By Tom Kleckner

AUSTIN, Texas — The list of state regulatory commissioners in their 30s is a short one. The list of 31-year-old commissioners with five years of experience as economic regulators is even shorter.

So meet Montana’s Travis Kavulla, who is not only in his second term on the state’s Public Service Commission but also, as of last week, the chairman of the board and president of the National Association of Regulatory Utility Commissioners (NARUC).

“It’s a real honor to have the confidence of my colleagues on the utility commissions, but it’s a particular honor to be in a leadership position,” he told RTO Insider in an interview.

Judging by the 1,000-person strong standing ovation the personable Kavulla received after his acceptance speech here Nov. 10, the fourth-generation Montanan appears to command the respect of his colleagues. Kavulla credited his involvement in several Western regional initiatives. He is co-chairman of the Northern Tier Transmission Group  Steering Committee and is a member of the CAISO Energy Imbalance Market Transitional Committee.

“I raised my hand in the West and volunteered to head up western commissions’ exploratory efforts around a real-time energy market. These kinds of … enterprises can turn into talkathons on panel discussions, but that sense of initiative needs to be developed into practical actions.”

Kavulla is referring to the expansion of organized markets in the West. The process led to the Integrated System’s incorporation into SPP and CAISO’s expansion of its Energy Imbalance Market in the Western Interconnection.

“I’m delighted [the Western Area Power Administration] and Basin [Electric Power Cooperative] saw the benefit of participating in what I regard to be an efficient and liquid market” in SPP, he said. “It seems to be going very well. I have some concerns about seams issues, as most people do … but they’re not novel issues.”

A Western RTO?

WAPA’s Upper Great Plains region was the first federal power marketing administration to join an RTO. The dominant role of the Bonneville Power Administration, another power marketing administration, is one of the reasons there’s been reluctance to create an energy market in the Pacific Northwest, Kavulla said.

“Bonneville’s legal status as a federal power marketing administration was seen as an impediment to the creation of a market. WAPA reached an accommodation with SPP and that shows that concern to be overstated,” Kavulla said. “Bonneville could participate as a member of an RTO if it chose to, but there’s a very long way to go before that happens.”

Kavulla said that whether or not a Western RTO is formed “comes down to whether there is a trusting relationship between California and the other states, as well as the utilities and commissions realizing there’s a lot of money and a lot of efficiencies being left on the table.

“Once some of those governmental concerns about Cal-ISO are ironed out, I think a Western RTO will be achieved.”

Technological Changes

For now, Kavulla is firmly focused on his term as NARUC’s president and the issues facing economic regulators. Harkening back to the technological innovations that transformed the telecomm industry and that could do the same to the electric industry, he asked his acceptance-speech audience to focus on two important initiatives: greater involvement in and a better understanding of RTOs, and better pricing signals for customers who generate their own power or react to market signals by reducing demand.

“We need to understand that an RTO or an ISO can facilitate competition and the efficient use of resources that our consumers are already paying for,” he said in his prepared remarks. “[And] we need clear and economic price signals that do not overcompensate or undercompensate … customer-side actions.

“Regulation may not fix the price of electric power in RTOs … but regulations prescribe the definition of market products, the way in which those products are bid into and procured from the market, and even the amount of those products one needs to avoid penalties,” Kavulla said. “Most commissioners barely have time to keep up with our own dockets, but we owe it to ourselves to better understand these wholesale markets. NARUC, working together with the existing organizations of state regulators that advise RTOs and ISOs, can help in that role.”

Kavulla praised NARUC’s Electricity and Energy Resources and Environment committees’ work in creating a rate-design subcommittee that will report to Kavulla and his four fellow board members.

“I hope this subcommittee will work to create a practical set of tools — a manual, if you will — for regulators who are having to grapple with the complicated issues of rate design for distributed generation and for other purposes,” he said. “We have an ability, through a staff subcommittee, to produce a practical, expert and most importantly ideologically neutral guide that offers advice to the dozens of states who are grappling with this question, and yet do not have the resources to do it themselves.”

State, RTO Roles in Clean Power Plan

And then there’s the Environmental Protection Agency’s Clean Power Plan, a heavy topic of conversation here. EPA Administrator Gina McCarthy delivered NARUC’s keynote address, and several of the panels focused on the plan and its implications for the industry. (See related story, McCarthy Defends CPP, Asks for Continued Engagement.)

Kavulla said it is clear to him “most states, if not nearly all, will select a mass-based approach and open doors to trading in some form.”

“Then, the issue becomes the allocation of allowances and if you do trade, to whom do you open doors? Is it a regional approach?”

Asked about the role RTOs would have in helping implement regional trading programs, Kavulla noted that CAISO and the Canadian province of Quebec currently participate in a cap-and-trade program “that has no interconnection at all between them.”

“There’s a reason RTOs are going hither and yon and saying they’ll be an important part of this debate … that’s really a decision up to the states,” Kavulla said. “RTOs can come up with options that get away from a command-and-control solution for 111(d) compliance. As an economic regulator, I accept the proposition that whatever the environmental law may be, we should meet it in the most efficient manner … and that means trading.

“I hate to paint myself and other economic regulators as skeptical curmudgeons, but we’re the ones who have to be promoting economically efficient outcomes — which is going to be really hard work in the context of the Clean Power Plan.”

Former Journalist

Kavulla attributes his ability to get to the heart of the matter to his early career as a journalist. “It requires a talent for reading and boiling down a lot of complex materials and translating them into analysis,” he said.

A graduate of Harvard, where he majored in history, Kavulla edited the conservative political journal Harvard Salient and wrote a regular column for The Harvard Crimson, the school’s daily newspaper. Upon graduation, he landed an associate editor’s position at the conservative National Review and several editing and writing jobs, from “8,000-word essays to very short, newsy write-ups” on the economy, politics and culture.

Kavulla returned to his hometown of Great Falls in 2009, intent on finishing a book on American evangelicals’ influence on the African church and continuing his freelance career. However, he wound up “being sucked in the vortex of local politics,” helping elect a city commissioner to undo the city utility’s “ill-conceived” fixed-rate electricity contracts.

Discovering that he enjoyed the process and understood the issues, Kavulla ran for the Great Falls area’s seat on Montana’s five-member PSC in 2010, winning election by 28 percentage points. Kavulla was re-elected last year, and will be term-limited in 2018.

After that? A Republican, he is already being mentioned as a potential FERC commissioner. Both Commissioners Tony Clark and Colette Honorable served as NARUC president before moving to Washington.

“I really don’t know,” he said with a laugh.

No worries. There’s much to do until then.

Other NARUC Officers, Board Elections

Pennsylvania Public Utility Commissioner Robert Powelson was elected first vice president and John Betkoski, vice chair of Connecticut’s Public Utilities Regulatory Authority, was elected second vice president.

Appointed to NARUC’s board of directors were: Judith Jagdmann of the Virginia State Corporation Commission; Ellen Nowak, chairman of the Wisconsin Public Service Commission; New Hampshire Public Utilities Commissioner Robert R. Scott; and Brien J. Sheahan, chairman of the Illinois Commerce Commission.

The NARUC board also confirmed Michigan regulator Greg White as executive director effective Dec. 1. He will replace Chuck Gray, who is retiring.

NARUC immediate past President Lisa Edgar thanked Gray for “37 years of service, regulatory intellect and camaraderie.”

“He has left a lasting imprint on the association,” she said.

White served on the Michigan Public Service Commission for more than five years after working in a variety of staff positions with the agency since 1987. He holds a Master of Public Administration from Grand Valley State University and a bachelor’s in resource development from Michigan State University.