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2009 Regulator's Forum: Walking A Tightrope

The economy forces tough decisions.

Fortnightly Magazine - November 2009

associated costs of base-rate cases while maintaining a high level of customer protections.

In light of today’s difficult financial markets, DSIC and CSIC is the type of innovative regulatory policy that needs to be implemented to assure that our utilities can maintain access to capital markets on reasonable terms.

For electric customers, we’ve taken steps to design default service rates that encourage energy efficiency and conservation. We’ve moved toward a full commodity charge so that, for every kWh that customers conserve, they pay less. We also have eliminated rate structures that favor increased usage, such as declining block rates, in favor of rates that will change behaviors when it comes to electric use. Regarding time-of-use rates, we are examining a broad spectrum of on and off peak, critical peak pricing, critical peak rebate, real-time hourly pricing, and day-ahead hourly pricing methods.

 

Fortnightly: How do you properly incent utilities to invest in smart grid, AMI and conservation while ensuring ratepayers are protected financially?

Everett, Georgia: Georgia Power is in the early phases of a meter change-out program to install AMI meters throughout its service territory. Once installed, the AMI meters can be used to implement new rate structures and to provide better and additional services for the utility’s customers. The commission will be addressing these issues in Georgia Power’s January 2010 integrated resource plan filing. The commission also is working with Georgia Power to acquire and best utilize federal stimulus funds for smart-meter installation.

Box, Illinois: Last year we approved in concept, rider recovery for the costs of installed automated metering technologies and required Commonwealth Edison and Ameren Illinois to participate in statewide collaboratives to review advanced metering and smart-grid technologies. The idea was to conduct broad-based discussions among all interested parties to consider options, a potential framework, and other issues with the hope of finding some common ground. These AMI collaboratives resulted in a pilot program from Commonwealth Edison to install 141,000 smart meters and test the consumer benefits and responses of such meters. However, with the hope of obtaining stimulus funds that the federal government has earmarked for smart grid and AMI, Commonwealth Edison has proposed a second set of AMI and smart-grid investments. Meanwhile, the smart-grid collaborative is still underway.

While I see great potential benefits in a smart grid, the commission is committed to ensuring that Illinois customers don’t pay for investments that are unnecessary. In my view, as long as the commission maintains its long history of treating utility investors fairly, utilities will have an adequate incentive to invest in smart grid. The more difficult challenge is to make sure that those investments produce the benefits to customers that make the smart grid so appealing. [Editor’s note: On October 14 the commission approved a one-year AMI pilot for Commonwealth Edison.]

Brown, New York: Use of federal stimulus money, which should provide up to 50 percent cost sharing for smart-grid projects, allows for smart-grid efforts to move forward at a reduced cost to the ratepayer. The commission approved utility smart-grid projects worth over $800 million subject to