Study shows investment and reliability are disconnected

Lawrence Berkeley National Laboratory released a study on how utility investment in transmission and distribution compares to changes in reliability. LBNL found that outages are increasing in number and duration nationally, and that levels of investment are not well correlated with improved reliability.

We testified on behalf of the Agricultural Energy Consumers Association in both the SCE and PG&E General Rate Cases about how distribution investment is not justified by the available data. Both utilities asked for $2 billion to meet “growth” yet both have seen falling demand since 2007. PG&E invested $360 million in its Cornerstone Improvement program, but a good question is, what is the cost-effectiveness of that improved reliability? Perhaps the new distribution resource planning exercise will redirect investment in a more rationale way.

3 thoughts on “Study shows investment and reliability are disconnected

  1. Pingback: A misguided perspective on California’s rooftop solar policy | Economics Outside the Cube

  2. Mark

    Thanks for the wonderful links!!

    The “LBNL” study Figure 20: US map of median annual heating degree- days appears to have lumped all of PG&E’s customers into one bin as the map is rather uniform for all the different temperature zones in PG&E’s territory. My fixed income in-laws have been experiencing a bit of rate shock with their average monthly winter bills from PG&E. Their 70’s vintage home doesn’t have natural gas or propane as alternative fuels for heating their home in the foothills. It seems like it might be a good idea to look into changing the 30% tax credit for residential PV systems and switch that to supporting efficiency efforts instead. With the improvements in heat pumps, mini splits as well as central HVAC, I assume the job growth rational used to support the residential PV market would flow to a similar group of installers, but the net effect to reducing carbon emissions is likely improved by changing the tax credit.

    I am sure there is some rational that PG&E and the CPUC used to set the winter Tier 1 and 2 rates higher than the summer ones. I can’t imagine that generation costs is one of the reasons……


    1. mcubedecon Post author

      The only rationale behind having higher residential winter rates is that it’s an easier mechanism to subsidize the majority of residential bills that peak during the summer. We’ve pointed out in testimony at the CPUC the perverse incentive that the CPUC has adopted with its baseline rates. This is contrary to the treatment of rates for every other rate group.



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