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No, it’s not the “Show me the money!” scene that has become a staple of our culture. Instead, it is the quieter but equally powerful scene where Tom Cruise, playing a sports agent, tries to break through the defense mechanisms erected by the high-maintenance football star played by Cuba Gooding Jr. “Help me help you,” implores Cruise of Gooding, who was holding out for a better contract. “I can’t get this done by myself.”
How fitting. In the same way that Cruise and Gooding overcame their differences to become an unbeatable team, Chappelle and some of her peer utility regulators want to team up with utility companies to accelerate the deployment of BPL technology. But this promising and exciting technology will remain in the lab, and never make it to market, unless both utility-company leaders and utility regulators rethink the traditional “don’t ask, don’t tell” approach that has generally characterized relations between regulators and utilities for a century.
Some might say, “don’t ask, don’t tell” is a charitable characterization. A less charitable one might be, “the mushroom treatment,” in which each side keeps the other in the dark and feeds them manure.
One of Chappelle’s colleagues on the task force, New Jersey utility regulator Connie Hughes, aptly summarized a critical take-away from the task force’s work on regulatory issues: “None of this is particularly difficult, but none of it is going to be easy.”
What’s not difficult is that there are existing laws and policies that could be applied to many regulatory issues associated with BPL, such as utility business models, codes of conducts, affiliate transactions, cost allocations, cross-subsidies, and the like. What’s not going to be easy is trying to advance BPL using a fresh approach to utility regulation, one that tries to unwind a century of deeply embedded beliefs and practices that have tended to retard innovation, punish risk-taking, engender finger-pointing, and ultimately waste vast sums of time and money.
One of the NARUC BPL task force’s recommendations is disarmingly simple: More frequent and better-quality communication between regulators and utilities on BPL technology itself and utilities’ still-evolving ideas for deploying it. It sounds like a “Duh!” recommendation, so obvious that it need not be stated.
One might think that a technology that has the potential to generate tens if not hundreds of millions of dollars in new revenue as well as cut wasteful capital, operations, and maintenance spending by utilities by an equivalent amount, would be Topic 1 for discussions between regulators and utilities. These discussions would be followed in short order by joint workshops, conferences, tours, regular reports on the status of pilot programs, and a shared high level of enthusiasm to redesign regulatory procedures and business processes to remove obstacles to BPL’s deployment.
There are a few utilities—including Cinergy, Duke, and Hawaiian Electric – that have practiced “full disclosure” on BPL with their regulators. However, research conducted by Platts strongly suggests that the practices of these BPL leaders are the exception, not the rule. In fact, to the extent they have thought about BPL and regulators at all, many utilities continue to follow the traditional “don’t ask, don’t tell” approach on the subject of BPL and regulators.
Laura Chappelle confirmed this when she addressed nearly 200 utility officials, vendors, and BPL service providers at the recent winter meeting of the United Power Line Council, a trade group dedicated to advancing BPL. She has seen widely circulated maps showing that nearly 50 utility companies have launched BPL pilot programs. But when she called some of her peer regulators in those states, they were surprised to learn that utilities in their jurisdiction had launched a BPL pilot. The regulators, in too many cases, were the last to know of a jurisdictional utility’s interest in BPL.
The best way to accelerate the deployment of this advanced technology and begin to capture its potentially enormous benefits is to engage in that quaint, quintessentially Old Economy practice of regular, direct, honest, face-to-face communication between regulators and utilities. Utility executives unable or unwilling to stop playing “don’t ask, don’t tell” with their regulators should instead begin preparing explanations for their Boards of Directors about the huge potential revenue gains and efficiency improvements that they let get away.