PSC Staff Open to Reg Reform

The Public Service Commission staff released its opinion on the Working Case to Consider Policies to Improve Electric Utility Regulation. Much of the discussion has focused on the issue of “regulatory lag.” Utilities would like to be reimbursed for their outlays more quickly. Staff seems open to making changes to address the issue. See the 85-page opinion here.  The Commission is expected to publish its opinion at the beginning of December.

Pull Quote: Many of the proposed investment opportunities may provide improved reliability, safety or security, but more likely, will automate the Missouri grid using the latest technologies and changing consumer needs.  Therefore, Staff recommends some reform to the current regulatory environment. Staff  is not opposed to the following approaches if in conformity with the general ratemaking principles and under the specific conditions outlined later in this Report: shortened  rate case processes, a continued true-up  period, certain trackers/riders, interim rates, partially forecasted test years that are trued-up within the pendency of a rate proceeding, an electric infrastructure system replacement surcharge (“ISRS”), an electric rate case adjustment proceeding process, decisional pre-approval with post-construction review, a grid modernization incentive mechanism, net metering and solar modifications, security and diversity supply modifications, alternative financial instruments, a low income rate or additional residential rate  classes, shared rate case expense.

Later (page 70), staff outlines its conditions.  Among them:

Any re-examination of regulatory lag issues should be focused on the context of increased plant modernization/infrastructure replacement initiatives that may go beyond adherence to the traditional “safe and adequate” service standard…  

The ability of the Commission to review and audit the books and records of utilities operating under its jurisdiction should be preserved…

If the risk faced by Missouri utilities is materially changed by enactment of policy initiatives to reduce regulatory lag, this change in risk should be taken into account in setting the utilities’ authorized returns.

Any changes should preserve current incentives for utilities to operate efficiently, and not serve to effectively guarantee the utilities a particular return or profit level…

 

Originally in October 19 MOScout.