern States Power. During this period, the Commission was forced to defend itself against allegations of improper communication. Specifically, it was alleged that a Commissioner had engaged in unauthorized discussions with utility executives regarding the details of the merger.
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The 2014 Rate Case Scandal
A more detailed breach of impartiality occurred in 2014 during a pending rate case—a legal proceeding to determine the prices a utility can charge customers—involving We Energies. Commissioner Ellen Nowak came under fire for appearing to violate both the ex parte rules and the legal requirement for Commissioners to remain impartial.
Conference Appearances and Utility Advice
In March and June of 2014, Commissioner Nowak participated in panels for conferences hosted by the Edison Electric Institute. During these sessions, she provided advice to utilities regarding rate-making practices. The June panel, titled "Utility Regulation and Success in a Low Growth Economy," was particularly contentious as she appeared alongside Gale Klappa, the CEO of We Energies.
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Calls for Recusal
The proximity of Commissioner Nowak to the CEO of a utility currently undergoing a rate review raised serious questions about whether further private communications had occurred between Nowak, Klappa, or other utility staff. Consequently, individual ratepayers and various advocacy groups called for Commissioner Nowak to recuse herself—meaning to remove herself from the case—to ensure the outcome was not tainted by a lack of impartiality.
Summary of Regulatory Controversies
| Year | Primary Entity Involved | Nature of Controversy | Key Figures/Events |
|---|---|---|---|
| 1997 | Wisconsin Energy Corp. & Northern States Power | Improper communication during merger | Commission vs. Utility Executives |
| 2014 | We Energies | Ex parte violations during rate case | Commissioner Ellen Nowak & CEO Gale Klappa |
Frequently Asked Questions
What are ex parte rules in the context of the PSC?
Ex parte rules are legal prohibitions that prevent Public Service Commissioners from communicating privately with parties who have a substantial interest in a pending case, ensuring all evidence and arguments are presented transparently.
Why was Commissioner Ellen Nowak's 2014 appearance controversial?
It was controversial because she advised utilities on rate-making practices and appeared on a panel with the CEO of We Energies while a rate case for that same company was pending.
What is a rate case?
A rate case is a regulatory proceeding where a utility company requests a change in the prices it charges customers, which the Commission must review and approve based on evidence.
What does it mean for a Commissioner to recuse themselves?
Recusal occurs when a Commissioner steps down from participating in a specific case to avoid a conflict of interest or the appearance of bias, thereby protecting the integrity of the decision.
Which utility company was involved in both major scandals?
We Energies (including its predecessor Wisconsin Energy Corp.) was the central utility entity involved in both the 1997 and 2014 controversies.