Getting to Yes: Helping Utilities Make the Case with Regulators

During the Big Picture Session on Monday at Itron Utility Week, NARUC President Nick Wagner and Itron’s VP of government affairs, Dan Pfeiffer, discussed the ins and outs of securing commission approval.

A decade ago, when advanced metering infrastructure (AMI) projects were being funded with ARRA stimulus grants, securing regulatory approval was a relatively easy request for utilities to make of their public service commissions. Today, without those federal subsidies, regulators are expecting more detailed plans and customer-facing benefits before approving AMI projects.

Unfortunately, in 2018, the industry saw more AMI project denials from regulators than approvals. Wagner attributes this to projects deemed not in the public interest. He went on to explain that as regulators, they have to assess all of the evidence that balances the interest of the consumer and the utility as well as who is assuming the risk versus receiving the rewards. Wagner noted that as regulators, they focus on what is tangible, quantifiable and regulatable. The three dominant reasons for some of last year’s regulatory denials include:

• Negative cost-benefit analysis
  • Incremental costs exceeded the projected savings
  • Key assumptions were challenged
• Not enough evidence or data presented
  • Must show that existing AMR provided “inadequate” services
  • Needed more detailed cost estimates for all AMI spending
• Not enough customer-facing benefits (vs. grid-facing or utility facing)
  • Did not propose any TOU or dynamic rate structure
  • No public involvement process

Yet, in the face of more business case scrutiny, many AMI projects have received commission approval and more than 50% of electric meters in the U.S. are smart. Wagner said the commission takes their time even during the approval process rather than make a quick decision; they want to provide certainty and be very deliberative and thoughtful in making good decisions. He reminded us that commissions are bound by the laws of the states they are working in and sometimes the legislature needs time to catch up.

Wagner concludes by noting that resilience is becoming a major part of what regulators are looking at and how they do their jobs. Utilities will continue to adapt, and so too will regulators and markets. In the shift to decentralized generation (DG), AMI and grid modernization has given utilities the data to implement DG better and faster because of the insights into their systems. Wagner predicts that we are going to see some utilities disrupting the disruptors.