Having dedicated nine issues of VMI focused on the regulatory side of the equation it’s time to turn to the other, the utility, side. It would be all too easy to conclude from the aforementioned articles that unacceptable levels of tree-caused outages are due to a lack of VM expertise on the part of the regulators. That is not my position.
Over the years, I’ve read a considerable number regulatory cases both the utility submissions and the ultimate decision by regulators. Obviously, given my focus, these cases involved VM. Generally, they have had to do with the funding provided for VM and how VM affects reliability, or if the extent storm damage could have been less if more VM had been performed, which ultimately returns us to the funding provided.
If you are an electric utility employee, particularly a senior manager, how often have these cases turned out satisfactorily – that is, you got what you requested?
From my perspective, in the cases I’ve read or in which I’ve been involved, the regulators got it right 98% of the time. In their shoes, I would have arrived at the same decision. The only cases where I have would have decided differently were ones where maintenance cycles were imposed, not because the regulator had definitive proof that service would be improved, justifying the additional expense, but because they felt they needed to do something. I might not have agreed but I can certainly appreciate the necessity for change.
So if the VM program is not delivering satisfactory reliability of service where does the problem lie? I’m going to state my position using some 90s' terminology. I believe it is due to an abject failure of utilities to recognize and “get into the game.” I don’t think it is for the utilities to make cost containment the primary objective. I don’t think it is for the utilities to decide what an acceptable level of reliability is. These are decisions that belong in the regulatory realm.
The regulatory process is an adverbial system. There are some inherent issues with this but I don’t know of a better system. It is intended to bring out the best possible information on which the regulator will base his decision. That makes it incumbent upon the utility to provide not only the facts that will facilitate the regulator to arrive at the right decision, but also the facts that will deflate intervener arguments. All decisions have consequences. Can you arrive at the best decision if the consequences have not been quantified and detailed? What are the risks? What is the change in risk as a consequence of maintaining the status quo; of undertaking the proposed action(s)?
When I say the right decision, it is based on the recognition that both the utility and the regulator would like to achieve a publicly acceptable level of service reliability. It is for the utility to demonstrate how, at what cost and the consequences of each course of action. It is for the regulator to decide.
It is the regulator’s duty to ensure the public receives a reasonable service for a reasonable price. That does not mean the regulator is opposed to any increase in expenditures. A comment I received form a regulator illustrates this point perfectly. As I have heard similar expressions in the past, I believe this reflects the views of most regulators:
“I believe that most electric utility regulators are on the side of professional vegetation managers. We would like nothing better than for each utility to fully fund its vegetation management function and to maintain an adequate staff of trained vegetation management professionals that know their jobs and have the necessary resources to get their jobs done right every year without fear of budget reductions. We regulators would prefer to have no cause or justification to impinge on your area of expertise by making demands that your utilities perform vegetation management to our standards. However, we have no alternative; we must get involved when vegetation management is inadequate to preserve delivery reliability and public safety. I believe the fault lies not with us or with you, but with your senior utility managers.”
If your utility management has taken a public caning over outages, then the political climate for substantially reducing tree-related outages also exists. As indicated by the above comment, the door is open. It’s up to you to decide whether you will get in the game. How you get in the game is not simply by proposing increased funding but by quantifying the risks associated with maintaining the status quo and the change in that risk for every proposed course of action.