Are regulators too soft on utilities? The case for mandated reliability

By Jesse Berst

The federal government plans to boost fuel efficiency in vehicles with even tougher Corporate Average Fuel Economy (CAFE) standards that automakers will have to meet. Some say it will bump the price of a new car $2,000 to pay for the new technologies that will make it more efficient.

States have imposed Renewable Portfolio Standards that require utilities to boost the amount of power procured from renewable energy sources.

And now here come staffers at the Maryland Public Service Commission (PSC) proposing new regulations that would mandate a 24% improvement in the frequency of outages by 2015. The standards would cover restoration time, response time (to consumer calls) and vegetation maintenance. Utilities who failed to meet the standards would face fines.

Baltimore Gas & Electric estimates that compliance could cost more than $100 million. BGE and the PSC are currently battling it out in the press, with BGE implying the standards would raise rates, while the PSC says not necessarily. The PSC is scheduled to consider the proposals again on Dec. 8 and has until July to implement the new standards.

You could argue that when standards like CAFE or RPS inch up gradually year to year they force progress. So is it time to mandate standards for improving electric power reliability? And what's the best way to do it? That's this week's Tuesday Topic over in our Smart Grid News Talk discussion forum. I hope you'll join the discussion.

Jesse Berst is the founder and chief analyst of Smart Grid News.com. He consults to smart grid companies seeking market entry advice and M&A advisory. A frequent keynoter at industry events in the US and abroad, he also serves on the Advisory Council of Pacific Northwest National Laboratory's Energy & Environment directorate.