Are the PUCs Really Ready to Facilitate Smart Grid Development?
Even with the DOE Smart Grid grants made under the ARRA, the vast majority of funding must come from private-sector investment. Utilities will seek to pass through as much of this cost as possible to consumers, subject to approval by their regulators. The application of both federal and State regulation inevitably will impact utility investment decisions. But are State regulators ready? a) The State PUCs Don’t Yet Know What Smart Grid Costs Should Be “Passed Along” to Consumers. As discussed above, retail electric rates historically are regulated by State PUCs. While regulatory regimes vary, the basic scheme is a determination of whether particular classes of consumer are “captive” to a particular utility (i.e., the consumers lack effective access to alternative suppliers) and, if so, whether the utility’s costs in providing the service were prudently incurred. Basically, PUC’s decide whether a utility spent money wisely on investments, and then allow the utility to pass the cost on to
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