Commission says its job is to regulate, not micromanage.

Update courtesy of Utility Regulatory News #4037: Although acknowledging that a corporate outsourcing arrangement between a natural gas local distribution company (LDC) and an independent consultant was of a significant magnitude, the Maryland Public Service Commission nevertheless has determined that negotiation of the contract was within the LDC’s managerial prerogative and that it did not require formal preapproval by the commission.

The LDC, Washington Gas Light Co., had entered into the agreement with Accenture for Accenture to perform a number of administrative tasks, ranging from customer service to human resources to information technology to supply procurement to finance and accounting. The Office of People’s Counsel (OPC) had protested the arrangement, arguing that the breadth of services included rendered it tantamount to turning over the reins of a public utility to an unregulated entity. The OPC expressed special concern about diminutions in service, particularly with respect to residential customers. The OPC further worried about the economic risks that would be borne by ratepayers should Accenture default. The commission, however, observed that Accenture employees would be bound by the same tariffed service requirements as the LDC’s own personnel, and thus Accenture’s assumption of responsibility for the listed functions should not impede the delivery or reliability of service.

The commission also related that its own job is to regulate, not manage, let alone micromanage, utilities within its jurisdiction. According to the commission, the roles assigned to Accenture under the contract are of just the nature that fall solely to utility management, thus making prior approval of the agreement by the commission unnecessary. For the full story, subscribe to URN.

Posted: October 18th, 2011 under management, natural gas.
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