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.
Construction work in progress
Industry in Transition
Utility CEOs face disruptive trends.
Top executives at AEP, the California ISO, and El Paso Electric address key challenges and opportunities.
Pre-Funding to Mitigate Rate Shock
Re-starting the Big Build calls for revisiting cost-recovery mechanisms.
As the industry resumes major capital-spending programs, utilities and their stakeholders are rightly concerned about the effects on prices. Traditional regulatory approaches expose utilities to risks and costs, and can bring rate shock when capital spending finally makes its way into customers’ bills. Pre-funding investments can provide a smoother on-ramp to bearing the costs of a 21st-Century utility system — but it also raises questions for utilities to address.
Updating the Utility Compact
New regulatory frameworks encourage electric infrastructure investment.
Under business-as-usual regulation, electric utilities must file more and more rate cases to keep up with rising costs. New approaches provide for modest but stable recovery of costs outside rate cases, while providing ongoing regulatory oversight and creating strong incentives for utilities to efficiently manage construction projects.
Grid Investment & Restructuring: Two Challenges, One Solution
FERC must align the immediate self-interest of profit-maximizing entities with its own view of what is in the public interest.
Two obstacles must be overcome to achieve true competitive markets: reversal of the long-term underinvestment in transmission, and greater clarity in the legal and regulatory environments. How can the industry make the most of a somewhat defensive regulatory posture?