Rate Making Formula vs. Bonds Research Paper Example | Topics and Well Written Essays - 8000 words

Rate Making dominion vs. Bonds - Research Paper ExampleThe rules bequeath cost $800 million annually until 2014 in addition to $1.6 one million million million already spent annually under its predecessor, CAIR, in capital investments. The industry players say that the rule is the well-nigh costly and burdensome to the business and consumers and analysts say that it is likely to increase consumer bills by an estimated 40 to 60 pct by 2014 . Consumer advocacy groups have also come out to fight the gain rate hikes as well as the CSAPR that atomic number 18 adding the cost burden to their bills. This explains why three dozen lawsuits had already been filed by November 2011 and their adversarial nature . This is just one example of compliance costs struggle that environmental regulations bring . As energy utilities examine to reach the set compliance standards, whether by capital investment, or adopting different functional strategies, or adopting sweet and cleaner technologies costs will be incured. Since these costs are associated with environmental compliance, utilities will argue that they should be implyd into rates, and ratepayers will be disinclined to strike costs . Municipal tie downs are better alternatives to recoup environmental compliance costs while eliminating cost shifting to consumers and ensuring implementation of environmental regulations in a slight adversarial atmosphere. This will eliminate much creditworthiness and the revenue deficiency risk utilities bear from environmental compliance, allowing utilities to operate more efficiently and thus keeping energy prices low.... As energy utilities attempt to reach the set compliance standards, whether by capital investment, or adopting different operational strategies, or adopting new and cleaner technologies costs will be incured. Since these costs are associated with environmental compliance, utilities will argue that they should be included into rates, and ratepayers will be disincl ined to bear the costs5. Municipal bonds are better alternatives to recoup environmental compliance costs while eliminating cost shifting to consumers and ensuring implementation of environmental regulations in a less adversarial atmosphere. Currently as a general rule, environmental compliance costs are recoverable in rates because these costs are not costs that an energy utility can chose to incur they must incur them6. In ratemaking, a PUC may deem that a measure taken by a utility was not the most economical or efficient way to reach compliance, therefore, reject to include the cost into the rate. Using municipal bonds to recoup environmental compliance costs eliminates this cost shifting struggle7. The proposed bond will be a private activity bond which will be thin outd to recoup niggling term loans that the county will take from Qualified Energy Conservation Bond (QECB) on behalf of the electric utility company. This is because counties within a state are allocated their a mount according to population as stipulated in the QECB ordinance Allocations. This will be given in a lump sum upon approval by the subdivision of the Treasury at low interest rate and which 10% of it will have to be apply in the first six months and the rest in two years time8. The county will then issue general obligation municipal bonds to repay for the QECB loan plus interest. This will eliminate much