The knottiest issue is how to balance risk between ratepayers and shareholders when you look at smart grid investments. […] We’re not going to let ratepayers bear this risk.

It’s a conundrum for the industry as a whole. Traditional rate-making methodology is a cost-plus exercise in which the utility gets its investment back plus a rate of return set by regulators. It was established many decades ago and premised on investment in largely stable, known commodities (poles & wires as compared to digital switches and advanced IT).[…]

IU: Which stakeholders could or should drive these sorts of changes?

O’Brien: That is the question, the heart of the matter. […] I’ve given this some thought and the best I can come up is that industry—the smart grid industry—could probably do more, along with the investor-owned utilities, to find some way to be more constructively engaged with the regulatory community.