An excerpt from an interview with interview of Kentucky PSC Chair Michael Schmitt in “Day at the Kentucky PSC”, March PUF:
“I try to ask probing questions to make certain that the respondents are forthright in the information they’re providing and that it’s accurate. We believe in conducting hearings because we’ve found there’s no better way to find out case details than to put a witness on the stand, ask questions and to listen to responses. Most of the time you can find out much more detail than you could ever imagine. I think most everyone wants to tell the truth and we try to give everybody the benefit of the doubt.
However, witnesses in general, tend to tangent into other areas that they might not have otherwise gone when they have the benefit of submitting their responses after writing and editing them on a piece of paper. Interaction through the question and answer process on the witness stand encourages witnesses to provide more detail in their responses.
As with some other Commissions, Kentucky does permit a black box settlement between the applicant and interveners. In the past, the parties agreed to a dollar amount and the Commission normally would accept it. All the variables were unknown to the Commission; only the settlement parties knew what had specifically been negotiated. We modified that process so that black box settlements are now transparent.
We encourage the parties to reach an agreement, but all the variables used, ROE, COSS, revenue calculation or any other factors that affected the case outcome must be provided to the Commission when submitting the agreed to stipulation. This eliminates the perception the Commission may be rubber-stamping settlements instead of being truly responsible for determining the case outcomes. It’s been a little bit of a tough situation for the utilities, but I think they are adapting and they’re finding out that the process is not all that bad.”