Your Utility Bill Is Going Up (and There’s Nothing You Can Do About It)

America’s utilities must be upgraded, and it’s the consumers, not the shareholders, who will get the bill.

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Fawn Johnson
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Fawn Johnson
March 6, 2014, 4 p.m.

After eight days without power, Abbe Mil­stein walked out of her home in Mont­gomery County, Md., itch­ing for a fight. The 2012 derecho had knocked out elec­tri­city to 4.2 mil­lion homes throughout the Ohio Val­ley and Mid-At­lantic re­gions. “I said, ‘Something is wrong.’ “

Mil­stein, a stay-at-home mom who was once a staffer for then-Rep. Mar­jor­ie Mar­gol­ies-Mezv­in­sky, D-Pa., and a cam­paign work­er for then-Rep. Joe Hoef­fel, D-Pa., star­ted call­ing her storm-frazzled, elec­tri­city-starved neigh­bors to or­gan­ize. “I haven’t done this in years, but something has to be done. We can’t live like this,” she told them.

She con­vened a meet­ing with their county coun­cil mem­ber, Ro­ger Ber­liner, who has a back­ground in util­ity law, and asked about the op­pos­i­tion groups keep­ing an eye on Pepco, the loc­al elec­tric com­pany.

His reply: “There is no grass­roots ac­tion on this. There is no in­form­a­tion on the oth­er side.”

Mil­stein had un­know­ingly waded in­to the mind-numb­ingly com­plex and closed world of util­ity reg­u­la­tion, where in­dustry in­siders and their reg­u­lat­ors man­age the dis­tri­bu­tion of gas, elec­tri­city, and wa­ter to homes and busi­nesses; main­tain the pipelines and power lines; and set the prices that con­sumers pay. And they might as well be speak­ing a dif­fer­ent lan­guage while do­ing it. Their stocks in trade are “rate cases” or “al­tern­at­ive rate re­cov­ery mech­an­isms” — pay­ment sys­tems for any­one who uses power, ba­sic­ally every­one in the United States. And even though the lingo af­fects every­one, act­iv­ists like Mil­stein must learn it on their own, if they can.

In­side this black box, the stage is be­ing set for util­ity rates to in­crease. The Na­tion­al As­so­ci­ation of Reg­u­lat­ory Util­ity Com­mis­sion­ers, the nuc­le­us of the coun­try’s util­ity reg­u­lat­ors, last year ad­op­ted a res­ol­u­tion en­cour­aging ex­tra charges on cus­tom­ers’ bills to speed up gas-pipeline re­place­ment, which is needed to im­prove the safety of gas-powered en­ergy. Re­cent re­ports of meth­ane leaks in nat­ur­al-gas lines in Wash­ing­ton, D.C., and Bo­ston have only ad­ded to the stead­ily grow­ing nar­rat­ive that the coun­try’s gas-de­liv­ery net­work is in need of a ser­i­ous makeover.

There is cer­tainly no dis­put­ing that util­it­ies need to up­grade the en­tire power sys­tem — gas and elec­tric. Gas pipelines that are 50 years old are not safe or ef­fi­cient. The elec­tri­city grid is burst­ing at the seams. Severe weath­er is be­com­ing the norm rather than the ex­cep­tion, mean­ing power lines need to be more re­si­li­ent than they were in the 1960s. At the same time, com­puter tech­no­logy has made the coun­try’s eco­nomy and na­tion­al se­cur­ity more de­pend­ent on a con­stant, re­li­able stream of power.

This all adds up to a massive renov­a­tion that will take place in bits and pieces over the next sev­er­al dec­ades. The cost? An es­tim­ated $4 tril­lion and count­ing, ac­cord­ing to NARUC. All of which will be borne by con­sumers as a likely per­man­ent line item on their util­ity bills.

Sur­charges already are a real­ity in many places. Ac­cord­ing to a re­cent com­pil­a­tion from the Edis­on Elec­tric In­sti­tute, util­ity sur­charges have been ap­proved in 37 states to fin­ance “cap­it­al ex­pendit­ures.” These are pro­jects like emis­sions con­trol for elec­tri­city com­pan­ies or pipe re­place­ment for gas com­pan­ies.

But here’s the prob­lem. Most of the people who truly un­der­stand how those costs are be­ing div­vied up are in­side the black box of util­ity reg­u­lat­ors or in­dustry in­siders. The few trans­la­tions that are offered to the pay­ing pub­lic are presen­ted as fait ac­com­pli. Cus­tom­ers huff, but they even­tu­ally ac­cept the high­er charges. They’re led to be­lieve they have no choice.

Last year, for ex­ample, In­di­ana Gov. Mike Pence signed a meas­ure al­low­ing the state’s elec­tri­city com­pan­ies to tack on ex­tra fees to boost power dis­tri­bu­tion, des­pite protests from cit­izens’ groups and en­vir­on­ment­al or­gan­iz­a­tions.

Mary­land Gov. Mar­tin O’Mal­ley signed le­gis­la­tion al­low­ing gas com­pan­ies to use sur­charges to up­grade their aging pipelines. That led the Mary­land Pub­lic Ser­vice Com­mis­sion in Janu­ary to ap­prove the first util­ity sur­charge in the state’s his­tory, for cus­tom­ers in Bal­timore and the sur­round­ing counties.

And while Mis­souri Gov. Jay Nix­on ve­toed a bill that would have ex­pan­ded gas com­pan­ies’ abil­ity to col­lect sur­charges, he did it only be­cause the state already had a law per­mit­ting such sur­charges. It was en­acted in 2003 after the state’s two largest gas com­pan­ies had fallen be­hind on in­fra­struc­ture main­ten­ance.

In most cases, these ex­tra costs are jus­ti­fied. Nor­mal monthly rates charged to cus­tom­ers cov­er the vast ma­jor­ity of a util­ity’s work. But that rev­en­ue stream was nev­er in­ten­ded to sup­port ma­jor in­vest­ments, such as re­pla­cing gas pipes or “un­der­ground­ing” high-voltage power lines. That’s where sur­charges come in.

And yet, be­cause the meth­od of de­term­in­ing fair util­ity rates is al­most in­com­pre­hens­ible to a layper­son, it is hard to know for sure wheth­er the sys­tem is work­ing like it’s sup­posed to.

NAT­UR­AL MONO­POL­IES

Al­most since the in­ven­tion of elec­tri­city, there has been an un­der­stand­ing among poli­cy­makers that es­sen­tial pub­lic goods, such as power, re­quire too much of an up-front in­vest­ment to foster any mean­ing­ful mar­ket com­pet­i­tion. And so it is ac­cep­ted that wa­ter, gas, and elec­tric com­pan­ies have nat­ur­al mono­pol­ies in the re­gions they serve.

The trade-off for these mono­pol­ies is that these com­pan­ies are heav­ily reg­u­lated. In every state, pub­lic util­ity com­mis­sions ap­prove every rate that the util­it­ies charge and any ex­tras ad­ded on in between. It is an ar­du­ous pro­cess. Every column in the util­ity’s in­vest­ment and rev­en­ue spread­sheets is avail­able for the com­mis­sion’s pars­ing.

The cus­tom­er is sup­posed to cov­er the cost of provid­ing a re­li­able, safe, util­ity ser­vice, plus a little ex­tra for the share­hold­ers who keep the util­ity com­pan­ies in busi­ness. Noth­ing more. Noth­ing less.

The reg­u­lat­ors are the judges. “We have the duty of bal­an­cing the in­terests of a num­ber of stake­hold­ers — the util­ity’s in­terests in gain­ing cap­it­al to in­vest in its in­fra­struc­ture and its fa­cil­it­ies, [and] that the util­ity is sound and able to get a good rat­ing from Wall Street to at­tract in­vestors,” said Colette Hon­or­able, pres­id­ent of the reg­u­lat­or’s as­so­ci­ation.

“The util­ity must be able to pass on costs to con­sumers. At the end, the reg­u­lat­or stands in the gap,” ad­ded Hon­or­able, who also heads the Arkan­sas Pub­lic Ser­vice Com­mis­sion. “We also have to make sure that the costs that rate­pay­ers or con­sumers bear is a reas­on­able cost, is a prudent cost.”

The util­it­ies don’t op­pose those rules. This may be be­cause they and the reg­u­lat­ors have a mu­tu­al un­der­stand­ing that cus­tom­er sur­charges make sense for ex­tra in­vest­ments that can’t be covered through the “nor­mal” util­ity rates that pay for the ba­sic dis­tri­bu­tion of power. “When a util­ity has a need to stretch, im­prove re­li­ab­il­ity, im­prove in­fra­struc­ture, it can’t work with­in that nor­mal rate-mak­ing,” said Mark Case, vice pres­id­ent of stra­tegic and reg­u­lat­ory af­fairs for Bal­timore Gas and Elec­tric, which serves cent­ral Mary­land. “It’s really a pay-as-you-go.”

But for con­sumer ad­voc­ates, the setup feels like, well, a setup. “The com­mis­sion does feel sorry for the util­it­ies. They feel like the in­fra­struc­ture is in need of re­pair, and they feel like some­body needs to pay for it,” said Tammy Bres­na­han, ad­vocacy dir­ect­or for Mary­land’s AARP.

Bres­na­han has en­cour­aged Mary­land cus­tom­ers — many of them seni­ors on fixed in­comes — to protest when util­ity com­pan­ies pro­pose sur­charges for gas-pipeline re­place­ment and elec­tric up­grades. But she says their act­iv­ism barely moves the needle away from the reg­u­lat­ors’ fa­vor­it­ism to­ward the util­it­ies.

“I’ve tried to get people to go to the pub­lic hear­ings. We’ve been suc­cess­ful get­ting 20, 30, some­times up to 50 people to testi­fy,” she said. 

Bres­na­han feels like her ef­forts have made only a slight dif­fer­ence with the reg­u­lat­ors. “I think it has kept the sur­charges lower. They don’t give them the full amount. I think at least we’re win­ning a little.”

Yet, on the in­dustry’s cor­por­ate and reg­u­lat­ory in­sider track, they feel like they’re set­ting fair rates. They know that power-grid up­grades are ne­ces­sary and that this means cus­tom­ers’ bills are go­ing to go up.

They would be right if the util­it­ies and the con­sumers were on equal ground. They aren’t.

UN­EQUAL WEIGHT

The util­ity’s in­flu­ence in the rate-mak­ing pro­cess is the equi­val­ent of a high school line­back­er on one end of a teeter-tot­ter with his kid sis­ter dangling her legs on the oth­er end.

Case in point: Every rate-set­ting as­sess­ment is like a tri­al, where dif­fer­ent parties pro­duce evid­ence (much of it deadly dull) about the need, or lack there­of, for an ad­just­ment of rates. The com­mis­sion’s staff weighs in. The state pub­lic coun­cil weighs in. The util­ity makes its case for an in­crease (note that it is nev­er a de­crease). All of these ar­gu­ments are presen­ted in an ob­scure leg­al util­ity code, with case fil­ings and re­but­tals and sur­re­but­tals.

Of course, there’s also a pub­lic hear­ing held for every case, where a con­sumer can air his or her views. The only trouble is, the pub­lic hear­ing isn’t part of this tor­tur­ous evid­en­tiary re­cord. It just hap­pens, and then the reg­u­lat­ors go back to the real busi­ness of pars­ing thou­sands of pages of testi­mony.

“Right from the be­gin­ning, you have an un­bal­anced story,” said Stan Bal­is, a re­tired at­tor­ney who spent his ca­reer hand­ling rate reg­u­la­tion for mu­ni­cip­al util­it­ies. “Con­sumer groups, even if they get in the door, they don’t really have the re­sources to do any of this.”

In truth, con­sumers shouldn’t have to force them­selves in­to the thick maze of util­ity reg­u­la­tion. The reg­u­lat­ors them­selves have no in­terest in rub­ber-stamp­ing a util­ity’s rate re­quests and they genu­inely want to do right by the cus­tom­er. In Geor­gia, for ex­ample, the state Pub­lic Ser­vice Com­mis­sion in 2011 re­fused to al­low Geor­gia Power to in­clude pen­sion con­tri­bu­tions for its em­ploy­ees in the cus­tom­ers’ base rates, stat­ing that any sav­ings to the com­pany would not flow through to cus­tom­ers.

Sim­il­arly, reg­u­lat­ors are per­fectly will­ing to dive in to the nitty-gritty of a util­ity’s in­fra­struc­ture im­prove­ment plans, and they aren’t shy about chan­ging them in drastic ways.

Last year, the Mary­land Pub­lic Ser­vice Com­mis­sion cut by more than two-thirds a re­quest from Pepco, the elec­tri­city pro­vider for Wash­ing­ton and parts of Mary­land, for a $7.13 av­er­age monthly in­crease for its Mary­land cus­tom­ers. They said Pepco could charge ex­tra for up­grad­ing cer­tain pri­or­ity power lines, but the rest of its pro­pos­al did not jus­ti­fy an in­crease in cus­tom­ers’ util­ity bills.

But Pepco wasn’t go­ing to be denied. Com­mis­sion­er Lawrence Bren­ner com­plained in a sep­ar­ate state­ment that Pepco was re­fus­ing to un­der­take any of its pro­posed im­prove­ment pro­jects if it did not get its re­ques­ted sur­charge. He took um­brage at Pepco’s “all-or-noth­ing, take-it-or-leave-it” at­ti­tude.

“My re­ac­tion to that is, who is reg­u­lat­ing whom here?” Bren­ner quer­ied.

Now, it’s all on hold while the com­mis­sion’s de­cision to al­low a par­tial sur­charge is chal­lenged in court.

Ad­voc­ates say the biggest prob­lem with the com­mis­sion’s de­cision was its cir­cu­lar lo­gic: The reg­u­lat­ors based their de­cision on Pepco’s es­tim­ates about what the pro­ject would cost, which were presen­ted as part of a Mary­land task force com­mis­sioned by the gov­ernor. It’s a clas­sic case, they say, of “reg­u­lat­ory cap­ture” — when a reg­u­lat­or be­comes an un­wit­ting re­it­er­at­or of an in­dustry’s view­point.

The lack of in­de­pend­ent veri­fic­a­tion of Pepco’s es­tim­ates also caused an­oth­er Mary­land com­mis­sion­er, Har­old Wil­li­ams, to dis­sent from the com­mis­sion’s de­cision to grant the par­tial sur­charge. “I fear [the com­mis­sion] will con­tin­ue grant­ing the wishes of Mary­land util­it­ies for many years and we may nev­er get it back in the bottle,” he wrote.

UM­PIRE OR AD­VOC­ATE?

The in­dustry’s in­flu­ence on the reg­u­lat­ors weighs heav­ily on Mil­stein, who has spent the last year and a half plow­ing through doc­u­ments that make James Joyce’s Ulysses look like a first-grade read­er. “You’re in this really neb­u­lous world of rate-makers and poli­cy­makers,” Mil­stein says. “Who’s in con­trol?”

It’s def­in­itely not Mil­stein, who is not con­sidered a real play­er in the game. There is no es­tab­lished meth­od for someone like her to par­ti­cip­ate in a rate-set­ting case. She had to write a let­ter to the gov­ernor and the chair­man of the Mary­land Pub­lic Ser­vice Com­mis­sion be­fore they gran­ted her a spe­cial time and place to form­ally of­fer her pe­ti­tion.

She filed it as the head of a small or­gan­iz­a­tion called Powerup­montco. But when the rate case wound up in court, she didn’t seek to join. She simply couldn’t af­ford it. The copy costs alone for her par­ti­cip­a­tion in the rate case were in the hun­dreds of dol­lars. “The com­mis­sion re­quires 17 cop­ies of everything,” she says.

Mil­stein’s group is truly grass­roots. She takes no money. She uses vo­lun­teer help from friends and builds buzz through her small e-mail list of home-based busi­nesses that stake their live­li­hoods on re­li­able power. Her or­gan­iz­a­tion doesn’t have its own web­site.

She doesn’t even know how many people re­ceive her e-mails, be­cause out­side as­so­ci­ations re­dis­trib­ute them once she sends them to her primary list. The only way she can de­scribe her pro­gress is to note that she in­tro­duced her­self at a cam­paign event for a Mary­land Gen­er­al As­sembly can­did­ate, “and every­one ap­plauded.”

Mil­stein is start­ing from scratch. She and Bal­is put to­geth­er a 50-page book­let for state As­sembly mem­bers and can­did­ates. Most of them know little, if any­thing, about the util­ity world. She test­i­fied re­cently against Anne Hoskins, a can­did­ate to sit on the Mary­land Pub­lic Ser­vice Com­mis­sion, be­cause Hoskins is a big fan of sur­charges.

Yet Mil­stein is resigned to los­ing these first fledgling battles. “I’m sure she’ll get con­firmed,” Mil­stein sighs.

Bal­is ad­vises her about the cloistered world on which she is en­croach­ing. She isn’t wel­come there. “Along comes someone like Abbe Mil­stein, and it’s, ‘Oh, my God! Here come the Mo­lotov-cock­tail throw­ers. The bar­bar­i­ans are at the gate,’ ” he says.

In­dustry in­siders see people like Mil­stein as the ex­cep­tion, not the rule. “I would push back that cus­tom­ers are ques­tion­ing it on a broad basis. They want re­li­ab­il­ity. They want a safe sys­tem. They know they don’t get that for free,” said Case of Bal­timore Gas and Elec­tric, which won ap­prov­al in Janu­ary for a 32-cent monthly sur­charge on cus­tom­ers.

At least for now, he’s right. Case’s com­pany found through sur­veys that two-thirds of its cus­tom­ers be­lieve an ex­tra $2 per month for ac­cel­er­ated pipeline up­grades is a good deal. That’s ex­actly what the new Mary­land law al­lows.

PRI­OR­IT­IZ­ING IN­DUSTRY OVER CON­SUMER

Con­sumer ad­voc­ates pose a pro­voc­at­ive ques­tion when it comes to util­it­ies and their fees: Why are the share­hold­ers pro­tec­ted over the monthly rate pay­ers? Pepco Hold­ings re­cently pos­ted a 41 per­cent in­crease in its earn­ings year over year, yet the com­pany has con­sist­ently been in the bot­tom quart­ile of elec­tric com­pan­ies for re­li­ab­il­ity. Why can’t a prof­it­able com­pany pay to up­grade its own sys­tem?

“So now here we are at the bot­tom of the bar­rel,” says Bal­is. “Pay­outs to share­hold­ers are nev­er missed.”

The an­swers are con­vo­luted and un­sat­is­fy­ing. It comes down to this: Up­set­ting the share­hold­ers is more dis­rupt­ive to the fin­an­cial struc­ture of a util­ity than up­set­ting the cus­tom­er. Share­hold­ers’ steady di­vidends are im­port­ant for a util­ity to main­tain a strong front on Wall Street, which then gives it an easi­er path to­ward bor­row­ing any ad­vance money it needs for op­er­a­tions, main­ten­ance, or up­grades. Cheap­er bor­row­ing means lower costs over­all, so the cus­tom­er even­tu­ally be­ne­fits. Or so the reas­on­ing goes.

Massive up­grades don’t fit in­to this equa­tion un­less sur­charges are part of it. Moreover, a util­ity’s cred­it rat­ing can ac­tu­ally go up if a state gov­ern­ment shows will­ing­ness to al­low ex­tra charges for big pro­jects. After Mary­land passed a bill last year per­mit­ting sur­charges to re­place old gas pipes, Stand­ard and Poor’s cred­it agency up­graded Bal­timore Gas and Elec­tric from a BBB to a BBB+.

Util­it­ies also op­er­ate with­in a nar­row band of ac­cept­ab­il­ity in terms of what they spend and how they charge con­sumers. Any de­vi­ation in how they al­loc­ate their re­sources draws ques­tions from reg­u­lat­ors, even if it’s for a le­git­im­ate ad­di­tion to the in­fra­struc­ture. “It gets very com­plex,” said NARUC’s Hon­or­able. “Do they need to build it, or is it just something they want to do?”

A util­ity’s repu­ta­tion is im­port­ant in this give and take. Pepco’s poor per­form­ance has caused reg­u­lat­ors to take a closer look at sur­charge re­quests than per­haps they nor­mally would. The Mary­land Pub­lic Ser­vice Com­mis­sion said in 2010 and 2012 that it can’t al­low the util­ity to con­tin­ue to reap in­creas­ing profits while re­li­ab­il­ity to its cus­tom­ers is so poor.

Pepco has re­spon­ded to the cri­ti­cism with a lar­ger fo­cus on cus­tom­er sat­is­fac­tion. The com­pany has its im­prove­ment fig­ures ready at hand. It met or ex­ceeded Mary­land’s re­li­ab­il­ity stand­ards in 2012 and in 2013. Since 2010, out­ages have de­creased by 38.5 per­cent.

“We are work­ing very hard to meet our cus­tom­ers’ ex­pect­a­tions,” says Pepco spokes­wo­man Myra Op­pel.

Even if what cus­tom­ers gen­er­ally do is com­plain? “We un­der­stand that,” Op­pel says. “We make in­vest­ments on be­half of the cus­tom­ers. We seek re­cov­ery of the in­vest­ments [from cus­tom­ers] on that level.”

In the end, the cus­tom­ers still need their power. Pepco may be hav­ing dif­fi­culty with its sur­charge re­quest in Mary­land, but a sep­ar­ate sur­charge re­quest to “un­der­ground” high-voltage wires in Wash­ing­ton is go­ing for­ward with few bumps. It is the res­ult of a year­long task force in which the city gov­ern­ment and Pepco fash­ioned a “game-changer” way to re­duce elec­tric out­ages dur­ing severe weath­er. Just this week, May­or Vin­cent Gray signed le­gis­la­tion clear­ing the way for a $1.50 monthly sur­charge on the city’s Pepco cus­tom­ers for the pro­ject.

Bal­is agrees that cus­tom­ers should bear some of the costs of in­fra­struc­ture up­grades like these, es­pe­cially if the util­ity has done everything it can to keep its struc­tures in tip-top shape. Even if util­it­ies have done their due di­li­gence to their fa­cil­it­ies (and that’s de­bat­able), he still wants to see the reg­u­lat­ors weight the scale more to­ward the con­sumer.

He of­ten cites a base­ball ana­logy tucked in to a 1965 case where a fed­er­al Ap­peals Court scol­ded the Fed­er­al Power Com­mis­sion for fail­ing to af­firm­at­ively pro­tect the pub­lic’s in­terest. “This role does not per­mit [the com­mis­sion] to act as an um­pire blandly call­ing balls and strikes,” the court said.

That means, Bal­is says, that pub­lic util­ity com­mis­sions should wel­come people like Mil­stein in­to their de­lib­er­a­tions. Right now, they don’t.

To be fair, the reg­u­lat­ors have a Her­culean task. They must in­de­pend­ently de­term­ine how much a bunch of sprawl­ing profit-seek­ing com­pan­ies can charge for bil­lions of dol­lars of es­sen­tial power. They have to deal with more than one util­ity. They have a lot of cases go­ing on at once. It’s not un­com­mon for com­mis­sions to be un­der­staffed, while the util­ity com­pan­ies have a treas­ure trove of law­yers to make their cases.

What’s more, the case work is painstak­ing, te­di­ous, and ex­act­ing. It re­quires ex­pert­ise in en­gin­eer­ing, long-term fin­an­cing, and mar­ket forces. Every evid­en­tiary ques­tion or chal­lenge, no mat­ter how out­land­ish, must be con­sidered. Even without ran­dom quer­ies from an am­a­teur mem­ber of the pub­lic, there is no simple for­mula to as­sess each util­ity’s re­quest.

“There is no easy book­let that I can refer to as a reg­u­lat­or, like a flow chart that says, ‘If this oc­curs, you give them their money. If this oc­curs, you do not give them their money,’ ” said NARUC’s Hon­or­able.

This is why, when push comes to shove, the com­mis­sions fall back on what they know. They know the util­it­ies. They know the oth­er es­tab­lished en­tit­ies in rate cases — state spe­cial-coun­sel of­fices, build­ing as­so­ci­ations, en­vir­on­ment­al groups, and even the big­ger con­sumer groups. They know each oth­er.

The util­ity world is full of cau­tious people. They are en­gin­eers who are un­com­fort­able with draw­ing broad con­clu­sions from dense, com­plex data. They are politi­cians who don’t want to tell their con­stitu­ents that the in­fra­struc­ture sys­tem that was built 50 years ago wasn’t meant to last forever. They are in­vestors who bank on a steady drip of small di­vidends, not a one­time wa­ter­shed. (War­ren Buf­fett says this about the util­ity sec­tor: “You won’t get rich, but you won’t go broke either.”)

This is not a com­munity that re­acts well to dis­rupt­ive changes, like, say, cli­mate shifts that all of a sud­den call for twice the re­li­ab­il­ity of your tired old elec­tric grid. Or new reg­u­la­tions that re­quire power plants to up­grade, and fast, to curb car­bon emis­sions. Or even the col­lect­ive aging of gas pipelines that took dec­ades to build — now they need to be re­placed, and, wow, that snuck up on us!

They know what they’re sup­posed to do — en­sure just and reas­on­able rates. And they are well aware that the defin­i­tion of “just and reas­on­able” is chan­ging.

The pub­lic is only dimly cog­niz­ant of all of this, which can lead to nasty, even ir­ra­tion­al re­ac­tions to high­er util­ity bills. “If we say, ‘Two cents [more] per kilo­watt hour,’ every­body freaks out. ‘We can’t have the big bad util­it­ies rais­ing our rates again,’ ” says Otto Lynch, an en­gin­eer who eval­u­ates the en­ergy grid for the Amer­ic­an So­ci­ety of Civil En­gin­eers.

“Some­times it’s the people who yell the loudest about a rate in­crease who are the first ones to yell when the power goes out,” he adds.

The com­plaints make it tough for over­worked reg­u­lat­ors to wel­come the pub­lic with open arms. But if they want those massive in­fra­struc­ture up­grades to hap­pen, they will even­tu­ally need buy-in from cus­tom­ers. They will need to open their black box. In bright­er light, its con­tents might sur­prise every­one.

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