Continued Turnover at the RCA as It Faces New Regulatory Challenges

September 27, 2024

By Brian Kassof

Editor’s note: Although it is editorially independent, the Alaska Energy Transparency Project receives its funding from the Alaska Public Interest Research Group (AKPIRG), which is mentioned in this story.  

At a special public meeting of the Regulatory Commission of Alaska (RCA) on September 4, the commissioners unanimously elected Commissioner John Espindola as their new chair. He takes the place of Commissioner Robert Doyle, who is stepping down from the RCA by the end of September. Doyle, who was appointed to the RCA by Governor Dunleavy in 2022, is leaving just over halfway through his six-year appointment. He is the third commissioner to leave the five-member body in the past seven months (and fourth in the past 18 months).

In addition to the high rate of commissioner turnover, watchdogs, such as the Alaska Public Interest Research Group (AKPIRG) have raised questions about the qualifications of some of Dunleavy’s recent appointees to the RCA and their preparedness to address the complicated issues before it. The RCA has also had difficulty filling staff positions, one-third of which have been vacant for much of 2024.

Turnover among commissioners, questions about their qualifications, and staffing issues have led some observers, including legislators, to express concern about the RCA’s capacity as it faces a number of new, complex regulatory challenges. Recently passed legislation requires the RCA to develop oversight for the new Railbelt Regional Transmission Organization (RTO, created by HB 307) and to develop new rules for community solar projects (as required by SB 152). And the Railbelt utilities are searching for ways to deal with projected shortfalls of Cook Inlet natural gas, which will likely create novel regulatory issues for Alaska, such as contracts to import liquified natural gas (LNG).

The Railbelt refers to the region between the Kenai Peninsula and Fairbanks. There are five Railbelt electric utilities, four of which—Homer Electric Association (HEA), Chugach Electric Association (CEA), Matanuska Electric Association (MEA), and Golden Valley Electric Association (GVEA)—are cooperatives. The fifth is the municipally owned Seward Electric System.

These concerns led legislators to include several RCA-related provisions in HB 307, a broad energy bill passed in May. One provision establishes more stringent qualifications for commissioners. Under the old rules, commissioners could qualify based on either a college degree or practical experience in a field relevant to the RCA’s work. The new qualifications require commissioners to have both. A second provision increases commissioners’ pay to make the position more attractive to those with experience in fields such as law and engineering. HB 307 also increases the surcharge paid by utilities to fund the RCA’s work, which will allow the RCA to increase its budget, hopefully making it easier to attract and retain the staff needed to deal with the volume and complexity of issues facing it.

What is the RCA and How Does it Work?

The RCA regulates public utilities in Alaska. It was created in 1999 to replace the Alaska Public Utilities Commission (APUC). All public utilities (electric, telecommunication, natural gas, water/sewer, and garbage) and pipeline operators in Alaska must be certified by the RCA. It regulates some Alaskan utilities, to ensure that they provide reliable service and that their rates are fair. Cooperative and municipal electric utilities are able to opt out of RCA regulation (for cooperatives this requires a vote by membership)—examples of exempted utilities include the City of Seward, the Alaska Village Electric Cooperative, and Copper River Electric Association. The four large Railbelt cooperatives are all subject to RCA regulation, as are privately-owned utilities. The RCA also helps to administer the Power Cost Equalization (PCE) program that subsidizes the cost of power in some rural Alaskan communities.

The RCA is headed by a five-commissioner panel. Commissioners are appointed by the governor and confirmed by the Legislature. They serve six-year terms and can be reappointed multiple times. The commissioners elect one of their number to serve as chair for one-year terms that coincide with the fiscal year (starting July 1). A commissioner can serve as chair for up to three consecutive terms (and are eligible to serve again after a year out of the position). The chair has a number of duties, including hiring and managing the RCA’s staff.

Both the previous and new statutes require commissioners to have expertise in one of the fields—law, economics, engineering, public or business administration—relevant to the RCA’s work. The RCA also has professional staff who evaluate utility proposals and advise the commissioners. Changes in rates or services offered by regulated utilities require RCA approval. In many cases, utility proposals are reviewed by staff and approved by the commissioners. But if other interested parties challenge a request, or RCA staff or commissioners have questions about a proposal, the filing can be suspended for investigation. This launches a quasi-judicial process that results in a decision (known as an “order”) by the commissioners. These investigations are known as “dockets” and are identified by an alpha-numeric code. The RCA also opens dockets for other reasons, such as to consider new rules or regulations. More information about the RCA can be found on its “About The RCA” page.

Turnover at the RCA and Future Challenges:

Doyle’s decision to step down comes during a period of considerable turnover on the RCA. Commissioners’ terms are staggered so that one term typically expires a year, to help ensure continuity and experience. But in the last eighteen months four commissioners have left the RCA, three before the end of their terms. In addition to Doyle, Commissioner Dan Sullivan stepped down in May 2023, four years into his term, and Commissioner Keith Kurber II left abruptly midway through his term at the end of May 2024. Commissioner Janis Wilson left the RCA at the end of her third term in March 2024.

As a result, of the remaining three commissioners, only one—Commissioner Robert Pickett—has more than 16 months’ experience. Pickett was initially appointed in 2008 and is in his third term, which expires in 2026. The newly-elected chair, Espindola, was appointed by Dunleavy in June 2023 to replace Sullivan. The third remaining commissioner, John Springsteen, was appointed by the governor on July 1 to fill Wilson’s seat. The governor has not yet named a replacement for Kurber. Because a quorum of three commissioners is required for the RCA to issue orders, the unfilled seats mean that a prolonged absence by any commissioner would compromise the RCA’s ability to issue decisions.

The RCA has also been experiencing staffing challenges. At a legislative hearing in March, Naomi Johnston, the RCA’s Administrative Operations Manager, said there were nineteen staff vacancies, representing about one-third of total positions. At the same hearing, RCA Advisory Section Manager Becky Alvey told legislators that the RCA anticipated needing to create and fill new technical positions to address its expanding workload. According to the Alaska Department of Commerce, Community, and Economic Development (ADCCE), at the end of August there were no immediate plans to create new staff positions at the RCA.

During his confirmation hearing in the Senate Resources Committee in April of this year, Epsindola said the RCA was taking active steps to recruit new staff. (Epsindola was not chair at the time, but told senators he had offered to help with recruitment)  Espindola acknowledged, in response to a question by Senator Forrest Dunbar (D-Anchorage), that not all available positions had been advertised at that time. ADCCE said that there were still nineteen staff vacancies at the RCA on August 31 (not necessarily the same positions that were vacant in March).

The RCA faces a challenging future. During this year’s session, the Legislature gave it two major new tasks beyond its usual workload. The first is to certificate the Railbelt RTO and approve its transmission tariff (set of rates). The RTO is an entirely new type of institution for Alaska and the RCA has already opened a docket to determine what information needs to be included in its certificate application (docket U-24-026). HB 307 requires the RTO to submit its certificate application by January 1, 2025 and its transmission tariff by July 1, 2025.

The RCA will also have to work with utilities to create tariffs for community energy projects, as required by the recently-passed SB 152 (see here for more information on the bill). These are solar or other renewable generation projects that will be jointly owned by utility customers unable to install solar panels at their own residences. Although such projects exist in most states, they are new to Alaska, and the RCA has to establish the rules governing these tariffs.

The creation of these tariffs will be part of a larger discussion on the rules for net-metering (the process by which households with renewable power generation installations (or community renewable projects) sell excess power back to a utility. On September 25 the RCA opened a docket on net-metering, a step it had been considering for some months. The Order opening the docket identifies the introduction of community energy programs as one of the reasons the subject needs to be revisited (current net-metering rules were established in 2010).

The RCA will also have to address new rate designs and other utility programs, some of which are related to anticipated shortfalls of Cook Inlet natural gas. One new program is the introduction of Time of Use (TOU) rates. These are lower rates offered to consumers during off-peak hours. TOU programs shift demand to allow generation plants to function more efficiently, saving fuel. The RCA just approved a voluntary TOU program for customers of the Alaska Power Company and is considering a TOU as part of CEA’s current rate case. In a presentation to the GVEA Board in June, Daniel Heckman, GVEA’s Regulatory Manager, said the utility was considering introducing TOU and other new rate designs as part of its upcoming rate case. GVEA is also preparing to introduce an On-Bill Financing (OBF) program in the coming months, the first of its kind for residential customers in Alaska. (For more information on OBF, see this AETP Explainer, or this 2022 article on GVEA’s exploration of such programs. AETP will be publishing an update on GVEA’s OBF program in the near future).

The Railbelt utilities, along with Enstar, the natural gas utility serving southcentral Alaska, are also discussing building and operating an LNG import facility. Although the RCA would not regulate the building of the facility itself, it would have to approve utility requests to incorporate associated costs into their rates, along with any contracts to purchase LNG.

Concerns About Commissioners’ Qualifications and the Timing of Appointments:

Alaska statute (AS 42.04.020(a)) requires RCA commissioners to have expertise in one of the fields related to its work: law, engineering, finance, economics, accounting, business administration, or public administration. Prior to the passage of HB 307, this meant either a degree or at least five years of practical experience in one of these fields. Utility watchdogs and legislators raised questions about whether three of Dunleavy’s recent appointees—Kurber (appointed in 2021), Doyle (appointed in 2022), and Espindola (appointed in 2023)—met the then-current statutory requirements.

Kurber’s qualifications were raised during his 2021 confirmation hearings. Neither his background (as a military officer, a public safety officer at Fairbanks International Airport, and as a pastor), nor his education (a General Studies degree from the United States Military Academy at West Point) clearly met the statutory requirements. In April 2021 Kurber told the House Community and Regional Affairs Committee that he believed his work and life experience had provided him with the skills needed to serve on the RCA and were sufficient to meet the practical experience requirements. He also said that, although cadets at West Point did not have formal academic majors when he attended, he had done extensive coursework in engineering, math, and science.

Representatives Calvin Schrage (I-Anchorage) and Sara Hannan (D-Juneau) expressed some skepticism about Kurber’s qualifications during the hearing. During public testimony, Alyssa Sappenfield, speaking on behalf of AKPIRG, said that she did not believe that Kurber met the educational or experiential requirements to serve as a commissioner. Sappenfield said that the qualifications were imposed for good reasons, given the complexity and importance of RCA decisions, and that the minimum qualifications should not be relaxed. She urged legislators not to confirm his appointment. Kurber’s appointment was ultimately confirmed by a vote of 45 to 14. This vote is in contrast to the other three most recent legislative confirmations of RCA commissioners, which were made by unanimous consent.

Doyle was appointed to the RCA by Dunleavy on May 23, 2022. His background is in education, and he held a number of positions in the Matanuska-Susitna School District, including as its Superintendent. Doyle also served for 12 years on the MEA board. During a meeting of the House Finance Committee in April 2023, Hannan noted that Doyle’s credentials, as listed on his resume, did not appear to meet the statutory qualifications for RCA commissioners. Doyle pointed to a Masters Degree in Educational Administration (although his RCA biography says he has a degree in Educational Leadership) and positions in educational administration, which he considered a form of public administration, as meeting the requirements. Doyle’s appointment was approved by the Legislature in May 2023.

Similar questions were raised about Espindola during a confirmation hearing by the Senate Resources Committee in April 2024. When asked about his qualifications by Senator Scott Kawasaki (D-Fairbanks), Espindola replied that he had worked for over 10 years as an executive manager in business, which met the experiential requirement in business administration. Espindola also mentioned his 4-plus years working in Governor Dunleavy’s office on issues that included energy, and volunteer experience on boards involved in utility issues in New Mexico. AKPIRG submitted a letter to the Legislature questioning if Espindola’s credentials met requirements, noting the need for qualified commissioners given the critical energy challenges facing the state. Espindola’s appointment was confirmed in May 2024.

A resolution passed by the Alaska Federation of Natives (AFN) at its 2023 Annual Meeting also raised the issue of commissioners’ qualifications. It stated that “Three of five RCA commissioners lack qualification” under current statute (presumably Kurber, Doyle, and Espindola), and called on the Legislature to investigate the fitness of these commissioners to carry out their statutory duties. The resolution was motivated in part by the commissioners’ decision to sign off on what amounted to a 300-400 percent rate increase in the City of Aniakin May 2023 without requiring advanced notification of ratepayers. This led to a public outcry, with over three dozen Aniak residents testifying about its impact at an RCA public meeting in June 2023.

The governor’s most recent appointee to the RCA, John Springsteen, was named after the end of the legislative session, so his confirmation hearings will occur in 2025. This was the second time in a row that, although an outgoing commissioner’s term ended during the legislative session, the governor waited over 10 weeks, until after the end of the session, to name a replacement (commissioner terms end on March 1, legislative sessions must end by May 15). The other case was Doyle in 2022 (no terms expired in 2023). In both cases, the timing of the appointment allows a commissioner to serve for nearly a full year before their appointment is considered by the Legislature.

In 2022 AKPIRG Executive Director Veri di Suvero told Ketchikan-based SitNews that the timing of Doyle’s appointment, which followed Kurber’s somewhat turbulent confirmation process, gave the appearance that Dunleavy was attempting to evade the vetting process, “undermining legislative authority and oversight.” In his Reporting from Alaska newsletter, Dermot Cole made similar observations about the timing of Springsteen’s appointment.

Espindola’s appointment also came after the end of the legislative session, on June 12, 2023. The timing of that appointment, however, was dictated by Sullivan’s decision to step down at the end of May.

Diversity in Expertise and Background:

While commissioners can qualify for their position with expertise in a number of relevant fields, recent appointees have claimed experience primarily in just two—business or public administration. Since Commissioner Wilson’s departure in March, the RCA has been without a commissioner with a legal background. This is a critical part of the RCA’s work, and throughout the 2010s there were always at least two commissioners with legal experience. The commission has also lacked an engineer for a number of years (Springsteen has a degree in Civil Engineering, but has spent most of his career in business or public administration). During an April confirmation hearing for Espindola in the Senate Resources Committee, Senator Cathy Giessel (R-Anchorage) pointedly asked him if there were any commissioners with a background in law or engineering. When Espindola acknowledged there were not, Giessel observed that this was one of the reasons that some people were concerned about the RCA and commissioner qualifications.

In an interview with Nat Herz in March, Doyle said that the RCA had asked the governor to appoint someone with a legal background to replace Wilson. Doyle later told Herz that in August Dunleavy had offered an appointment to Stephen Devries, a retired attorney who formerly worked at RAPA (the Regulatory Affairs and Public Advocacy section of the Department of Law, which represents the public interest in RCA proceedings), but that he decided against accepting the position.

The 2023 AFN resolution criticized a lack of varied perspectives on the RCA from a different angle. It stated that rural Alaskans are facing unique and unprecedented challenges due to climate change and the high cost of energy. To help represent these interests, it called for legislation that would require at least one commissioner to be an Alaska Native Tribal member who could represent “the unique needs of Tribal and rural communities…”

Alaskans wishing to serve on the RCA can apply through the Boards and Commissions portal on the governor’s website. In March a spokesperson for the governor’s office told Herz that there were four applicants for Wilson’s position (Springsteen was not among them). Dunleavy appears not to have relied on applications through the portal in making recent appointments. Both Kurber and Doyle said during their confirmation hearings that they were asked to serve on the RCA (Kurber’s testimony suggested he was not completely familiar with the role of a commissioner when he was asked to serve). Espindola and Springsteen both worked in Governor Dunleavy’s office immediately before their appointments, Espindola as a Special Assistant to the Governor and Springsteen as a Policy Advisor and liaison to state-owned corporations and authorities.

Legislative Responses:

The Legislature tried to address some of the concerns about the RCA in HB 307, which Dunleavy signed into law on July 30. The bill contains three relevant provisions: raising qualifications for RCA commissioners, increasing commissioners’ pay, and increasing the RCA’s overall budget.

Previous requirements allowed appointees to qualify through either education or experience. This framework allowed the governor and appointees some leeway in deciding what constituted relevant practical experience, putting the onus on legislators to challenge their interpretations. The new rules, which require a combination of education and practical experience, appear designed to reduce such ambiguity. Future appointees must meet one of the following three criteria: be a member of the Alaska Bar with at least five years of practical legal experience, be an engineer registered to practice in Alaska, or hold a degree in economics, finance, accounting, business administration or public administration and five years of practical experience in the same field.

Current commissioners do not need to meet the new qualifying standards to complete their current term, but will if they are reappointed by the governor. This change would apply to Espindola, whose term ends in March 2025. His RCA biography states that he has a degree in political science. It is not clear if Springsteen, whose appointment became official after the bill’s effective date but before it was signed by the governor, will be held to the new standard in his confirmation hearings next year. Springsteen’s biography on the RCA website lists degrees in Civil Engineering and Business Administration, as well as considerable business and public administrative experience, including 4 years as the Executive Director of the Alaska Industrial Development and Export Authority (AIDEA).

HB 307 also increases RCA commissioners’ pay with the goal of making the position more attractive to skilled professionals such as lawyers and engineers. In March Doyle told Herz that the relatively low pay the RCA offers was making it harder to attract qualified candidates with these credentials. HB 307 raises commissioners’ pay from Step 27 to Step 29 on the state salary schedule, an increase of about 7%. Actual pay for commissioners depends on qualifications and experience. In 2022, according to state salary figures obtained by the Alaska Beacon, commissioners’ salaries ranged from $122,795 (for Kurber, who was in his first full year on the RCA) to $153,017 (for Wilson and Pickett, who each had served for over a dozen years).

Lastly, HB 307 makes it possible for the RCA to increase its budget. The RCA is funded principally by a surcharge levied on regulated utilities. Previously this surcharge had been capped at 0.7% of a utility’s annual gross sales; HB 307 increases it to 0.98%. The actual surcharge each year depends on the RCA’s annual budget and can be lower than the cap. The higher surcharge is intended to help the RCA to hire and retain staff, including anticipated new positions. From 2019 and 2023 the RCA’s annual budget was between $8 million and $8.5 million.

Regulated utilities pay an additional surcharge to fund RAPA. HB 307 increases the RAPA surcharge from 0.17% to 0.22%. These fees appear on electric utility bills as a “regulatory surcharge” or “regulatory cost.” Non-regulated utilities also pay a lower RCA surcharge, which varies in amount.

The provisions in HB 307 had their origins in a number of bills introduced into the Legislature this year. The heightened qualifications for RCA commissioners originated in SB 257, a wide-ranging energy bill introduced by Giessel in March. The increased pay for commissioners came from an amendment to HB 307’s senate counterpart, SB 217, introduced by Senator Matt Claman (D-Anchorage). The increased surcharge for the RCA was a recommendation of the Alaska Energy Security Task Force convened by Dunleavy in 2023. (AEST Final Report, Recommendation F-3.1). It began as a separate bill, HB 313, before being merged into HB 307.

Although the RCA’s work often seems arcane, its decisions can have real and substantial impacts on Alaskans’ utility bills and the services available to them. It will likely take several years to know how effective HB 307’s provisions will be in addressing concerns about the RCA’s capacity to address the high volume of complex regulatory issues facing it. The hope is that the heightened qualifications and increased pay for commissioners will lead to the appointment and retention of individuals with the background and experience to meet these challenges, while a larger budget will enable the hiring and retention of the staff needed to support the commissioners’ work.

This article was updated on September 29, 2024 to reflect updated information on staff levels at the RCA.