by Paula C. Squires

Clinton Miller, chairman, State Corporation Commission Photo by Waybe Scarberry

For a man who heads a state agency under intense scrutiny, Clinton Miller appears perfectly calm as he gives a tour of his office. The chairman of the State Corporation Commission graciously shows the portrait of Thomas Jefferson, the small, gurgling water fountain, and a panoramic view of downtown Richmond from the SCC’s 11th floor conference room. Miller is in good spirits. Two consultant studies have just concluded that there’s no need to abandon the aging and powerful agency that regulates railroads, insurance, financial institutions and public utilities. Miller’s $127,294-a-year position looks safe.

Yet, for Miller and the SCC, the turmoil is far from over. As deregulation transforms critical industries regulated by the SCC, the agency may be in for a major tune-up. There’s talk of creating a new division to oversee energy and telecommunications and of making the agency more accountable and visible to the public. Consumer groups hope the SCC won’t become politicized under the guise of change. "That’s what I fear," says Irene Leech, president of the Virginia Citizens Consumers Council. She wants the SCC’s role to remain the same, because "The SCC takes the law and applies it while balancing the needs of various groups ... Business isn’t the only constituency."

Driving the change is deregulation of the state’s energy and telecommunications industries. Powerful state utilities such as Dominion Resources Inc. are under pressure from Wall Street and their shareholders to change completely how they do business as regulated prices for electricity end by 2007. The state’s phone industry is caught in a vicious war over market shares. In turn, the SCC must shun its watchdog mindset to one that promotes business competition, say deregulation proponents. "The complete authoritative approach cannot exist," says Sen. Thomas K. Norment, R-James City County, who chairs a General Assembly subcommittee studying the commission and who sponsored the 1999 energy deregulation law.

If anyone has the ear of energy company leaders, it is Norment (see story, Page 18). Lately, he’s been getting a blast about the SCC from utility executives who are critical of its cautious approach towards deregulation. The two consultant studies likewise have been critical. "Across the utility sectors," says a report prepared by a consultant the SCC hired, David Wyrick of the National Regulatory Institute at Ohio State University, "some have concluded that the SCC has not made the cultural and behavioral shifts necessary to effectively employ competition; that the SCC approach is too heavily adversarial; and that the SCC has not moved quickly enough to create industry change."

But to the relief of Miller and SCC staff, neither report provides the ammunition needed to justify massive change. Both consultants say the independent, quasi-judicial agency does a good job and is generally well regarded. Plus, very few of its decisions have been overturned by the state supreme court, the only court of appeal.

Still, deregulation calls for a new way of doing business. "The current view is that regulation is about facilitating competition, not controlling the thing itself," says Kenneth Button, a George Mason University professor who has analyzed government regulatory structures around the world and was hired by the subcommittee to assess commission operations. He says increasing the number of SCC judges from three to five would speed up decision-making and allow for more fresh blood on the bench. So far the idea isn’t attracting support, particularly with current budgetary restraints. Moreover, Button says that the SCC needs to raise its public profile and shouldn’t operate like "some sort of secret service." Miller bristles at the characterization, saying, "It’s a stretch and unfair." SCC files and hearings are open to the public, and the agency fields 70,000 consumer calls a year.

Both consultants recommend taller walls between SCC staff and judges. This recommendation is based on perceptions that staff lawyers have undue influence, because they can still lobby judges privately after making their public presentations. Miller says new rules adopted by the SCC in June address those concerns. Ethics, though, can be a sticky wicket. Del. Clifton A. Woodrum, D-Roanoke, questions how Edward Flippen, a lawyer representing Dominion Virginia Power on SCC deregulation issues, can seemingly play it both ways. While representing Dominion, Woodrum says, Flippen simultaneously serves as a citizen member on a subcommittee that might make recommendations to the General Assembly on the SCC’s roles and responsibilities. "It would seem to me that that’s a situation that would raise most ethical people’s eyebrows," says Woodrum, who tried unsuccessfully during the last assembly session to delay electric restructuring. Miller says he has no problem with Flippen, a former SCC lawyer, serving on the committee. Flippen, appointed by Gov. Jim Gilmore, says: "My service on the joint subcommittee is a public service. I do not represent or consult with clients on matters before the joint subcommittee."

Miller, a lawyer and former delegate from Harrisonburg who has served on the commission since 1996, knows deregulation will bring major changes in how the SCC does business. The General Assembly has directed the SCC, when it considers deregulation issues, to consider "the goals of competition and economic development in the commonwealth." Miller says the SCC will do everything possible to see that deregulation works. "But, he adds, "if it doesn’t work, a correction will need to be made."

Return to Virginia Business - August 2001