Electric regulation: Utilities undertaking smart grid investment should use benchmarking techniques |
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| Authors: | Nicholas S. Bowden |
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| Affiliation: | Lecturer in the Economics Department and regulatory policy research associate, Institute for Regulatory Policy Studies, Illinois State University Nicholas S. Bowden: is a lecturer in the Economics Department and regulatory policy research associate for the Institute for Regulatory Policy Studies at Illinois State University. He can be reached at nsbowde@ilstu.edu. The opinions herein are not necessarily those of Illinois State University or the Institute for Regulatory Policy Studies. |
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| Abstract: | In the simplest of terms, the regulator's goal is twofold: ensure utility solvency while inducing the utility to provide quality service at a price that reflects productive efficiency. The ostensible goal of Smart Grid investment is to increase the quality of service, while a likely outcome is the increase in the price needed to ensure utility solvency. Given the uncertainty about the efficacy of Smart Grid investment, public utility regulators would be prudent to undertake benchmarking studies that ensure that improvements in quality explain any increase in utility expenses that result in higher prices. |
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