Financial

Utilities are facing rising operating costs and infrastructure needs that are prompting them to seek more frequent rate increases. The electric industry is embarking on one of the largest infrastructure/construction trends, if not the largest, in the history of American utilities. It is estimated that utilities will need to spend $1.5-2 trillion form 2010-2030 to maintain current reliability standards. (Brattle Group for The Edison Foundation, 2008).

The recent global financial and economic crisis has heightened what had already become a mounting financial challenge for utilities. This challenge appears to be one that will remain with us for an undetermined period into the future. Wall Street demands and expectations have dramatically increased while capital is less plentiful and more costly as we face major build-out needs.

All stakeholders must assess how they can constructively address these challenges. Utilities must move forward, but cannot foot the bill alone. Traditional ratemaking methodologies can accommodate neither the scale nor the speed required for necessary investments, making alternatives ratemaking mandatory. Failure to invest will result in inadequate reliability for consumers. Failure to invest appropriately will result in significantly higher costs for consumers.