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2009 Regulator's Forum: Walking A Tightrope

The economy forces tough decisions.

Fortnightly Magazine - November 2009

50-percent matching funding by the DOE. Utilities are incented to invest in smart grid and other conservation programs with the implementation of revenue decoupling mechanisms. Ratepayers are protected by the review of each smart-grid project prior to allowing cost recovery. Also, program costs will be offset by any benefits.

Anthony, Oklahoma: The Oklahoma commission has advanced the use of smart metering and wireless communications, recently awarding our largest electric utility $20 million dollars per year for a pilot program. We’re incenting smart-grid investment through reduction of regulatory lag by using a rider for cost recovery between rate cases. This approach helps the utility to enter into contracts with vendors that have better pricing due to less risk that deployment will be suddenly stopped. Also in 2009, our commission authorized $2 million per year in rates for our second largest electric utility to conduct a pilot project on smart meters in addition to its quick-start energy efficiency efforts that were already under way. Hopefully, well-developed energy programs like these will protect ratepayers financially by avoiding expensive capacity additions.

Beyer, Oregon: Plans to install smart meters for two of Oregon’s three regulated electric utilities—Portland General Electric and Idaho Power—are still going forward. The commission has approved a rate mechanism for each utility that provides for timely cost recovery as well as recognizes operational savings from advanced metering infrastructure.

DelGobbo, Connecticut: One of our electric companies has already deployed smart meters. With some minor upgrades, which have been approved by our department, they will be capable of providing most desired applications. A major study is underway to evaluate the response of customers to innovative rate options and determine the future of smart meters for our other regulated electric distribution company.

Our electric distribution companies and the department have applied for federal funding to advance the roll out of smart-grid technologies.

Cawley, Pennsylvania: A 2008 law required EDCs with more than 100,000 customers to file a smart-meter technology procurement and installation plan for commission approval. EDCs are to furnish smart-meter technology upon request from a customer who agrees to pay the cost of the smart meter at the time of the request; in new building construction; and in accordance with a depreciation schedule not to exceed 15 years.

The commission said it views the requirements in the law as minimum requirements and directed that the smart-meter technology must also support other capabilities, such as remote disconnection and reconnection, the ability to upgrade as technology advances, and the ability to communicate outages and restorations. At the same time, the commission established a stakeholder process to facilitate the discussion on the benefits versus the costs of smart-meter technology.

The EDCs filed smart-meter plans with the PUC on Aug. 14, 2009, and the commission is in the process of reviewing these plans. We fully expect these plans to complement the energy-efficiency and conservation plans by enhancing the ability of the EDCs, energy generation suppliers, and curtailment service providers to offer innovative demand response programs and pricing programs.

 

Fortnightly: Some utilities have used securitization bonds—similar to those used for