Ratemaking

Good Ratemaking is Hard to Do

Especially in today’s politically charged environment

Trying to use ratemaking to address an increasing number of social issues intensifies the difficulty for regulators to reach a balanced outcome. Net metering stands out as economically inefficient, unfair and a regressive cross-subsidy, essentially an implicit tax on non-solar customers.

Regulators Can Win the Trifecta with Residential Demand Charges

Advanced metering and demand charges give efficient and equitable price signals to customers.

The wide deployment of smart meters gives regulatory policy-makers a rare opportunity to change residential rate design. This can be done in a way that improves economic efficiency, and utility consumer and shareholder equity. Here we provide ten questions that should be asked by policy-makers, as well as some guidance in deriving the answers.

Equity Returns: ‘Allowed’ vs. Earned

Understanding how PUC rate case findings differ from a utility’s financial reports.

 

(November 2015) Setting an allowed return on equity has consistently proven to be the most contentious and subjective part of a rate case proceeding.

Innovation Mandate

Meeting the just-and-reasonable standard in a time of change.

Who can say for sure if markets are working? The landscape keeps shifting.

Reducing Rate Shocks

Original-cost ratemaking doesn’t suit the challenges facing utilities today.

Levelized rates can serve customers’ interests, while also accelerating capital investment and providing an economic stimulus to the economy.

Smart Grid at a Crossroads

Refining the business case for advanced  distribution investments.

As utilities plan their capital budgets for the next few years, investments in advanced distribution systems face an uncertain future. Customers question the value—and propriety—of some programs, while long-term strategic goals depend on seamless integration. What will be the path forward for smart grid technology?

Battle Lines:

2011 Groundbreaking Law & Lawyers Survey and Report

With a flurry of major new environmental regulations, the Environmental Protection Agency (EPA) is altering the power generation landscape. But will the new federal rules survive court challenges—to say nothing of next year’s national elections? Fortnightly's Michael T. Burr considers the controversy over new environmental standards. PLUS: Top Utility Lawyers of 2011.

Zone of Reasonableness

Coping with rising profitability, a decade after restructuring.

With a recent flurry of gas pipeline rate investigations at the Federal Energy Regulatory Commission (FERC), many pipeline owners face the prospect of having their profits scrutinized to ensure their rates are just and reasonable. Understanding FERC’s approach will help companies ensure they’re not falling outside the zone of reasonableness.

Presumed Power

Growing gas storage depends on fair regulatory treatment.

FERC’s final rule authorizing new natural gas storage facilities seems to presume market power for pipelines and new storage. FERC should consider changing that presumption to more accurately reflect Congress’s intent in EPAct 2005.

Regulation by Formula

Tools to facilitate changing utility economics.

These are challenging times for the electric and gas utilities. Reliability projects, renewable portfolio standards, greenhouse-gas emissions control, AMI, smart-grid investments, and conservation programs—all these things add to costs, but might bring in no additional revenue. Moreover, there will be unprecedented capital investment in transmission, renewable generation projects, and replacement of old facilities from the 1950s and 1960s. Thus, earnings likely will be more closely watched and traditional general rate cases might not be able to keep up.