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Next page >> 1 By David O'Brien
Remember the kids' game Red Light / Green Light? When the kid who was "It" faced away and called out "Green Light!" and we'd all go running. When he/she shouted "Red Light!," we’d try to come to a screeching halt before he/she could turn around and catch us moving. To win, you had to be able to anticipate when the red light would be called.
As a result, utilities are trapped in a game they can never win, and society’s benefit is therefore stalled, at the moment it seems, indefinitely.
To be fair, there are plenty of things for regulators to worry about – new technology, new approaches, new variable rates and how customers will react to all that. So regulators have not trusted the benefit data that has been provided on the evidentiary record as they can with, let's say, a new distribution substation or a power purchase agreement. It is only human – especially in a governmental/political environment – to be cautious and to hedge one’s bets. This is all so new, the thinking seems to be, that we can't rely on it in a lasting way.
Maryland gives... and Maryland takes away
A case in point is the order handed down on May 8 (Case No. 9207) by the Maryland Public Utility Commission approving Delmarva Power’s AMI proposal. In the affirmative, the PUC concluded “...that Delmarva’s modified business plan complies with the AMI Order, satisfies our previous concerns and likely will be cost-effective to Delmarva ratepayers."
GREEN LIGHT! Got it. Go!
However, the order also included some significant caveats to that approval:
· “The authorization granted by this Order allows Delmarva to proceed with deployment of its AMI program, but does not constitute a determination as to the prudency of the program’s costs.”
· The PUC “will require Delmarva to demonstrate in the context of a future rate case that it has incurred a level of costs and delivered a level of benefits that render its AMI projects cost-effective programs for its Maryland customers before we will authorize cost recovery.”
· “In the event that the Proposal, as implemented, falls short of that standard, we will determine what level of cost recovery the public interest requires.”
· “Therefore, the risks that the parties identified during the course of proceedings will be borne by Delmarva, not its ratepayers.”
Translation: “We support you in principal, but are uncertain and want bona fide proof down the road that this stuff all works and was worth the effort (cost). If this all doesn’t work out as hoped then we reserve the right to find you responsible and withhold reimbursement of your costs.”
Next page: Do we go forward or not? >>
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