Before even utility business model 1.0
The Public Service Commission's chief engineer authored the report. It's:
"an analysis of the theories and principles of electric light and power rates... to devise a rate which will cause each individual consumer to pay in direct proportion to the cost of rendering him his required service."
A filing in a proceeding about utility business models? You might say that.
Except that the author was chief engineer of the Saint Louis Public Service Commission. Say what?
Except that the report was authored on August 25, 1910. A hundred and six years ago!
A few states back then, including Missouri, had created municipal public service commissions like the one in Saint Louis. According to "Regime Change and Corruption. A History of Public Utility Regulation," a 2006 paper by Werner Troesken:
"The second phase in the evolution of public utility regulation took place between 1900 and 1909. (This phase followed municipal franchises and preceded state public service commissions.)
During this period, many states began to pass laws authorizing municipal governments to directly regulate the rates charged by gas and electric companies, as well as other utilities. The states that passed municipal regulation laws were Arkansas, California, Florida, Iowa, Kansas, Minnesota, Mississippi, Missouri, Nebraska, and Ohio.
The new municipal regulation laws meant that once a utility company's franchise contract with the city expired, city authorities could unilaterally dictate rates; gas and electric companies did not have to consent to the rates in order for them to become legally binding."
The report has a detailed analysis of class load and peak responsibility. The utility analyzed was Union Electric Light and Power Company, which is now Ameren Missouri.
The report came out just twenty-eight years after electric service started at Pearl Street Station. Yet already regulatory experts like the chief engineer in Saint Louis were discussing cost to serve (cost causation) principles.
Smart meters and the smart grid weren't anticipated though. The report says "it is manifestly impossible to obtain an actual measurement of each consumer's K.W. demand at the instant of the Investment Peak (system peak)."
Consider the lot of regulators in 1910. It would be nineteen more years before the first issue of Public Utilities Fortnightly arrived in their mailboxes.
Steve Mitnick, Editor-in-Chief, Public Utilities Fortnightly
E-mail me: mitnick@fortnightly.com
