Jan. 30--When New Mexico voters narrowly approved a constitutional amendment in 1996 to create the Public Regulation Commission, Rep. Thomas Taylor, R-Farmington, thought it was a big mistake.
By marrying the Public Utility Commission with the state Corporation Commission, which also oversaw all insurance matters, voters had created the most powerful such regulatory body in the nation.
Fast-forward to November 2012, when voters agreed with Taylor that the marriage had failed. They approved two constitutional amendments divorcing the Corporations Bureau and the Insurance Division from PRC oversight. Voters also approved a third constitutional amendment to increase the qualifications of the elected commissioners.
Now state lawmakers have to formalize the divorce and are considering at least four bills that will reshape the PRC. Taylor is carrying three bills to reconfigure the commission.
Meanwhile, the PRC, the Insurance Division and the Corporations Bureau are grappling with the details of making a transition by July 1, the deadline set for the split by the constitutional amendments. The five-member elected commission will consider Wednesday a transition plan proposed by staff.
The transition means shuffling around some of the 266 PRC employees, disengaging shared computer systems, rethinking office space and figuring out how to make up about $1.4 million the PRC may lose when the Insurance Division is gone.
A failed marriage
In 1996, voters approved merging the state Corporation Commission and the Public Utility Commission to form the PRC because they had lost confidence in the two individual regulatory bodies, according to a history by the nonprofit policy group Think New Mexico. The state Corporation Commission, which regulated corporations, railroads, the state fire marshal and the insurance bureau, was mired in controversy a few years after it was created in 1910. The Public Utility Commission, which regulated all utilities, also was criticized. But joining the two, voters "may have unintentionally made matters even worse," according to the Think New Mexico report.
The PRC has touched the lives of every New Mexican, Taylor said. The commission's decisions impact the monthly electricity, natural gas and telecommunications bills of most residents. The PRC can hire and fire the superintendent of insurance and has jurisdiction over consumer insurance complaints. It regulates towing companies, ambulances and taxis. It has authority over fire codes and arson investigations. It registers and regulates corporations.
Sen. Carroll H. Leavell, R-Jal, was first elected to the Legislature the same year the PRC was formed. He now is co-sponsor of one of the bills to dismantle it. "On paper, it appeared the PRC should have worked extremely well," Leavell said. "But it hasn't worked that well. It simply is not functioning."
The PRC has been in the news frequently, plagued by scandal. Two commissioners were convicted of felonies in the last three years. Settlements of harassment claims involving commissioners and have staff cost taxpayers more than $1.8 million in the last four years, and four similar claims are still pending in court. Every insurance superintendent after the PRC was formed has been fired or quit. People have complained frequently of politically motivated hires.
Think New Mexico and legislators such as Taylor said the PRC needed to get back to its core mission -- regulating investor-owned utilities. Voters agreed in November.
A new insurance office
House Bill 45 would establish a new independent Office of Superintendent of Insurance and create a committee to nominate an insurance superintendent. The bill, carried by Taylor and Leavell, would transfer all contracts, staff, property, records and -- most importantly -- appropriations, to the new office and away from the PRC.
The bill would create a nine-member nominating committee, with four members (no more than two from the same political party) appointed by the Legislative Council, four appointed by the governor and a ninth selected by the rest of the committee. All are expected to have extensive knowledge of insurance issues in the state. The committee would then appoint the insurance superintendent.
Under the bill, the insurance superintendent would serve four-year terms with no term limits. The insurance superintendent could only be removed for incompetence, willful neglect or malfeasance by the state Supreme Court after the governor files a complaint.
PRC Chairman Pat Lyons said he was concerned there wouldn't be enough oversight of the insurance superintendent under the proposed legislation. He also thinks it establishes a less public-friendly way to appeal insurance rate increases or policy decisions. Currently, consumers can appeal an insurance decision by the superintendent directly to the PRC.
"If you don't have oversight of the insurance office, it will be disastrous," Lyons said. "Right now, I don't see the accountability [under the legislation]."
Currently, the PRC can hire and fire the insurance superintendent, and can hear appeals of insurance-rate decisions made by the superintendent. The PRC also can discipline the superintendent for actions commissioners don't like. For instance, the commission recently approved suspending Insurance Superintendent John Franchini without pay for two weeks, in part because he let his staff go home an hour early Christmas Eve due to snow. His first day back on the job was Monday.
Fred Nathan, executive director of Think New Mexico, which lobbied for the constitutional amendments, said there is oversight in the bill. The insurance superintendent will have to file an annual report with the Legislature and the governor, he said.
But almost half of voters in November may have shared Lyon's concerns. The constitutional amendment to create a separate Insurance Office passed by 325,980 votes to 316,708 votes.
Although the PRC has limited authority over the Insurance Division, breaking the two apart is challenging, said PRC Chief of Staff Johnny Montoya. A transition plan his staff has put together still has to be approved by the PRC.
The Insurance Division could easily stay at the PERA Building it currently shares on Paseo de Peralta with the rest of the PRC, Montoya said.
Staffing and budgets after the split are tricky, however. A total of 83 full-time Insurance Division employees fall under the PRC umbrella at the moment, plus eight positions paid through federal grants. Some of those employees work in other PRC areas. In the PRC Consumer Relations Division, for example, four members of the staff handle insurance complaints. A new insurance office will need its own human resources supervisor, attorney, records custodian, paralegal, and IT expert.
Plus, "I'm recommending Insurance get its own public information officer," Montoya said.
The Insurance Division also shares a computer server with the PRC. A server costs $200,000. "As part of the divorce, do they need a separate server?" Montoya asked.
The PRC also may lose about $1.4 million in insurance funds that pay for some PRC functions.
Chartering and regulating corporations will be moved from the PRC to the Secretary of State's Office under Taylor's HB 46. The Secretary of State's Office already has a business unit. Advocates of the move say this will streamline paperwork for businesses, creating a "one-stop shop" for all filings and registrations.
Montoya said he doesn't expect the split to be much of a problem financially for the PRC, but the logistics of the split could be tough. The bureau currently has 19 full-time employees, all paid out of the general fund. It will be up to the Secretary of State's Office and the Legislature to decide if all those positions stay with the bureau.
The bigger issue is the extensive information system for corporations that is currently housed on the PRC website. Montoya said the Corporations Bureau had recently completed an online-based filing system for businesses. The system will have to be transferred to the Secretary of State's Office.
Secretary of State Dianna Duran is working with legislators to iron out the details of the transition.
Cases coming before the PRC are often highly technical, involving hundreds of pages of documents. Commissioners rely on staff to filter those documents and make recommendations. But it is up to the commission to make tough decisions that affect customers and companies. Until November, PRC candidates had to fill a short list of qualifications: They had to be over 18, had to have lived in New Mexico for a year and had to have no felony record. The voter-approved constitutional amendment increasing commissioner qualifications would drastically change that. That amendment garnered more votes (535,000) than any prior amendment.
"It is in the best interest of all involved that commissioners are on par with staff [in terms of knowledge]," Taylor said.
Three bills introduced so far address qualifications for PRC members. Taylor's HB 47, endorsed by House Speaker Ken Martinez, would require PRC members to have either a college degree in a relevant field or seven years of relevant job experience related to such fields as utility management, law, finance, telecommunications or water management. The bill exempts current commissioners from the requirements. It also requires annual continuing education for commissioners and withholds their salaries until the hours are completed. The PRC unanimously voted to support the bill.
Commissioners would need both a college degree and seven years of relevant experience in HB 89, sponsored by Rep. Paul C. Bandy, R-Aztec, and the concurrent SB 8 that Bandy is co-sponsoring with Sen. Timothy M. Keller, D-Albuquerque. The bills don't require the college degree to be in a specific field. The bills also don't require continuing education.
SB 8 is scheduled for a hearing before the Senate Rules Committee on Wednesday in room 321 at the Roundhouse.
Contact Staci Matlock at 986-3055 or firstname.lastname@example.org. Follow her on Twitter @stacimatlock.
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