Regulatory Uncertainty: The Ratemaking Challenge Continues

Deck: 
Ratemaking Special Report
Fortnightly Magazine - November 2004
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Ratemaking Special Report

Regulatory Uncertainty:

In a joint survey conducted by Navigant Consulting and , utility executives identify the biggest challenge to their business.

No matter what position you subscribe to when characterizing the degree of competition in today's energy industry, it is clear that regulation continues to serve as a major influence on the business strategies and operations of the gas and electric distribution utilities in North America. While it is readily understood why such regulatory oversight is necessary in this segment of the business, it is less clear how regulators internalize this important role, and how they choose to interact with utilities in implementing energy policies, reviewing operational issues, and approving the revenues and rates upon which the financial health of this industry segment is premised.

The results of a previous Navigant Consulting/ survey, " The Outlook for the North America Power Industry," identified regulatory uncertainty as the most critical issue for utility executives to resolve over the next five years. The words of one electric utility leader cut to the chase, "We need to solve regulatory uncertainty so we can plan and execute." Indeed, respondents to that survey (72 percent) said regulatory uncertainty was the top issue to solve to ensure a strong future for the industry. Understanding the key issues and challenges inherent in the utility regulatory process is the first step to gaining valuable insights into this uncertainty, and being able to manage it effectively.

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