Alternative Ratemaking in the US: A Prerequisite for Grid Modernization or an Unwarranted Shift of Risk to Customers?

Friends and Colleagues: My co-authors Ken Costello, Sean Ericson, Dennis Stephens and I are pleased to announce that the Electricity Journal has published an editorial we wrote on Alternative Ratemaking. While legislators and regulators are endorsing multi-year rate plans, forward test years, and rider cost recovery methods to encourage grid investment in increasing numbers, our editorial examines the unintended consequences of these ratemaking practices. These unintended consequences, including the practical elimination of cost disallowance risk, create a moral hazard which encourages utilities to propose massive, premature, and cost-ineffective grid investments to the detriment of state economies, businesses, and consumers. These are not just ratemaking innovations; they represent a fundamental shift in the balance of interest between customers and shareholders that is clearly and dramatically in shareholders' favor. We look forward to your feedback on our perspectives. To access the article at no charge and with no subscription through November 23, please access this link: https://authors.elsevier.com/a/1fsak3ic--9oHr