{"id":291,"date":"2012-02-28T14:23:23","date_gmt":"2012-02-28T20:23:23","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=291"},"modified":"2012-02-28T18:57:16","modified_gmt":"2012-02-29T00:57:16","slug":"regulation-does-not-equal-zero-risk","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2012\/02\/28\/regulation-does-not-equal-zero-risk\/","title":{"rendered":"Regulation does not equal zero risk"},"content":{"rendered":"

As I pointed out in <\/span>my previous blog<\/span><\/a>, dealing with commissions without the thought of long-term implications can come back to bite you.\u00a0\u00a0 Regulation is not risk free.\u00a0\u00a0 In fact, it could be argued that regulation risk is higher and harder to quantify than market risk.\u00a0\u00a0 In the regulation world, you are making deals which are perceived to be set in stone.\u00a0 Whereas in the free market, no one believes in any deals being set in stone.\u00a0\u00a0 This makes the\u00a0free market\u00a0companies more agile and proactive.\u00a0\u00a0A regulated company\u00a0without foresight will be punished.\u00a0\u00a0 AEP recently saw this as the <\/span>public utility commission reset the rates which was agreed upon<\/span><\/a>.\u00a0\u00a0 I don\u2019t recall an event like this ever occurring.\u00a0 AEP clearly miscalculated the reaction and the potential pull\u00a0of many of the small businesses.\u00a0 In general, the new rates impacted the commercial and residential class the most.\u00a0 The impact was greater than 60% for several customers.\u00a0 The outcry was too much for the commission and they quickly dismissed the rate agreement.<\/span><\/span><\/p>\n

AEP rolled all their concerns into one rate case.\u00a0\u00a0 This works well when the rate shock is not so great.\u00a0 In this case, given the expected rate shock, there was a significant risk of rejection.\u00a0\u00a0 This has left AEP holding the bag on many legitimate rate increases.\u00a0 There were several gray areas of rate increases, which I will not get into.\u00a0 Utilities should learn from Barclays Capital economist Peter Newland and his latest discussion on gasoline prices.\u00a0\u00a0 Peter notes, it is not the price, but the rise of gasoline prices.\u00a0 To an extent I agree with him, but in the gasoline case it is still important to look at the price.\u00a0 I will leave this discussion for another blog.<\/span><\/span><\/p>\n

We positively and evocatively challenge the current thinking involving any aspect of energy use. We look for projects that offer meaningful, transformative, with impactful outcome to the marketplace or society.<\/span><\/p>\n

Independent analysis and opinions without a bias right is what we offer to our clients. Please consider and contact All Energy Consulting for your consulting needs.<\/span><\/p>\n

Your Energy Consultant,<\/span><\/p>\n

\u00a0<\/span><\/p>\n

David K. Bellman<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

As I pointed out in my previous blog, dealing with commissions without the thought of long-term implications can come back to bite you.\u00a0\u00a0 Regulation is not risk free.\u00a0\u00a0 In fact, it could be argued that regulation risk is higher and harder to quantify than market risk.\u00a0\u00a0 In the regulation world, you are making deals which […]<\/p>\n","protected":false},"author":1,"featured_media":267,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6],"tags":[103,24,105,104,7],"class_list":["post-291","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","category-power","tag-rate-increase","tag-regulation","tag-regulatory-risk","tag-risk","tag-utilities"],"_links":{"self":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/291","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/comments?post=291"}],"version-history":[{"count":5,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/291\/revisions"}],"predecessor-version":[{"id":295,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/291\/revisions\/295"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media\/267"}],"wp:attachment":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media?parent=291"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/categories?post=291"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/tags?post=291"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}