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2009 Regulator's Forum: Walking A Tightrope

The economy forces tough decisions.

Fortnightly Magazine - November 2009

meters that would be required.

Box, Illinois: A couple of natural gas utilities have requested decoupling of revenue from the volume of gas sold. In one instance, the commission approved such a request as a pilot program. In other instances, the commission has used a straight fixed-variable approach that increases the monthly fixed charges with offsetting decreases in usage charges to mitigate the impact that varying sales has on revenues of natural gas utilities.

In recognition of a trend of increasing uncollectibles, Illinois law recently was revised to allow electric and natural gas utilities to implement a separate rider mechanism that will assist them to deal with the fluctuating levels of uncollectibles outside of rate cases. There are several requests to implement uncollectible riders currently pending before the commission.

Anthony, Oklahoma: Yes. In its last general Oklahoma jurisdictional rate case, our state’s largest electric utility added and/or modified programs to bring additional benefits to its low-income customers by further reducing the customer charge for persons who qualify for LIHEAP. It also offered a reduction of $5 per month off the customer charge for senior citizens who participate in time-of-use rates. Finally, the utility has created new tariffs for customers who use in-home smart-grid technology. Staff is also working with other utilities that are requesting reduced rates to certain commercial and agriculture customers due to declining usage and competition from other fuel sources. Staff is working with those companies to find solutions that retain customers. In addition, the state’s major gas and electric utilities participate in a program with the Salvation Army that allows customers to pay an extra amount on their monthly statement to assist others with bill payment.

Beyer, Oregon: Not directly in response to economic conditions. However, to encourage more efficient use of energy, the commission recently approved for Portland General Electric—Oregon’s largest electric utility—a residential peak pricing pilot that utilizes a dynamic pricing structure based on time-of-use rates. All three Oregon-regulated electric utilities offer time-of-use pricing programs and various other demand-response programs.

Cawley, Pennsylvania: The Pennsylvania Public Utility Code authorizes the PUC to prescribe a mandatory system for automatic adjustment of a utility’s rates by means of a sliding scale of rates. In 1997, the code was amended to provide for an adjustment clause for the recovery of costs related to distribution-system improvement projects designed to enhance water quality, fire protection reliability, and long-term system viability.

The distribution system improvement charge (DSIC) for the water industry is a best-practices regulatory tool created in Pennsylvania with seven other states adopting similar mechanisms. Due to DSIC and other innovative regulatory mechanisms, the PUC was recognized for effectively encouraging water company investment by Standard & Poor’s. The commission is encouraging the Pennsylvania general assembly to enact a similar amendment to authorize a DSIC for natural gas and a collection system improvement charge (CSIC) for wastewater improvements. The use of a surcharge on customers’ bills allows companies to fund more upgrades of aging infrastructure than would otherwise be feasible under normal ratemaking. A natural gas DSIC and CSIC will reduce the frequency and