Regulators weighing reliability mandates for electric companies

~ A proposed law would credit consumers' utility bills for overlong outages.

JEFFERSON CITY, Mo. -- Every time your lights flicker, every time an electricity blip forces you to reset your alarm clock, some of Missouri's utility regulators want to know.

But gauging the reliability of your electricity service could cost you more money.

Thus the predicament facing the five-member Missouri Public Service Commission, in charge of regulating the four investor-owned companies that provide power to almost two-thirds of Missouri's electric customers.

Following a year of widespread and prolonged power outages due to storms, the PSC is pondering whether to adopt its most extensive rule ever governing the reliability of electricity service.

The highlight, from the consumers' perspective, would be a minimum $25 credit on monthly bills whenever it takes more than five days to restore power after a major storm or more than 16 hours during normal conditions.

But the details about consumer credits account for barely one of 18 pages in a draft rule pending before regulatory commissioners. Much of the proposed rule focuses on the information utilities would have to collect -- and report to the state -- to measure their reliability.

Although some utilities don't like the consumer credits, it's the reliability measurements that have really jolted them.

St. Louis-based Ameren Corp., the state's largest utility with 1.2 million electric customers, estimates it would cost between $213.5 million and $268.5 million to make the improvements it believes are demanded by the proposed rule, plus an additional $203.4 million annually to comply with it. And that doesn't include the $15 million Ameren figures it would have to return annually in consumer credits.

Cost of collecting data

To meet the proposed rule's requirement of tracking the average number of times annually that a customer experiences a momentary electricity outage, Ameren figures it would have to install about 8,000 automated data collection and transmission devices along its power lines and substations. That accounts for around $200 million of its cost estimate.

"Having some kind of reliability reporting and measuring system is fine, but this is really overkill in a lot of the cases," said Ron Zdellar, Ameren's vice president for energy delivery.

The Empire District Electric Co., a Joplin-based utility serving about 137,000 Missouri electric customers, projects it would cost $8.4 million annually to comply with the rule plus between $20 million and $30 million in equipment improvements needed to monitor its service.

That nearly matches the $25 million Empire spends yearly on poles, power lines, transformers and other equipment needed to hook up new customers, said Mike Palmer, the company's vice president of commercial operations.

Not only would Empire have to install automatic data collection devices along its power system, but Palmer said it also would have to replace the manually checked meters at customers' homes with automated ones.

Utilities likely would try to pass the cost for the improvements on to consumers by requesting rate increases from the Public Service Commission.

The potential cost has caught the attention of some utility regulators, who at a meeting last week decided more research and revisions are needed before reconvening July 10 to again consider the proposed reliability rule.

Among other things, PSC chairman Jeff Davis wants to explore whether there is a less intrusive -- and thus less costly -- way of gathering and reporting the reliability statistics.

The reliability rule is largely the brainchild of commissioners Steve Gaw and Robert Clayton, both former Democratic lawmakers. It's one of three parts to their plan. The other two pieces, governing tree trimming and infrastructure, already have been approved by the PSC for publication in the Missouri Register, which would kick off a public comment period before the rules are potentially revised and finalized.

Gaw and Clayton want the PSC to take a similar vote on the reliability requirements. They want the proposed rule to be as broad as possible to generate public comment and a cost-benefit analysis, assuming it's easier to later soften a rule -- if necessary -- than to toughen it.

High estimates

"We want to ensure we have something significant done for the people who are experiencing poor reliability today," said Gaw, who suggested the high cost estimates from utilities were connected to their opposition to the rule.

Clayton notes that Ameren, Empire, Aquila Inc. and Kansas City Power & Light all recently won rate increases from the PSC based on their costs of providing service, without any mandates on the reliability of that service.

"If there is an increased cost for these rules -- and I don't concede that there are increased costs -- it is our hope that those costs would then cause an improvement in reliability and service that customers would receive," Clayton said.

It seems unlikely, however, that consumers would want to collectively pay hundreds of millions of dollars to pinpoint the places where the lights blink most frequently. Resetting an alarm clock is annoying -- but perhaps not that annoying.

Yet, observed Commissioner Lin Appling, "the public expects us to do something on reliability."

The challenge for utility regulators is figuring out how much to do.