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A Mississippi Business Journal Q&A

State’s newest PSC commissioner finds challenges

Even though thunderstorms were rolling through the state last Monday, and power outages were spotted throughout his district, Michael Callahan, who was elected Public Service Commissioner for the southern district of the state in November, talked with the Mississippi Business Journal during a relatively calm moment and discussed the challenges and concerns of his job.

Mississippi Business Journal: Tell us about your business background and what led to your interest in the job?

Michael Callahan: After I graduated from the University of Southern Mississippi and the Mississippi College School of Law, I was in private practice, was an assistant district attorney and returned to private practice before I became district director of the public service commission. Then, in 1999, I resigned that job to run for this position.

MBJ: What has been the biggest challenge since you took over the new post?

MC: The biggest challenge — a single specific issue — is dealing with the aftermath of Glenn Kelly Johnson.

Just before I took over, Glenn Kelly Johnson, who owns about 30 water and sewer systems in Mississippi, was put in receivership by the EPA in Louisiana. To protect himself, he tried to file bankruptcy. That leaves us with bunch of systems in receivership in Louisiana and that has been very frustrating for us. A lot of his systems in Mississippi need improvement, and it has been like pulling teeth to get the trustee to do anything. One system, White Cypress, was without water for almost a week, and we didn’t even know about it. We’re attempting to get some answers, but it’s been very, very tough dealing with these folks.

MBJ: What are your primary concerns about electric power deregulation and where it now stands?

MC: My primary concern about deregulation, and it should be everybody’s concern, is that some people will see their rates go up. As a commissioner, it is my job to make sure residential customers don’t see a rate increase. People may not understand the issues surrounding deregulation, but they do understand about their telephone bill. As I was campaigning last year, I kept hearing how everybody thought their telephone bill was too high, too many charges were being added. They hate the format of the bill, they can’t read it or understand it.

When I was talking to the Laurel Rotary Club recently, I told them I didn’t want to go back to them and say, ‘Hey, I’m the guy that made your electric bill look like your phone bill. Your rates went up, your service went down, and, by the way, vote for me in 2003.’ I just can’t do that to folks.

From a national standpoint, I just got back from a meeting of the National Association for Regulatory Utility Commissioners in Washington, D.C., where I am on the electricity committee. We locked ourselves in a room for eight hours, trying to establish principals for a federal restructuring program. We kept going through different scenarios, and some commissioners kept adding costs to the bill — up to 6% — while southeastern commissioners were saying no, don’t do that. But I’m afraid that’s what’s going to happen.

MBJ: Do you see deregulation bringing more problems to the industry?

MC: First of all, I think because of our low prices, we’ll see rate increases. When I listen to investigators who have been at PSC for years and years and hear them talk about the time before the telephone industry was deregulated, they joke and say this used to be a good job. (He laughs.) When we went through the March complaints at our monthly staff meeting, about 65% to 70% of them were in regard to the telephone industry. In a deregulated market, you could have five people providing service — a different company to generate, transmit and distribute electricity; another company that reads the bill; another that generates the bill. If you have a problem, customers wonder who to call. In the telephone industry, people call the public service commission because it’s the easiest number to have handy. I could see the same thing happening in electricity when it happens.

MBJ: What feedback have you gotten from utility companies about deregulation and where it now stands?

MC: To be completely and totally honest, I try not to listen to utility companies regarding deregulation because they have a vested interest. During our last hearings, the attorney general’s office brought in an expert that worked with Massachusetts, Rhode Island and Pennsylvania during their deregulations and he was testifying about promises of better service and lower rate reductions that didn’t come to pass.

When it was my turn to question him, I asked, “If our rates are not going to go down, our services are not going to improve, and we already have low rates, why would Mississippi want to do this?” and he said, “I have no idea.” Everybody started laughing, but it made a point.

MBJ: What are your thoughts on options or compromises to deregulation?

MC: Industrial customers are prime customers, and if companies are allowed to cherry pick, outside companies like Duke Entergy or an Enron could pick all of the large-load industrial customers and leave everyone else with residential customers to serve. What we’re finding is that in states with similar situations, companies are pulling out because they don’t want to serve residential customers. If we did some type of hybrid deregulation, I’m afraid the bottom line effect would be an increase in residential rates.

MBJ: Deregulation has gotten the most press, of course, but what other issues need attention?

MC: Water. Water needs attention. When I first took office, I sat down with the engineer tech from the public utilities staff. Because of the problems with Glenn Kelly and some of his systems that will be sold, I’ve had an opportunity to talk with water companies from Texas and California that operate nationally in 26 or 27 states. They pretty much all told me the same thing — our water systems are in extremely bad shape.

We’ve got to spend a lot of time, energy and money to get them where they need to be. I don’t really know how that happened. I don’t know if the guys that were running them put the money in their pockets and didn’t reinvest any, but the state of some of our water systems scares me. With water being scarce because we haven’t gotten the amount of rain needed this fall and winter, I’m concerned about this summer, especially if we have a hot, dry one like we did last year.

Contact MBJ contributing writer Lynne Wilbanks Jeter at lwjeter@yahoo.com, mbj@msbusiness.com or (601) 364-1018.

About Lynne W. Jeter

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