They want lower carbon and air pollution they want resilience and equity they want consumer choice and local control. Today, however, customers and regulators want more than just reliable power. Utilities have traditionally been guided by two values: reliability and low cost. The challenge facing the power sector now is not expansion, but making its services greener and smarter (which often amount to the same thing). Building more stuff is not always the right answerĮlectricity service has largely saturated the US. More and more frequently, utility shareholder interests and the public interest have come out of alignment. We needed more stuff.īut these days, things have changed building more stuff does not always produce more social value. And PUCs have limited ability to restrain them.Īs long as the US was rapidly expanding electricity service to areas that had none, utility shareholder interests and the public interest were aligned. In fact, since it is their legal obligation to act in the interests of shareholders, it is their legal obligation to build as much stuff as possible (and, ahem, prudent). In short, investor owned utilities (IOUs) have every incentive to build more stuff. The "prudent" part is supposed to be enforced by public utility commissions (PUCs), but in practice, in "prudence reviews," there’s an information asymmetry (utilities know more than PUCs or outside advocacy groups) and PUCs are often cozy with utilities anyway. How can we induce private investors to put up money for public capital investments? We offer them - utility shareholders - a safe and predictable rate of return on those investments.Īll "prudent" capital investments by utilities are guaranteed the same rate of return that’s how shareholders make money. Yet to provide service to their customers, they need investment money to build out new substations, transformers, meters, and power lines. By law, they have to sell power to ratepayers without any markup. Utilities are state-protected monopolies, so we can’t have them profiting off their main product. The thinking behind COSR is pretty simple. In a nutshell, they make money by building stuff. It is this: US power utilities almost universally operate under what is called cost-of-service regulation (COSR). There is one key fact about utilities that average people need to know in order to understand their current dysfunction. I’m condensing from a great two-paper series by America’s Power Plan: Part one is about how utilities make money part two is about how those incentives can change. I realize most people have limited patience for discussion of utility regulation - it pains me, but I realize it - so I’ll keep this short. While there’s plenty of greed and animus to go around, the fact is, utilities are just doing what they’ve been designed to do. “If asking questions is criminal, then I guess I could understand the actions taken, but I don’t think that asking questions and asking for transparency should be treated as, like, a criminal act.Most people are at least vaguely aware at this point that power utilities are the Bad Guys in the story of renewable energy - fighting rooftop solar, clinging to old coal plants, and generally slow-walking the work of cleaning up the grid.īut the role of utilities is often badly misconstrued, read as a tale of greed or animus. “It was really disconcerting to see a private gas company using our police force against neighbors who were trying to speak reason to folks who didn’t want to hear it,” she said. (Kim Hairston/Baltimore Sun )Ĭlaudia Towles was one of three protesters arrested Friday evening on charges of interfering with material equipment and facilities belonging to BGE.Īlthough she said she can’t comment on the details of the arrest, she said the 20-hour detainment “wasn’t a pleasant experience.” Residents are angry that BGE has switched from interior regulators and is installing equipment on the front exteriors of brick rowhouses, a change they believe is unsafe, unsightly and unnecessary. BGE has been replacing "regulators" that control gas pressure in Fells Point, Washington Hill, Butchers Hill and other dense, urban neighborhoods.
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