"It has been a stereotype of political wisdom that the bureaucrat is ever ready to exercise authority arbitrarily. But there is the far greater danger that the second rate, insecure personality who often finds his way into bureaucracy will become uncomfortable at having to exercise authority and will anxiously seek to placate as many interests as possible. This fear to offend, complaisance, and readiness to listen and be "fair" and "reasonable" clog the muscles of the will, and what begins in amiability can end in corruption."

L. Jaffe, "The Scandal in TV Licensing," Copyright 1957, by Harper's Magazine, Inc. Quoted in A. Kahn, The Economics of Regulation, Vol. II at 88 n.122 (1988 ed.).

The effective regulator has four attributes: purposefulness, education, decisiveness and independence. The purposeful regulator defines the public interest, then shapes regulation to align private behavior with it. The educated regulator knows regulation's six subject areas, its six legal sources, its five professions, its three processes and its many local facts.

The decisive regulator makes decisions (1) required by the public interest, (2) when the public interest requires it, (3) regardless of discomfort felt, (4) using a logical method and an active approach.

"Required by the public interest": Regulation is docket driven: rates, mergers, certificates, sitings, approvals, waivers. The public interest is not the sum, median or mean of these private requests. The decisive regulator therefore asks not "What decisions do these parties want?" but "What decisions does the public interest require?" She identifies the questions no party has asked. She thus converts private pleadings into public interest dockets: investigations, inquiries and rulemakings.

"When the public interest requires it”: Decision avoiders try to sound savvy -- "We have to be cautious." "We don't want to box ourselves in." "Let's not get ahead of the other states." – but these lack substance. My firsthand experience: When I ask commissioners why they have no merger policy, I get one of two answers: "We have no merger pending, so we don't care about it" or "We have a merger pending, so we can't talk about it.” Twenty years and three dozen mergers later, regulatory "caution" has produced more opportunistic transactions than competitive market structures.

Decisiveness is not impulsiveness, but it is improvement-oriented. Decisiveness includes deciding not to decide, but to inquire: "It has been 10 years since anyone examined the mix of competition and regulation. Every 5 years we should reexamine. Let's begin." Like geological sediments, today's regulatory procedures comprise layer on layer of historic habit. The decisive regulator questions the status quo. She asks continuously, "Why do we do things the way we do?" and "Why not try another way?"

"Regardless of discomfort felt": I recall a state legislature in 1999, pressured to enact retail electricity competition. Tight term limits meant that half the House was new. Their leader complained: "Making novice legislators address an issue so complicated is unfair." Unfair to whom? Inexperience cannot excuse indecisiveness. Decisiveness attaches to the oath of office.

Discomfort with decisiveness does have honest roots. Most regulators have few years' experience. Even the most experienced face challenges without precedent. For conscientious regulators, inexperience breeds humility; humility breeds caution; caution, unguided, becomes indecisiveness. In a docket driven environment, indecisiveness leads to reactivity. Policymaking becomes the sum of approvals and disapprovals of private interest requests.

So what does the inexperienced regulator do? Decide only what one is competent to decide; for the remaining issues, put them on an accountable timeline. Instead of the platitudinous "now is not the time," try "We will master this issue and decide by April."

"Using a logical method and an active approach": A decisive regulator decides the right things at the right time. She uses a logical method, five steps in logical sequence: (1) determine the industry structure that best aligns private behavior with public interest; (2) establish performance standards for producers and consumers; (3) establish financial consequences for performance that meets, exceeds or falls below those standards; (4) create processes for evaluating performance and assigning the consequences; and (5) establish procedures for the periodic re examination of the foregoing four steps. The decisive regulator constantly organizes her work life to complete this sequence.

Active approach: Based on boxing, the regulatory legend Peter Bradford described a hierarchy of regulatory decisiveness: Rocky, Rope a Hope, and Canvasback. See Bradford’s article, "Gorillas in the Mist: Electric Utility Mergers in Light of State Restructuring Goals," NRRI Quarterly Bulletin Vol. 18 No. 1 (1997). Lacking Bradford's metaphorical gifts, I will call these decision-making styles active, reactive and passive.

The active decision-maker directs parties to the Commission's questions, organized according to the five sequential steps. This approach converts private interest applications into public interest inquiries. She makes current filings address future consequences. She critiques present practices (those of producers, consumers and the regulators), then realigns them with the public interest.

The reactive regulator answers the parties' questions, but omits her own questions. Reactive decision-making involves some thoughtfulness, but is bounded by the parties' requests. The five steps toward effective regulation are absent. Consider mergers again. Reactive regulators ask "Is there any harm?" Active regulators ask: "What industry structure most likely will align private behavior with public interest?"

The passive regulator accepts parties' requests without independent thought. One can cloak passivity in wig and scepter sentences like "We find that the opponents' speculation does not satisfy their burden of proof." But the real burden of public interest promotion belongs with the regulator, not with the opponent.

For those seeking an active approach, John F. Kennedy's inaugural speech, paraphrased, remains a reasonable guide. The active regulator tells parties: Ask not how regulation can advance your private interest; ask how your private behavior can serve the public interest.

Recommendations for Regulators

Why are regulators so often in "reactive" rather than "active" mode? State statutes usually entitle private requestors to answers within a specified time. Commissions then allocate scarce resources to these deadlined (reactive) proceedings first, leaving insufficient resources for commission initiated (active) proceedings. These pressures undermine purposefulness. The commissioner coming to work without her own purpose finds her day filled with other people's purposes.