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How We Work
Select Areas of Focus
We kicked off our efforts focused on two primary activities: First, education on financial matters that impact policy and investment and second, direct analysis which supports specific actions involving Advocates, policy makers, commissioners, investors, and other stakeholders. Interested parties typically contact us about how PSS Finance Lab can assist them in understanding concepts learned or how to create direct analysis of the economics and financial risks of projects, interventions, and policies.
Reform ROE Targets:
The Return on Equity (ROE) targeting process has been practiced well before any renewable technologies were invented. It's time to update the process. The low inflationary environment, negative real interest rates, shedding of risk with fees/riders/tariffs create an odd risk-reward landscape that does not match the real world.
Securitization:
New financial tools to save everyone money. Old plants cost more to operate and have lower reliability. Securitization allows old plants to shut down now instead of their forecasted useful life often made decades ago. The savings from new and efficient technologies goes to help payoff what's owed on the old plant so everyone can move forward while saving money.
Demand Response:
Instead of building new assets to meet possible peak electricity demand moments, can an improved grid and real-time communications take advantage of curtailing demand to ensure adequate levels of service? We think so.
Fuel Pass-Through Policy:
The cost of fuel to create electricity has been passed through to the customers in its entirety for almost every state in the country since 1973. A lot has changed since then! Let's update this policy so everyone is motivated to make the best choice with all risks and rewards considered by the key decision makers.
Performance Based Rates (PBR):
The traditional way for regulated utilities to determine their rates was based on what they spent to create the power. This incentive structure makes a utility push to always build more and more when the most economic answer may not be to do so. PBR is an effort to align incentives more closely with objectives other than building more generation assets.
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Fees, Riders, and Tariffs:
The trend to add new charges to a user’s electricity bill is creating an environment where costs for electricity rise faster than inflation, creating tremendous stress on businesses as well as residential customers. This practice should be examined with far greater scrutiny as it grows to become a large (or the largest) part of the electricity bill.
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The community influences what we work on, so expect more topics to be added and some existing topics to recede in focus. All the topics we work on have these common attributes:
1- An economic and financial element materially impacting the primary stakeholders involved.
2- A policy element applicable to multiple markets and situations across the country.
3- An area of active focus with cases, interventions, integrated resource plans, technology influence, and advancement of cleaner energy generation and distribution.
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