While debates over global warming, cap and trade, and the deployment of new energy sources are likely to drone for some time to come, all generally agree that the electric/gas energy served up by power utilities is an increasingly precious resource. Not surprisingly regulatory agencies have become progressively prescriptive in scrutinizing the operations of utilities as well as their asset investment planning (AIP) strategies.
Relationships between a utilities and regulatory agencies need not be adversarial. Indeed, a utility should view a regulatory agency as one of its major stake holders — no less important than its workforce or stockholders – during the formulation of AIP strategies. Building two-way trust and confidence must start with clear and open communications. However, its sustenance calls for proactive measures initiated by the utilities. Although such proactive measures may vary from regulator to regulator, there are some that apply to all. The top 5 of these proactive measures are:
- Lead the relationship with regular communications both electronically and in print to the regulatory agency not only from the utility CEO but also from the utility’s professional staff directly to key regulatory staff members. Avoid surprises by issuing timely alerts on planned and completed projects
- Anticipate information requests by staying abreast of critical issues facing regulators, and by preparing AIP data that can help resolve the issues.
- Defend asset investment decisions with comprehensive analyses of all variables driving AIP decisions, and provide data views that the regulator can use to endorse proposed spend levels and associated rate increases.
- Minimize subjective judgment by providing objective data that expedites the regulatory review and approval of utility-formulated rate cases, financial and otherwise. Quoting subjective views by “experts” without objective backup, or at least well presented empirical results, will not satisfy today’s business savvy regulators.
- Leverage technology platforms that present consistent and timely views of key AIP variables at a moment’s notice. Data manipulation and usage must be efficient, repeatable, and low cost to answer the same types of questions regarding each rate case filing. Ideally, utilities should be comfortable inviting regulators to “look over their shoulders” to view the data analyses outcomes delivered by their technology platforms.
Building and improving upon regulatory agency relationships should be a high priority for utilities. Fortunately, there is a new generation of powerful AIP software tools that simply the task of initiating the proactive measures described above.