By Jenny Chung C’12
Ken Hurwitz L’76 WG’76, a partner at the law firm Haynes and Boone, provided attendees at a recent breakfast talk at the Biddle Law Library’s Rare Book Room an overview of the energy law field, and the many career paths open to those involved in the sector.
Sponsored by the Penn Law Energy Club, Hurwitz’s talk highlighted the changes the energy sector has undergone over the past 35 years. Hurwitz, who earned both his J.D. and M.B.A. degrees from Penn in 1976, recalled that when he graduated, there had been “no real energy field, per se,” adding, “there was public utility practice, environmental practice and some natural gas practice, but that was about it.”
In the past, the electric utility industry had been structured in such a way as to preserve vertical integration. According to Hurwitz, electric utilities firms owned production, transmission and distribution mechanisms, earning 80 to 90 percent of all revenue from retail sales to commercial, industrial and residential users.
Regulated by the Federal Power Commission (now known as the Federal Energy Regulatory Commission), such utilities also engaged in limited wholesale activities and limited reserve-sharing agreements with others, he said.
Within this “fairly tight structure,” law firms represented utilities seeking to complete wholesale transactions. When inflation set in during the 1960s, many utilities likewise sought to raise their rates and, correspondingly, representation from law firms.
“There were firms in Washington that filed rate increase cases before the Federal Power Commission and firms nationwide which represented utilities that wanted to raise retail rates,” Hurwitz said, adding that certain segments of the legal profession opposed such rate increases. He cited firms that represented electric co-ops which resold utilities to distribution co-ops as examples of the latter group.
With regard to the natural gas sector, firms would go before the Federal Power Commission and contest utility firms that represented pipelines, which were integrated in that they provided bundled services consisting of both sales and transportation.
“Lawyers practicing in the utility area were either pro-utility/pipeline or anti-utility/pipeline,” he said.
In 1978, a “revolution” occurred with the passage of the Public Utility Regulatory Policies Act (PURPA), which opened up the electric generation field to competition with utilities. For instance, Hurwitz explained, small power producers that used renewable energy sources were given the right to require electric utilities to divide their power.
Because PURPA facilities could require an electric utility to sign a contract with them for thirty years, Hurwitz explained the law “furnished many benefits to a new section of generators” and “gave rise to a vibrant and competitive independent power sector.”
“You get excited as a lawyer because there’s now a whole new class of clients you can represent,” he said.
Shortly afterward, the natural gas sector also underwent significant changes as a result of FERC Order 436, which “changed the nature of how pipelines did business,” Hurwitz recounted.
He explained that pipelines were required to provide open access transportation, effectively being converted from purchase and resale agents to transportation entities.
Once the Energy Policy Act was passed in 1992, electric utilities were required to provide transmission services to third parties, resulting in a “whole new series of entities…that could generate and transport power.”
According to Hurwitz, the implications for energy law deriving from the previous legislative measures were far-reaching.
“In the old days, who you could represent was fairly limited,” he said. “Now, things have opened up in new, varied and interesting ways [as] numerous groups of potential clients came into being.”
Hurwitz characterized the 1980s in general as a period of change, largely due to the massive deregulation carried out by the Reagan administration. In Washington, D.C., for instance, the “specialized boutique” firms of the past were gradually replaced by an influx of out-of-town firms which performed more “generalized” commercial work.
“In the old days, the only utility transaction work that went on was when utilities wanted to issue bonds,” he said. “Today, there are all sorts of litigation and transactions that go on—plenty of regulatory work.”
“Energy has become an exciting field with lots of potential employers,” Hurwitz added.
He advised law students looking to enter the field to postpone working at government agencies for a few years upon graduation in order to acquire more extensive experience.
“Four to six years out of law school is ideal [for entering a government agency],” he said. “You get a good law firm foundation and more expertise.”
While Hurwitz deemed “becoming ingrown at a law firm” as the “most traditional and successful path in private legal practice,” he acknowledged that in the current economic climate, many firms are reluctant to hire first or second-year associates.
“The difficulty firms are having is that they aren’t quite sure where this new world will end up,” he said. “They’re reluctant to discount because of the expectation that they’ll return to the old world in which they can command premium rates.”
Regardless of the path one chooses to pursue, Hurwitz said, diligence and a passion for the profession are essential to success.
“You really have to work hard and like what you’re doing,” he said.