Imagine if, in your family budget, you were not allowed to plan ahead. Even if you knew you'd have to replace the roof, government rules prevented you from trying to earn more money to save for the expense.
Instead, you'd have to spend the money to do the repair, then maybe, just maybe, you could pay yourself back through a higher income a year, or two, or three later.
In effect, that's how regulated utilities in West Virginia have been operating under rules of the Public Service Commission. Until recently, there has been little opportunity to save money in advance for a major improvement.
The PSC's process effectively told utilities: "You spend the money on repairs and maintenance of your infrastructure, then come to us and tell us how much it cost you. Then, we'll let you recoup the money you spent ... maybe."
Fortunately, for both utilities and the customers they serve, gas and electric utilities are seeing new regulatory treatments that could allow them to bring in revenue for pipeline replacements and tree-trimming programs, the Gazette-Mail's Andrew Brown reported.
Some are concerned this may mean the costs to customers will rise. But after-the-fact repairs to unreliable utility infrastructure costs the utilities considerable money - which customers ultimately pay for - and causes considerable headaches for all.
The policy changes - the result of recent PSC orders and a bill passed by the West Virginia Legislature - allow gas and electric utility companies to submit forecasts of how much they plan to spend on infrastructure improvements or maintenance and assess a separate surcharge to customers in advance of that work being done.
"Allowing utilities to use an annual surcharge to recover the cost of infrastructure improvements is a valuable tool that can help utilities in planning and updating their infrastructure," Appalachian Power's Jeri Matheney said.
The surcharges promote the upkeep of infrastructure more regularly, unlike base rate cases, where companies have to wait several years to be paid for improvement or maintenance projects.
"The replacement creates a safer, more reliable system," said Joe Gregorini, People's Natural Gas' vice president of rates and regulatory affairs.
The Commission will still conduct the diligence necessary to make sure utilities don't overrecover.
Yet the change offers better benefits for utilities because it will mean more proactive replacements of aging infrastructure, rather than repairing broken lines after the fact. That offers better benefits to consumers, who will less likely have to worry about outages, and perhaps pay less for service in the long run.