Bob Wyman for Congress (NY CD-10)

12/ Utilities also argue that such rates create beneficial cost shifts because permanent increases in sales volume create more sales base over which to spread fixed costs. Of course, these increases also drive demand for new power plants and infrastructure.

13/ Point 3. Whether a potential cost shift is good or bad also depends on the quality of the underlying rate. Class rates are based on average usage. Customers who use less pay less than average and are often accused by utilities of not paying a “fair share” of costs. But . . .

14/ under cost of service regulation, you are only supposed to pay for what you use. They are just heeding the price signal. Crying “cost shift!” whenever a customer uses less makes no sense. Crying “cost shift” only in response to certain ways in which customers use less ...

15/ like through installing distributed generation (DG), is discriminatory absent actual evidence of avoided payment for caused costs. Note that there is a lot of evidence that DG customers actually cost much less to serve than non-DG customers. That means ...

16/ most DG customers have costs shifted onto them unless they are put on a rate that credits them for those reduced costs. Finally, since utilities operate under cost-of-service regimes, it is fair to suggest that the vast majority of potential ...

17/ cost shifts arise from bad planning, forecasting, and grid investment. If the utility had accounted for DG growth and built accordingly, the rate would recover the revenue required. Didn’t they see it coming? Should customers pay for every utility mistake? That is:

18/ Rates send price signals to utilities, too. When a regulator guarantees recovery of every cost, they tell the utility that cost control doesn’t matter—the opposite of substituting for the forces of competition the utility would otherwise face. That leads to my final point.

19/ Point 4 is that dealing with cost shifts is complicated, a bit subjective, and a matter of policy preferences. Rates and the forecasts they are built on are seldom if ever perfect. A utility rate case can involve hundreds of different and potentially offsetting potential ...