The Arkansas Public Service Commission Actively Considers Policy Alternatives
Electric energy efficiency, conservation, demand response, innovative ratemaking, and transmission are hot topics throughout the United States, and the Arkansas Public Service Commission is actively addressing these issues.
- ENERGY EFFICIENCY. Beginning in 2006, the Commission led an inquiry into the potential for utility led energy efficiency and conservation programs (06-004-R). The result was the Commission's Rules for Conservation and Energy Efficiency Programs, under which the state's electric utilities implemented Quick Start C&EE programs for 2008 and 2009, and have filed plans for a Comprehensive C&EE Plans for 2010 and beyond.
- TRANSMISSION. The Commission's Electric Transmission Docket, (08-136-U) was initiated in September 2008 to consider the state of the existing transmission network and to gather "information on new technologies related to the efficient transmission of electricity." Not is the Commission examining new technologies that will "lead to greater optimization of the electric transmission grid" but is also considering "the adoption of 'Smart Grid' technologies" to increase energy efficiencies for consumers.
- RATEMAKING. The implementation of Smart Grid and other technologies leading to energy efficiency and conservation pose issues of cost recovery and other revenue issues for utilities. Therefore, the Commission initiated a docket expressly to consider innovative ratemaking rules (08-137-U). In its Order establishing the docket, the Commission noted that while increased energy efficiency and demand response opportunities may decrease usage by consumers of electricity, but acknowledged "that revenue recovery by the utilities could be compromised absent possible implementation of decoupling mechanisms."
- SUSTAINABLE ENERGY. Finally, the Commission is also considering the "expanded development of Sustainable Energy Resources ("SER")" (08-144-U). The Commission defined SER to include energy efficiency, demand response, automatic metering (including the "Smart Grid"), and renewable resources. Moreover, the Commission pointed to a number of regulatory models implemented across the country that include cost recovery for utilities implementing SER programs and lost revenue allowances (decoupling of utility profits from sales volume) to remove disincentives fro utilities to help customers save energy.
In light of the overlap between these four dockets, the Commission might consider consolidating them into a single docket for developing a regulatory framework that addresses:
- Current and future generating capacity requirements;
- Rules for siting and transmission for utilities and Independent Power Producers;
- Integration of electricity produced by renewable resources;
- Standards for the implementation of demand response, including automatic metering and "Smart Grid" technologies for consumers; and
- Rules for cost recovery and decoupling.
