Incentive regulation can provide benefits both to utility shareholders and customers by encouraging greater efficiency. But even if incentive regulation supplants traditional COS regulation, regulators and utilities still will need to confront the same basic ROE questions that have vexed both for many years. Because the base ROE under incentive regulation will be an integral part of the incentive structure itself, it ought not to be done as an afterthought. The approach described here is one way to address this important issue.

I believe the primary measure of successful “deregulation” is a minimization of the delivered cost of power to end users, at an acceptable level of reliability. To help achieve that, I suggest the following actions should be taken nationwide on a timely and consistent basis.

LMP enhances reliability in a manner that no penalty regime can achieve.

Regulators from five states across the country discuss the fallout from the August blackout, and their battle with the feds over how to tackle the tough issues the states are facing.

Many electric utilities have been on high alert since Sept. 11 to protect the assets within their systems from cyber and physical attack. For instance, 21 U.S. nuclear reactors are located within five miles of an airport, but 96 percent of all U.S. reactors were designed without regard for the potential for impact from even a small aircraft.

Compiled June 21, 2001 by Bruce W. Radford, editor-in-chief, from contributions as noted from Carl J. Levesque, associate editor, and Phillip S. Cross and Lori A. Burkhart, contributing legal editors.