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By Jon Hurdle
U.S. electricity regulators face historic challenges over the next 20 years in helping to
guide an estimated $2 trillion in investment to renew or replace aging infrastructure, ensure industry compliance with increasingly stringent environmental regulations, and adopt smart-grid technologies, according to a new report from the sustainability think-tank Ceres.
With the enormous investment by both investor-owned and public utilities, regulators should take a new approach to managing the risks of both the costs of new infrastructure and the time it takes to install it, the report said.
It warns that the industry faces risks from seven broad sources that reflect the new operating environment. They include the costs of construction, fuel and operation; emerging regulation including air and water quality and waste disposal; government limits on greenhouse gas emissions; the availability of water; the cost of capital, and the risk that load forecasts will be inaccurate because of changes in consumer demand or competitive pressures.
"To navigate these difficult times, it is essential that regulators understand the risks involved in resource selection, correct for biases inherent in utility regulation, and keep in mind the long-term impact that their decisions will have on consumers and society," the report said.
The lowest risks and costs will be provided by expanding investment in clean energy and energy efficiency, while the highest risks attach to placing too many bets on conventional generation technologies, according to the 60-page report.
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