(The following is the executive summary of REAL’s Memorandum for the Executive Council dated March 6th, 2012. The full Memorandum is available here.)
REAL respectfully requests the Executive Council to reject Mr. Harrington’s nomination for three reasons.
First, we believe Mr. Harrington’s flat refusal to disclose to the Executive Council the amount of his Northeast Utilities pension and other key information regarding his pension conflict shows a level of disrespect for the Executive Council, the confirmation process and the public that is inconsistent with the character, temperament and values expected of PUC commissioners.
Second, we believe Mr. Harrington’s links with the regulated utility sector – including his 21+ years of prior employment at a utility and his Northeast Utilities pension (which REAL estimates may pay $400,000 to $1,750,000 to Mr. Harrington) – are too substantial to meet the public’s valid expectations that PUC commissioners will be fully independent from regulated utilities both as a matter of fact and as a matter of perceptions and appearances.
Third, we believe Mr. Harrington’s present, vested right to the Northeast Utilities pension clearly constitutes a disqualifying financial interest under RSA 363:5 that renders Mr. Harrington ineligible to serve as a PUC commissioner.
We estimate Mr. Harrington’s Northeast Utilities pension will pay him in the range of $20,000 to $70,000 a year for life, or $400,000 to $1,750,000 in the aggregate. The total payments overwhelm in significance the $100,000 salary of a PUC commissioner and are so large as to irrevocably undercut any public confidence in Mr. Harrington’s independence from the utility sector he would regulate as PUC commissioner. Does the Executive Council wish to risk the erosion of public confidence, increased public perceptions of a utility-captured PUC and a strong public backlash by confirming a PUC commissioner who likely stands to receive future payments of $400,000 to $1,750,000 from the utility that owns Public Service of New Hampshire (“PSNH”), the state’s largest regulated electric company?
Mr. Harrington’s personal expectation of a pension payout materially depends on the financial performance of Northeast Utilities. The utility’s pension plan is underfunded by almost $1 billion, and the shortfall must be made up by contributions from Northeast Utilities. Securities in the pension plan rise and fall with market movements, and Northeast Utilities’s credit ultimately stands behind the pensions. Unless Northeast Utilities produces strong financial results in the future (which depends directly on the regulatory decisions Mr. Harrington would make as PUC commissioner), the company may be unable to provide adequate funds to pay the pensions. This situation places Mr. Harrington in a direct and substantial conflict of interest on any regulatory matter involving or affecting Northeast Utilities, PSNH or their affiliates. How will Mr. Harrington remain neutral in fact (and be perceived by the public as remaining neutral) when his regulatory decisions materially affecting Northeast Utilities – for example, the upcoming PUC decisions on PSNH’s accelerating loss of its customers and whether to approve the Northern Pass project that is so critical to Northeast Utilities’s corporate strategy — can so importantly affect his own wallet?
Mr. Harrington’s massive pension conflict absolutely disqualifies him from serving as PUC commissioner under the clear, unambiguous terms of RSA 363:5. To ensure an independent PUC, RSA 363:5 strictly prohibits any person with any financial interest in a regulated utility (even a single share of utility stock) from becoming a commissioner. It is beyond any serious argument that Mr. Harrington’s present, vested right to a Northeast Utilities pension worth hundreds of thousands if not millions of dollars is a disqualifying financial interest under the statute.
The Attorney General’s contrary advice to the Executive Council misunderstands the financial realities of Mr. Harrington’s pension and comes to an erroneous conclusion. We strongly disagree with the Attorney General’s apparent suggestion that because these conflicts slipped through in the past, they should be allowed to do so again. Two wrongs don’t make a right. The Executive Council is duty bound to uphold the law and to reject Mr. Harrington because of his disqualifying pension conflict.
Any suggestion that Mr. Harrington should be confirmed with the understanding that he will recuse himself from matters involving Northeast Utilities, PSNH and their affiliates should be rejected. Mr. Harrington is flatly ineligible to serve as PUC commissioner under RSA 363:5 regardless of any undertakings he may make. And there would be no public benefit in having a neutered PUC commissioner who is unable to participate in huge swathes of the PUC’s business.