(November 2009)Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year...
CEO Roundtable: Debating The Boucher Bill
Utilities consider imposing a retail surcharge to fund clean-tech R&D.
with their customers. There may need to be changes in the regulatory strategy to get that done.
Chesser: Our whole growth strategy has got to be moving down the value chain with the customer. We’ve to get innovative about how we do that.
Izzo: I worry sometimes, not out of disrespect, that policy makers haven’t yet caught up to this. Look at two choices, as a hypothetical example: investing in LED streetlights versus investing in a transformer substation. The transformer gives me a 10 percent return, but I’m not allowed to do the other unless it’s part of my foundation giving.
The regulatory system hasn’t caught up with the espoused goals that the legislative and executive branches have rightly laid out for us.
Morris: The model of yesterday just won’t work for what we need to do tomorrow. It’s so troubling when you try to do things that make sense for everyone except for the cottage industry that’s grown up around rate cases.
Fortnightly: Specifically in the area of electric vehicles, do you see any institutional or regulatory barriers that we need to overcome to electrify more of the transportation industry?
Morris: Rick Wagoner, CEO of General Motors, said the fuel of tomorrow for the U.S. transportation fleet will be electricity. GM isn’t the company it once was, but those words coming out of his mouth … it’s incredibly important. The foreign nationals are way ahead of the U.S. manufacturers in that space.
I’m impressed with the way the NRDC [Natural Resources Defense Council] and others see plug-in electric hybrids. They see using off-peak electricity as a plus compared to the carbon footprint associated with drilling for, producing, cleaning, cracking, transporting and ultimately consuming gasoline. There are, of course, barriers in infrastructure, but I think gasoline at $4 a gallon woke up the sleeping giant, and it will not go back to sleep.
Chesser: I’m very bullish on plug-in hybrids as well. I think there’s a real business opportunity there for utilities. In the early stages, we’re the logical people to make sure the installation happens in a safe way, is synchronized with the grid, is reliable, and of course that it’s coupled with the right price incentives.
To define the boundaries of our business to include the plug and to improve the interconnection with the vehicle would be a real opportunity.
Izzo: To me it’s almost simple arithmetic. If we’re going to achieve a 60- to 80-percent reduction in CO 2 emissions by 2050, there are two things we have to do. We have to make transportation electric based, and we have to get the carbon out of electricity, either by CCS, renewables or nuclear. Without those things, this is just foo-foo dust. It’s just imagination that we can get to these targets.
Catell: There’s also a role for natural gas vehicles in this picture. Maybe it’s in a transition until we get to the electric vehicle, which I agree is where we want to be. The technology for natural gas vehicles is here right now, it works