Easing Regulator Reticence
Tom Sloan is a recently retired twelve-term veteran of the Kansas Legislature and member of several federal agency and professional legislator organizations’ energy committees. He is now a Senior Advisor to Public Utilities Fortnightly and can be reached at email@example.com.
Perceptions and fear frequently result in more powerful realities than do facts. This is particularly true in the public arena where elected officials and regulators are concerned about making mistakes that are visible to, or will affect, the general public.
Innovative technologies, by definition, have no or minimal quantifiable performance record and hence the perceived reality is that deployment will result in high risk of failure. Failure has financial and political consequences for the utility customer and the public official/regulator who approved deployment.
In the July and December 2018 issues of Public Utilities Fortnightly, I suggested that Public Utility Commissions will be more likely to approve the deployment of, and earning on, innovative technologies if the financial risk to electric customers is minimal. I suggested a couple of ways in which a Performance Assurance Insurance Program could be constituted.
The primary suggestion was a variant on the existing U.S. Department of Agriculture's Crop Insurance Program in which farmers select the degree of risk they are willing to accept that their current year commodity crop will not meet or exceed their five-year average.