KyKurmudgeon

Sunday's column:

FRANKFORT — Kentucky’s Public Service Commission regulates more than 1,500 utilities that provide the state’s residents with electricity, natural gas, water, sewer service and telecommunications.

Sounds like the epitome of a “public protection” agency, doesn’t it?

But when Gov. Steve Beshear earlier this year issued an executive order breaking up the massive and unwieldy Environmental and Public Protection Cabinet created by former Gov. Ernie Fletcher, the PSC wound up attached not to the new Public Protection Cabinet but to the new Energy and Environment Cabinet.

To some, including Tom Fitzgerald of the Kentucky Resources Council, that seems an odd coupling.

“There is a structural conflict of interest that cannot be avoided when the agency that is promoting and giving or lending dollars in the form of incentives and grants to promote certain energy projects also has to regulate those projects,” Fitzgerald said in an e-mail response to questions about the issue.

Fitzgerald, who is even more concerned that environmental programs were linked with energy, said the “PSC should have gone to Public Protection.” He said he expressed his concerns to the administration in advance and was told he would be briefed and have a chance for input before the reorganization became final but “that didn’t happen.”

Jay Blanton, Beshear’s new communications director, said the rationale behind linking the PSC and the Energy and Environment Cabinet was a desire to take a more comprehensive and creative look at energy. In that context, Blanton said, the thinking was that a synergy created by communication between those who regulate energy and those who make policy could be beneficial.

Besides, Blanton noted, the PSC’s connection to the cabinet is a “dotted line” relationship that is solely administrative in nature and will not affect the PSC’s independence.

Blanton also said Beshear’s appointment of Dave Armstrong, a former attorney general with a record of being an “aggressive watchdog,” as the new PSC chairman should allay public fears that the agency will be any less vigilant because of its attachment to the cabinet.

In addition, Blanton said, there are many instances in state government where regulators are attached to agencies they may have to regulate, including having the inspector general who regulates nursing homes serving in a cabinet that owns and operates some nursing homes itself.

Perception is less important than actions, Blanton said. “Let’s see the proof in the pudding. … At the end of the day, we’ll be judged on what we do.”

So far, the Beshear administration has given me no reason to question the integrity of its actions. Indeed, its full cooperation with an ongoing FBI investigation of the Transportation Cabinet and other steps it is taking there suggest a serious commitment to cleaning up what traditionally has been the worst cesspool in state government.

But the administration on several occasions has given ample reason for questioning the wisdom of its actions, and particularly its failure to anticipate potentially negative perceptions. Attaching the PSC to the Energy and Environment Cabinet could qualify as another example of that failure.

Regulators and policy makers can develop a communications synergy without being linked to each other administratively. And a “dotted line” relationship between the PSC and the Public Protection Cabinet would not raise eyebrows the way its odd coupling with the Energy and Environment Cabinet does.