US utility regulators prefer nuclear

04 December 2009

Nuclear power is preferred by twice as many US state utility regulators as its nearest rival, the latest survey by RKS Research and Consulting shows.


Public service commissioners regulate essential utility services, such as electricity, gas, telecommunications, water, and transportation, in many US states. They are charged with protecting the public and ensuring that rates charged by regulated utilities are fair, just, and reasonable.


Between August and October, RKS conducted 107 telephone interviews with 97 state utility commissioners and ten regulatory commission professional staffers representing a total of 52 separate jurisdictions. The survey covered both electric and natural gas utility issues.


Some 35% of regulators picked nuclear power as a power source that 'effectively balances consumer's need for low-cost energy with having a minimal environmental impact.' Other sources were far behind: natural gas with 18%, wind with 16%, and coal with 8%. One in ten of those polled said they are simply not sure.


Other topics covered in the survey include: electric and gas ratemaking methodology; energy supply; electric generation preferences; energy efficiency; risk management; sufficiency of electric and gas supply; electric reliability; renewable energy; and environmental protection.


RKS chairman and CEO David Reichman commented: "One of the notable findings from the 2009 survey is that when state utility regulators consider both the cost to the consumer and the environmental impact of future electric generation, a clear preference emerges." He added, "Nuclear plants receive twice the number of mentions as natural gas and wind, their second and third place choices."


"The 2009 Survey of State Utility Regulators study finds a willingness to explore creative solutions to meet US energy and environmental needs," Reichman said. He added, "Holistic, creative thinking like this is necessary to optimally balance energy needs, environmental protection, and economic growth."


The survey also found an increase in regulatory willingness to permit utilities to contract directly with natural gas providers for their fuel. It also found that 62% of regulators continue to strongly support the need for new ratemaking methodologies to better respond to current regulatory realities.


RKS said that regulatory decoupling continues to gain acceptance by state utility regulators, although survey results suggest that this tool is not yet regarded as an unqualified success. Decoupling, which separates a utility's profit from its commodity energy throughput, is more common for gas utilities than electrics, and regulators view gas decoupling as more successful than electric decoupling, according to the RKS survey. 58% of regulators say their jurisdiction presently permits decoupling for natural gas utilities, while only 39% said their jurisdiction allows decoupling for electric utilities.


Reichman noted, "Regulators are keenly aware that the costs of battling climate change, providing incentives for energy efficiency, and making utility assets more secure will have to be shouldered by customers." He added, "However, regulators also are concerned with the low levels of customer awareness about the costs of these initiatives. Regulators are worried about 'sticker shock' setting in and fear that they will be blamed when energy prices and consumer bills increase."


The results of the survey show that regulators strongly believe that "utilities, among others, must take a leadership role in educating the public about what is coming."