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Clearview Energy Partners Managing Director Christine Tezak shares her thoughts on whether upfront charges for infrastructure updates is good policy.
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Will these be able to -- customers upfront for costly upgrades to aging infrastructure like pipelines and power grids and that's what a handful of states are considering.
My next guest says that's good policy joining us now Christine -- -- managing director of save you energy populism Christine thank you for being here.
-- -- it normally works utility gets the authorization goes out makes all the upgrades and then collects from the customers.
You'll saying that maybe that's not the best idea maybe the customer should give a little now.
So that the shop down the road isn't as big as that the theory.
Well certainly that's one of the things under consideration -- one of the things to keep in mind is if you wait to allow -- utility to recover their costs until the infrastructure goes -- service -- certainly you've created a sense.
It an incentive for them not to dally around -- but if you're gonna ask a relatively small utilities undertake something very big let's say.
A city or state has decided that they really want to replace all of the hundred year old cast iron infrastructure.
-- Kerry's natural gas to consumers.
Then that might be something a lot bigger than that utility is actually built for.
And by allowing the utility to collect some not by no means all.
But some of those costs will help bring down the cost to capital.
For a project that probably far exceeds the balance sheet -- that utility so there could be a tradeoff that might be a win win for consumers.
This is already being done in some places is -- it and has -- been successful.
Why -- certainly thinks so I mean one of the first areas you -- happened was in 1996.
Pennsylvania started doing its distribution.
System and investment charge and what that did was allow the local utilities to.
Increase rates a little bit and it allowed them to bring to -- Quickly execute an upgrade of the water delivery system and that has actually worked very well eleven states have those programs now and it got picked up very quickly on the natural gas delivery side.
So one of the things to keep in mind is that you know some not all but some smaller utilities in particular.
Can really help meet the needs of their customers.
By eight having the opportunity to recover at least enough to manage the financing.
Sooner.
Right consumer advocates -- say like okay we understand it down the road we can actually save money that we don't have to pay as much because of the bad interest rates on loans.
And so on but they're also worried that this could lead to being nickel -- -- to death.
Well certainly anything that's not manage properly can go out of control and and the truth is is is the utility commission doing its job.
In working with the utility to manage this week you look at what these things are -- called trackers.
The idea is that -- go backing it true -- you see whether or not the costs are where they're supposed to be.
Whether or not the agreements struck between the regulator in the utility are being adhered to so it's not like this is some Willy -- you're allowed to go shop and at the -- to your heart's content what it is is it's a different type of cooperation between -- utility and its regulator.
In order to facilitate cash flows that benefit all consumers.
And -- they still have to get permission from the the commission -- -- out of the getting my silently and for the -- absolutely.
The interest thing Christine -- act quickly.
