I was an early proponent of what has been called incentive ratemaking, price cap regulation or performance based ratemaking for public utilities. I’m cognizant it is not a new idea at all. 

During the 1980’s, the government of the United Kingdom, under Prime Minister Margaret Thatcher, decided to privatize the nation’s utilities. The utilities had been nationalized in the 1940’s. The UK rejected the US regulatory model, selecting a variant with annual rate adjustment. 

Last week, Donald Trump was elected President. 

OK, you knew that.

By now, you’ve read the speculation about what this means for all the aspects of domestic and foreign affairs. Sure, the impact on trade, immigration and jobs might be important to some folks. But you care about what this means for utility regulation and policy.

First, it seems likely that natural gas production and pipeline development will maintain its pace if not increase. There will probably be less tolerance for the efforts of opponents. Though those efforts could become more confrontational. 

The Energy Department reports that the average residential rate for electric service was lower than last year in every month this year through August (the latest month of the data). Except this March.

It also reports that the average commercial rate was lower than last year in every month this year. No exceptions.

Year-to-date, the average residential rate was 12.54 cents per kilowatt-hour this year. That’s lower than last year, by 0.9 percent, when it was 12.65 cents.

Demand-side management programs are not new to the electric utility industry. 

Arguably the most effective peak management tool was the invention of commercial and industrial interruptible service and tariff offerings. Electric utilities introduced effective residential peak shaving programs in the 1970’s as well.  

I know. I had direct experience with one when I was a young and new public service commissioner in Wisconsin in the early 1980’s.

More good news yesterday for electric service customers.

The Commerce Department published the numbers it uses to estimate the gross domestic product. Including personal consumption expenditures, which is seventy percent of the GDP. 

Including the expenditures for cars, clocks, carpet, computers, cereal, clothing, cosmetics, child care, cabs, clubs, cable, cell phones and casinos. That’s just the c’s. 

And including the expenditures for electric service. 

It is the process of setting a return on equity that is fair to both shareholders and consumers that demonstrates the art and science practiced by regulators. One case reported here provides a good glimpse at the entire range of issues put before regulators: a decision by the Michigan Public Service Commission setting electric rates for Consumers Energy Company.