Management Issues: Other Issues
Raj Addepalli
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
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Ratemaking
Service Quality
Integrated Resource Planning
Public Benefit Programs
Mergers/Acquisitions
Introduction of Competition
New Generation/Transmission Facility Approval
Sale of Assets
New Security Issuance
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality
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Service Quality
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Standards in place for reliability
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SAIFI, CAIDI standards in place, measure system average
frequency of interruptions and duration of interruptions
Utilities monitor 10 worst circuits and report to the
Commission periodically
Staff continuously monitors utility performance in
providing reliable service
Staff conducts special investigations re: utility restorations
after storm related outages or other extended outages to
see whether the utility acted prudently
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality
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Other Service Standards measured
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Internal
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Billing Accuracy
Meter Reading on time
Appointments Kept
New Services provided on time
External
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Customer Satisfaction
Customer Complaints to the Commission
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality
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Staff monitors utility service quality
Incentive/Penalty mechanisms used to
induce utilities to provide good service
Staff investigates major service quality
problems: recent examples
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utility’s massive billing errors
utility’s prolonged outages and how it
communicated with public
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality
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Metering
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Requirements on new meters and meter
devices that are installed for billing purpose
Commission approves the meters before
utilities installs meters
Ongoing meter testing requirements on
utilities to ensure continued accuracy of
meters
Staff reviews utility reports and does
periodic audits
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality
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Metering (contd)
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Master metering
Sub-metering
Automated Meter Reading (AMR)
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Telephone (Inbound, Outbound) based meter
readings
Radio frequency drive by
PLC
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality

Billing
 Typically, bills are typically rendered on a monthly
basis based on monthly meter readings
 Some utilities do bimonthly meter reading, but
monthly billing with estimated meter reads in
between
 Commission monitors accuracy of utility billing
 Customers pay by mail, by phone, internet, walk-in
utility office, at grocery stores etc.
 Billing Policies (frequency, payment practices,
interest on over collections, late payments etc) set
by Commission
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality
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Customer Service
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Commission
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monitors utility provided customer service
resolves customer complaints against utilities
sets customer service policies (penalties for poor
service, slamming, cramming, utility collection
practices, utility response to customers concerns)
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Service Quality
Summary of Performance Incentive Plans
CHG&E
Con Ed
NYSEG
NMPC
O&R
RG&E
KeySpan
NFG
Max Penalty - Customer Svc
$875,000
$18,000,000
24 BP
$13,000,000
$360,000
$750,000
$5,000,000
$2,640,000
Max Penalty - Elec Reliability
$875,000
$22,000,000
16 BP
$11,000,000
$360,000
$750,000
n/a
n/a
Max Penalty - Gas Safety
13.5 BP
25 BP
25 BP
12 BP
30 BP
25 BP
12 BP
26 BP
PSC Complaint Rate
6.0 - 8.0
7.0
4.0
5.0 / 7.5
10.6
9.0
8.0
10.0
Customer Sat. Survey
No
80-83% (3 surveys)
Yes
No
1 Res / 1 Comm
Yes
Yes
Yes
Contact Sat. Survey
Yes
No
Yes
No
No
No
No
No
Answer Time (%)
No
94.9%
No
78 / 72
No
73 / 70
No
74%
Bill Accuracy
No
97.2%
No
To be developed
No
97 / 97.3
No
No
Meters Read (%)
No
86.9%
No
89.5 / 88.5
No
No
No
No
Missed Appointment
No
No
No
No
2.73 / 2.65
1%
No
No
Installation-Initial (days)
No
7.5
No
No
No
No
No
92%
Installation-Final (days)
No
10
No
No
No
No
No
No
Investigations Comp.
No
94.9%
No
No
No
No
No
No
Corp Res Trans Index
No
No
No
Yes
No
No
No
No
Low Income Asstance
No
No
No
Yes
No
No
No
No
Customer Service
General Info
Service Measure
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Integrated Resource Planning
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Evaluation of Supply and Demand Side Resources
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Optimal Mix of each to meet the growing energy needs of
customers
Utilities conduct studies and file plans with Commission
Public Input sought
Commission takes action on utility plans
A major issue is measuring costs and benefits of various
options, particularly those benefits that are difficult to
quantify
Utilities could be provided incentives to achieve public policy
goals
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Public Benefit Programs
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Research and Development
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Independent research by utilities (reliability
improvements, productivity improvements
etc)
Funding contribution to other agencies for
new technologies and common purpose
research (EPRI, NYSERDA etc)
Commission staff reviews utility
expenditures on R&D
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Public Benefit Programs
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Low-Income programs
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Elements:
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Rate Discounts
Percentage of Income plans
Arrears Forgiveness
Energy Efficiency Measures
Budget Counseling
Consumer Education
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Public Benefit Programs
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Low-Income programs (contd)
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Budget
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Some funding from Federal Government
Some funding from State Government
Some funding from other customers; very
minimal
Commission monitors utility activities;
encourages coordination among state
agencies with responsibility for assisting
low-income customers
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Public Benefit Programs
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Demand Side Management Programs
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programs that involve peak shaving, valley filling,
load shifting from peak to off-peak, energy
efficiency etc.
if “market place” cannot provide these services,
perhaps some public funding is needed
who benefits from programs and who pays for
them?
how do we do cost, benefit analysis of the
programs?
who makes judgements on which programs should
or should not be done?
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Public Benefit Programs
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Cost effectiveness
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costs relatively easy to compute
benefits, particularly non quantifiable and
secondary benefits, difficult to compute
leads to controversy over public benefit
programs
Rate Impact Measure Test, Total Resource
Cost Test etc. measures for cost effectiveness
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Mergers and Acquisitions
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Utilities file petitions for Commission
approval
Evaluation by the Commission whether
it is in the public interest?
Who bears the cost of M&A and who
gets the benefit? Over what time period?
Impact on utility employees, customers,
community evaluated
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Competition
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Drivers:
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Advances in power-generating technology
Lower cost and cleaner alternatives to utility capacity
Pressure from customers
 Regional electricity price variations
 In 1995, average sales revenue to all consumers ranged
from 4.0 cents/kWh in western states to 11.9 cents/kWH in
the Northeast
 Industrial customers had significant influence with
legislators and regulators
Trend to competitive markets in other industries
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Competition
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Based on three primary assumptions:
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Efficiency through competitive markets will reduce prices and
improve the quality of service
Inability of regulation to match the performance of markets
where competition is viable
Competition will spur innovation (e.g. communications)
Recognition that regulation still superior to imperfect
competition for many utility functions:
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transmission and distribution rates and service
load pocket problems
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Competition
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Continued reliability of service
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Address concerns about market power in competitive services
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Provide level-playing field for competitors
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Continue regulation of monopoly services (e.g. transmission &
distribution)
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Continue environmental and public policy programs
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Continue customer protections and the obligation to serve
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Competition
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Wholesale Markets:
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Regional entities to manage and operate transmission grids
will provide non-discriminatory access to transmission
Properly designed ISOs can improve grid operations
through uniform market rules and pricing approaches
Reliability and security remain highest priority
The new trend is to forming Regional Transmission
Organizations (RTOs)
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Competition
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Fundamental challenges remain the same. How to deal
with:
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Excessive market power
Attainment of public policy objectives
Promotion of operational efficiencies to correct market
failures
Instant deregulation is not the answer
Implementing competitive markets, while continuing
to regulate those that are not competitive, requires
significant Commission effort and resources
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002
Substantive Issues
Competition
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Retail Competition
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Customers have a choice of purchasing
commodity and other services from
competitors (Energy Service Companies ESCOs)
Utility role ultimately limited to wires and
pipes is the vision of some
Developing the infrastructure and markets
an ongoing exercise
Course 3.6 Regulatory Commissions: Management & Staff Functions, Bangladesh, Mar 31- Apr 4, 2002