Don't Be Kept In the Dark

Questions & Answers

Question 1:

Isn’t the cost of future investments proprietary information belonging to a private company?

Answer 1:

From the moment a utility plans to “rate base” an investment, that is, to charge its cost plus a “reasonable return on equity” to ratepayers who are captive customers with no choice to “not buy,” the estimated impact on those ratepayers is a fair and reasonable disclosure. Otherwise it would be like an auto dealer picking out a car, signing you up to buy it on credit, and then, only later as you drive the car away, letting you know how much it will cost.

Question 2:

Doesn’t “cost estimation” require significant work (and therefore added cost) to the utility?

Answer 2:

Utilities that are already following the standard for “integrated resource planning” (as outlined under the Federal PURPA law), will be comparing proposed investments to: (1) the cost of doing nothing, (2) purchasing the service from a third party, or (3) finding other lower-cost alternatives such as improving efficiency or conserving energy. To make such a comparison, the cost must already be known. The bill merely asks the utility to share with us, the ratepayers, information they already have.

Question 3:

How would this help keep customer rates low?

Answer 3:

Disclosing estimated impacts on rates helps consumers in numerous ways, including:

  1. It empowers the public to advocate against investments that are of marginal value, i.e. if the utility hears credible public response finding the investment’s value speculative, accruing to other jurisdictions, or simply unneeded at the present time, it may choose not to add it to the rate base.
  2. It gives third-party service providers and independent power producers more visible benchmarks for their own pricing, and ratepayers win when these lower-cost alternatives are selected.
  3. It breaks the “bad news” of needed investments early, but provides transparency that will favor least-cost solutions, two outcomes that will make rate-setting by the IPUC less controversial.
  4. It allows power-dependent businesses and industries to do forward-looking planning of their own, including a more informed cost-benefit evaluation of demand-side management options.

Question 4:

Do other States require rate impact disclosure for large capital investments?

Answer 4:

Integrated resource plans differs dramatically across the U.S. Each state utility commission defines its own requirements. Many states require much more disclosure than what is proposed by this bill.

 

how you can help:

Contact your legislators and tell them to support the Electric Utility Rate Impact Disclosure Act and have YOUR say about what electric utility investments YOU pay for.