To the Editor:
In “Rate-Base Cleansings: Rolling Over Ratepayers” (November 2005, p.58), Michael Majoros urges state public utility commissions to recognize a refundable regulatory...
- a particular kind of equipment. While potentially important , RCM neither identifies strategies for replacing equipment nor directly addresses the question of minimizing lifecycle costs. Therefore, RCM does not provide a least-cost solution to the repair-replace problem. We are indebted to Charles Feinstein and Peter Morris for pointing out the limitations of the RCM method.
- See Chaper 7, "Moving Beyond Traditional Reliability Analysis," Customer Needs for Electric Power Reliability and Power Quality: EPRI White Paper, October 2000.
- With dependent contingencies, "low" probability events may not be so "low" probability after all.
- These steps are suggested by Feinstein, Morris, and Chapel in their briefing, Strategic Reliability Analysis, op. cit.
- The methodology for solving the multi-attribute, multi-year capital budgeting problem is well-developed and available in the public domain. The recognized expert in multi-attribute decision theory is R. Keeney (see R. Keeney, Value Focused Thinking: A Path to Creative Decisionmaking). Applications of the methodology to electric utility capital budgeting are becoming more common. See, e.g., L. Merkhofer on Priority Systems. Lee Merkhofer, 2003, and S. Chapel, et al., Project Prioritization System: Methodology Summary, EPRI 2001. Both papers can be downloaded from the publications page of www.s-chapel.com.
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