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Gov. Dannel P. Malloy on Monday rejected a call from state utility regulators for more independence, telling reporters that the regulators could resign if they required more autonomy from his administration.

Malloy’s comments stem from a letter written last month by the three commissioners of the Public Utility Regulatory Authority.

The commissioners, Art House, Jack Betkoski and Michael Caron, used much of the 19-page memo to call for independence from the Department of Energy and Environmental Protection. Malloy consolidated the regulatory body under the agency in 2011 when DEEP replaced the old Department of Environmental Protection.

The commissioners said the arrangement creates an “insurmountable conflict of interest” as a result of the panel answering to an agency that is often a party to energy cases that come before PURA.

“Now entering the fourth year of experimenting with the placement of PURA within DEEP, much of the relationship remains dysfunctional and ethical strains are obvious despite the best efforts and good will of all involved,” the commissioners wrote to the Malloy administration on Dec. 29.

Asked about the letter after a meeting of the State Bond Commission, Malloy said he was in “absolute disagreement” and accused the commissioners of “empire building.”

“I’ve been in government for a longtime. I’m used to people wanting to have their own empire. I don’t believe that that’s what’s necessary. I believe we need to constantly be looking for greater efficiencies. If any of the commissioners find that objectionable, they can always act on it,” Malloy said.

Asked to clarify the comments, the governor said “they can resign.”

Malloy said similar arguments could have been made by other agencies he merged shortly after taking office in 2011.

“Anyone could have made that argument in any consolidation that we’ve made in the past and we’re not going to go about recreating a Connecticut government the likes of which I inherited,” he said, adding that there number of state employees has decreased during his tenure as governor.

“I know that sometimes stretches people to what they think are their limits. We need to stretch people to their limits,” he said.

In the letter, regulators complained of the administration’s control over the panel’s budget and staff, which they said “provides not only the public appearance of impropriety, but also a structural conflict.”

They expressed frustration with delays in getting approval from DEEP to fill vacant positions.

“Such difficulties are perceived by many as pressure, subtle or otherwise, with respect to substantive decisions. Regardless of the accuracy of that perception, the perception itself is corrosive both internally and externally,” the commissioners wrote.

Malloy dismissed the objection.

“The opposite of that would be to simply allow them to hire whoever they want to hire whenever they want to hire and the answer is ‘No,’” he said.

In the letter, regulators quoted author and public utility expert Scott Hempling. Hempling submitted testimony when the regulators were consolidated into DEEP in 2011. 

“The result of the statutory and administrative decisions to date is that the PURA has less authority, less internal infrastructure, less independence — and therefore, less credibility with the industry actors whose performance it must assess and compensate — than any utility regulatory agency in the United States,” Hempling said.

The commissioners praised DEEP Commissioner Rob Klee for encouraging “respect and cooperation.” Klee became head of the agency after former Commissioner Dan Esty departed the administration last year.

However, they found “no compelling case for PURA to be within DEEP. The work of the two organizations is different; the two organizations are not integrated either substantively or procedurally. PURA’s needs and priorities are not those of DEEP and vice versa,” they wrote.