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2009 Regulator's Forum: Walking A Tightrope

The economy forces tough decisions.

Fortnightly Magazine - November 2009

passed, and the governor signed, Georgia Senate Bill 31. It approved the recovery of financing costs associated with construction work in progress through rates during the construction of nuclear power generating facilities.

Box, Illinois: The laws governing the regulation of utilities in Illinois seem to constantly be changing. Nevertheless, I don’t believe there’s been a fundamental shift in the regulatory compact. One important change, however, is the increase in competition in some portions of the previously regulated monopoly utility services. Many of the larger businesses in Illinois now acquire electric generation and natural gas commodities from suppliers other than the traditional utilities. The commission no longer establishes the prices for a significant portion of what was traditionally the utility bill for many customers. Instead, in many cases, the competitive market establishes the prices for electric generation and natural gas commodity. For the portions of utility services that remain regulated by the commission, the manner of regulation remains quite similar to what it’s been for decades.

Cawley, Pennsylvania: Prior to the restructuring of the electric industry in Pennsylvania, market risks were part of the consideration when calculating the rate of return for [electric distribution companies] during base-rate cases. The commission’s approach to default service permits our EDCs to design their default service programs to minimize market risk.

Restructuring has shifted the risk. Consumers no longer bear the risk for inefficient generation plant investments and operations. Generation plant owners now are at risk for cost overruns and inefficient operations.

Brown, New York: It has been our long-standing position that there is no regulatory compact in New York. The commission has full discretion to take whatever actions it believes are in the public interest.

 

Fortnightly: In this economy, saving money is a top priority. What can state commissions do to ensure utilities give customers the tools and education to help control energy bills?

Brown, New York: Commissions can remove financial disincentives through revenue decoupling, rate incentives or other ratemaking approaches. They can elevate the importance of, and establish funding mechanisms for, utility programs designed to help customers control energy bills through major policy initiatives, such as [New York’s] energy efficiency portfolio standard proceeding and advanced metering infrastructure, highlighting the importance of customer education in all programs. They can require and review annual utility customer education plans. Finally, commissions can convene joint, multi-agency and utility working groups to pool knowledge and resources with the common goal of helping customers control energy bills.

DelGobbo, Connecticut: As a result of programs our state legislature and our department have initiated and administered, Connecticut is recognized as a leader in energy efficiency and demand response and renewable programs. We believe the tools customers need to better manage their energy consumption and hence energy bills are being deployed and are ensuring significant savings for our ratepayers.

The Energy Conservation Board also has undertaken several campaigns to educate utility customers about managing their energy usage during peak times. The home energy solutions program sponsored by our electric utilities provides a thorough evaluation of a residential customer’s energy usage, while identifying