NRRI's Vision in Detail

Research Based Regulation

Economic regulation seeks to align private behavior with the public interest. For today's regulators, the public interest is becoming difficult to discern: New interest groups, accelerated technological change, higher customer expectations, lower investor patience, and growing instability in corporate and market structures, are combining to blur regulatory vision.

Enlarging the problem is the uncertain stature of state commissions. Underfunded and understaffed relative to their responsibilities, they also face a common political dichotomy: citizens support regulation when it protects, but reject regulation when it obstructs.

To preserve its political effectiveness, regulation cannot ignore these pressures. But to preserve its professionalism, regulation cannot succumb to them. Otherwise regulation becomes mere conflict resolution rather than public interest promotion. For the public interest to prevail, regulators require research products based on facts, objective analysis, and independence.

This demand spawned NRRI. Founded in 1976 by the National Association of Regulatory Utility Commissioners (NARUC) and housed at The Ohio State University through 2007, NRRI's original design reflected dual demands: supporting commission policymaking while satisfying university standards. As NRRI begins its new phase, as an independent, nonprofit corporation supported by state commission dues payments, it will adhere to these historical requirements of political relevance and academic rigor.

Values

In all our activities our selection of personnel, internal policies, professional writings, dissemination methods and our relationships with our constituents we will embody the following values: excellence, alertness, and anticipation; immersion, objectivity, and openmindedness; accountability, to professional standards and to our duespayers; curiosity, creativity and courage; independence, idealism and pragmatism; humility and integrity; fiscal prudence; continuous professional improvement; passion, for getting regulation right; and compassion, for those whom regulation serves.

Four Priority Activities

Commissioners tell NRRI they spend more time reading stakeholder submissions than objective analyses, more time on the present than the future, more time reacting than pro acting. A former NARUC committee chair offered the perfect mixed metaphor: "Every time we rush to put out a fire we shoot ourselves in the foot."

NRRI seeks to solve these problems, with four priority activities:

1. Identify regulatory challenges, both current and future: In each of the industry sectors electricity, gas, telecommunications, water, multi utility NRRI's section chiefs will lead a process of continuous issue identification. They will will tap the thinking of the 50 state commissions (at the Commissioner and staff levels), NARUC committees, federal regulators, practitioners, legislative staff, academics and grantors. This process will produce, for each industry sector, an always existing, regularly refreshed research agenda, publicly available for comment on NRRI's web site.

2. Create the new knowledge necessary to meet current and future regulatory challenges: Informed by the issue identification process, NRRI will perform and stimulate the original research necessary to ensure the quality of utility regulation. Compared to the past, there will be fewer NRRI surveys and more NRRI recommendations. NRRI is not a clearinghouse; it is an engine for regulatory improvement. The effective regulator is empowered less by surveys of 50 states than by studies of optimal practices.

Recommendations are not inconsistent with objectivity; they are the result of objectivity. NRRI products should empower readers to reach their own conclusions. Empowerment occurs when the researcher's fact gathering, fact sifting, analysis and reasoning are neutral and transparent. Adding to this empowerment is a researcher's recommendation, based on her years of exposure and experience. Recommendations have another value: they force the researcher's own quality up a notch by making her own career a stakeholder in regulatory success.

3. Democratization of access to existing knowledge: It is a fact of regulatory life: most regulators are non experts. Democratization of knowledge is the process by which experts instill existing knowledge in non experts. Democratization is not a set of disparate, disconnected learning opportunities. It is rather is a species of mentoring. The mentor sifts knowledge, presents it systematically and evaluates the results through observation.

4. Opinion leadership on the quality of regulation: Successful enterprises engage in self criticism continuously, systematically and openly. See J. Collins and J. Porras, Built to Last (1994, 2002), especially Chapter 9 ("Good Enough Never Is"). The regulatory community should focus as much on its own performance as it does on utility performance. NRRI's research reports and services will carry out NRRI's mission of regulatory effectiveness. The Director's monthly essays also will sound this theme. The first four essays address the key attributes of effectiveness: purposefulness, education, decisiveness and independence.

Accountability to the State Regulatory Community

NRRI is the state commissions' resource. Its primary funding comes from voluntary dues paid by state commissions. (Other funding comes from contract services (performed for federal, state and foreign governmental units, as well as private industry) and foundations.) While corporately independent, NARUC and NRRI are linked in multiple ways to ensure accountability. NRRI's formation and its dues structure were approved by NARUC's Board of Directors. NRRI's bylaws were approved by the NARUC Board's Executive Committee. State commissioners constitute a majority of NRRI's Board. NARUC's Executive Committee receives regular reports on NRRI from its Second Vice President, who is an ex officio member of NRRI's Board. The NARUC Board's Education and Research Subcommittee evaluates NRRI's performance. NARUC's chief financial officer is an ex officio member of the audit committee of NRRI's Board.

Academic Ties

Effective regulation merges the academic with the practical, the policy with the political. NRRI has been well served by its 30 year academic connections to The Ohio State University. For the new NRRI, that past practice remains an asset and a priority. Two NRRI studies issuing in early 2008 are authored by professors from OSU and from Ohio University. We are in discussions with nine other universities about specific projects as well as broader, none exclusive, relationships to involve professors and students in our work. We welcome more such discussions.