Utilities Are Spending a Lot for Power Lines We May Not Need, and Spending Less on Ones We Do Need

Kent Chandler, a former chairman for the Kentucky Public Service Commission, told me he agrees that there is a regulatory gap. He is a senior resident fellow at R Street Institute, a think tank that promotes open markets, and will be part of a panel discussing the RMI report next month. 

“We’ve just got really perverse incentives,” he said.

By that, he means that current rules encourage utilities to make investments that may not be in the public interest because they can do it without having to endure a time-consuming review process.

“I don’t blame the utilities for doing it,” he said. “I blame legislators and regulators for letting them do it to the detriment of consumers.”

He specified that many local transmission projects would probably be deemed prudent if they went through a robust review process. The problem, he said, is that there’s no way to know in the absence of such a process.

Asked if he disagrees with any part of the report, he pointed to a recommendation that FERC establish an “independent transmission monitor,” which would be an office that provides information to state and regional regulators to help them review spending requests from utilities. He doesn’t think there’s enough of a consensus on how this should function, which would limit its workability.

But he said any quibbles he has are minor, and he agrees with the report’s assessment of the underlying problem, which he views as serious and underappreciated.