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Abstract

In 2004 the South Carolina General Assembly instituted a major reform to its system of public utility regulation. Previously, the Public Service Commission, the administrative agency in charge of regulating public utilities, both adjudicated utility proceedings and, through its staff,a advocated for the public interest. A scandal concerning revelations of extensive ex parte communications between regulated utilities and members of the Public Service Commission led to the 2004 reform, which created the Office of Regulatory Staff (ORS) as a separate agency to perform the Commission's advocative functions. In my research, I use data on fuel factor proceedings before and after this reform to analyze the effect that ORS has had on public utility regulation to assess whether and how changes to regulatory structure can affect the outcome of regulation. A fuel factor is part of an electricity rate which utilities petition to change on an annual basis as fuel prices fluctuate. Because these proceedings happen so regularly, they provide a robust set of data with which to analyze the impact of ORS on the public utility environment. My research shows that while it is unclear whether ORS has had any effect on the actual fuel factor rates electric utility companies are awarded, these proceedings are now marked by a significantly higher degree of collaboration between utilities and their customers. I argue that this more collaborative process is a significant change to the outcome of regulation because it increases the legitimacy of public utility regulation. Inasmuch as the 2004 reform was motivated by a crisis of legitimacy, ORS has been a successful solution to that crisis.