expertise

UTILITY REGULATION

Alternative Regulation

Overview

The term Alternative Regulation ("Altreg") encompasses a wide range of alternatives to the traditional Cost of Service ("COS") approach to utility regulation, where base rates are reset only in occasional rate cases using historical test years. The most important approaches to Altreg today include performance-based ratemaking, revenue decoupling, capital spending (capex) trackers, and forward test years. The growing use of Altreg in North America reflects in part its effectiveness in improving the timeliness of rate adjustments without frequent rate cases. For energy distributors especially, ratebases are growing, and utilities can no longer count on brisk growth in use per customer to offset the chronic gap between inflation and productivity growth. The problem is especially acute for utilities engaged in accelerated programs of system modernization.

Performance-Based Regulation

Performance-based regulation ("PBR") is most commonly defined as an approach to utility regulation designed to strengthen utility performance incentives. Thus defined, the term PBR is synonymous with incentive regulation ("IR"). The two most common forms of PBR are award-penalty mechanisms ("APMs") and multiyear rate plans ("MRPs"). Both involve mathematical formulas that can lower regulatory cost at the same time that they encourage better performance. This constitutes a remarkable potential advance in the "technology" of regulation.

Award/Penalty Mechanisms

An APM is designed to strengthen performance incentives in a targeted area. Basic components of an APM includes a performance metric or indicator (called an "output" in Britain), a performance appraisal that compares the utility's value for the indicator to a benchmark value, and a mechanism for adjusting utility rates to reflect the performance appraisal. Here are some common performance areas targeted by APMs:

  • Reliability (e.g. SAIDI, SAIFI)
  • Other customer service dimensions (e.g. telephone response time)
  • Demand-side management (e.g. estimated net benefits)
  • Cost (e.g. cost/dkth of gas procured).
APMs targeting cost are often used to bolster incentives when a regulatory system features a mechanism, such as a fuel cost adjustment clause, that is believed to weaken cost containment incentives.

Multiyear Rate Plans

MRPs are the most common approach to PBR around the world. An MRP features a moratorium on rate cases that typically lasts three to five years. An attrition relief mechanism ("ARM") adjusts rates automatically to reflect inflation and other changes in business conditions. Some costs may be addressed separately using cost trackers. Some MRPs feature earnings sharing mechanisms that share surplus or deficit earnings between the utility and customers when the return on equity deviates from its target. Plans may also feature an efficiency carryover mechanism that incentivizes long term performance gains and discourages the opportunistic timing of expenses by permitting the utility to keep a share of cost savings (or absorb a share of high costs) when rates are trued up to cost at the end of the plan.

Several approaches to the design of ARMs are well established.

  • An index-based ARM is developed using industry price and productivity research and is calibrated to produce superior returns for superior productivity performance. This approach was developed in the United States but is more popular today in Canada and countries overseas (e.g. New Zealand).
  • A stairstep ARM increases revenue by a certain percentage each year, with the percentages set in advance. Allowed revenue then has a stairstep trajectory. This is currently the most popular approach to ARM design in the United States.
  • Two hybrid approaches to ARM design have been widely used. In North America, revenue for O&M expenses is indexed, while that for capital cost has a stairstep trajectory. This approach to ARM design was developed in California and is currently used in the MRP of Southern California Edison. In Britain, a multiyear cost forecast is approved and a revenue cap index with an RPI - X formula (RPI is the retail price index) is chosen that yields equivalent net present value. A similar approach to ARM design is used in Australia.

Since infrequent rate cases lessen concerns about cost allocations and cross-subsidies, MRPs can permit regulators to sanction greater marketing flexibility. Most MRPs also include APMs to balance incentives for cost containment with incentives to pursue other goals (e.g. reliability or energy conservation) that matter to customers and policymakers.

MRPs have been especially popular in North America where utilities need marketing flexibility. Such plans have helped railroads, oil pipelines, and telecommunications utilities provide complex arrays of services to markets with diverse competitive pressures from common sets of assets. MRPs are also favored for energy distributors in most populous provinces of Canada and are increasingly popular for gas and electric utilities in the United States.

Recent developments have increased the potential usefulness of MRPs in the US.

  • Slower volume growth due to conservation, slow economic growth, and increased distributed generation has reduced the "gravy" many utilities relied on in the past to help finance cost growth.
  • Natural gas-fired technologies have replaced solid-fuel technologies as the low cost choice for incremental generating capacity.
  • Vertically integrated electric utilities need fewer plant additions, and those that they do need are smaller than in the past.
  • Some utilities are engaged in accelerated modernization of distribution systems that involve elevated levels of capital expenditures for several years.
  • Diffusion of "smart grid" technologies creates opportunities for new products and services.
  • Some customers will pay a premium for better quality service.

Under cost of service regulation, utilities will respond to these conditions by filing rate cases more frequently and requesting additional marketing flexibility. Frequent rate cases raise regulatory cost and weaken utility cost containment incentives. The recurrent issues of cost allocation and cross-subsidies will incline regulators to discourage desired marketing flexibility. In a prior period of frequent rate cases, in the 1970s and 80s, the productivity growth of US energy utilities slowed markedly.


Overseas, the privatization of many utilities in the last 20 years has forced governments to choose a regulatory system. The majority have chosen MRPs over cost of service regulation. Regulators in Britain, Australia, Germany, the Netherlands, Norway, and New Zealand are recognized MRP leaders.

The British approach to PBR is one of the best known. The latest version of this approach, called "RIIO" (Revenue = Incentives + Innovation + Outputs), has been implemented for gas and power transmission utilities in Britain and will begin for power distributors in 2015. The heart of the RIIO system is an MRP, which the British call a "price control". A revenue cap ARM has an RPI - X formula. The typical plan term is 8 years. Since the ARM is based on multiyear cost forecasts, the regulator must carefully review utility business plans. Statistical benchmarking and independent engineering studies loom large in cost appraisals. 30 months is typically required to process a RIIO application. There are APMs for a wide range of outputs. Special cost trackers encourage innovative projects.

RIIO has recently been touted as a promising approach to regulating US electric utilities in an era of smart grid innovations and increased distributed generation. However, many components of RIIO (e.g. MRPs and APMs) are already widely used in America and Americans have developed their own approaches to addressing certain regulatory challenges. For example, integrated resource planning has been used for years in some states, and planning in some states can be extended (as in California) to incorporate DG and smart grid innovations. There is a long tradition of "pilot" projects to encourage innovation. Alternative approaches to ARM design are more familiar and can involve lower implementation costs.

Revenue Decoupling

Revenue decoupling is an approach to Altreg that has been used for more than three decades by North American utilities. The two most common approaches are decoupling true up plans and lost revenue adjustment mechanisms ("LRAMs"). An LRAM compensates the utility periodically for the margin that is lost due to its DSM programs. In a decoupling true up plan, rates are reset periodically to ensure that a company's revenue matches its revenue requirement. Both approaches make utility finances less sensitive to the slowdown in use per customer that can accompany aggressive demand side management (DSM) programs. Utilities are therefore more likely to embrace DSM. A well designed decoupling mechanism can help utilities avoid frequent rate cases that might otherwise be triggered by slow volume growth. The need for decoupling is especially acute when volume growth is slow but utilities are compelled to use historical test years in rate cases.

Decoupling true up plans usually involve a revenue adjustment mechanism (RAM) that escalates the revenue requirement in the absence of a rate case. Five approaches to RAM design have been established.

  • Under a revenue per customer (RPC) freeze, revenue per customer is fixed for the term of the plan. The revenue requirement then grows automatically with the number of customers served. The formula may apply to the total revenue per customer or individual rate classes. This is the single most popular approach to decoupling today. Although used primarily by gas distributors (e.g. Baltimore G&E), who experience declines in average use, it is now used as well by electric utilities in Idaho and Maryland. RPC freezes don't compensate utilities for input price inflation, which has accelerated substantially in recent years. As a consequence, many utilities operating under RPC freezes have been compelled to file frequent rate cases. The other four approaches to RAM design that we describe do not have this failing.

  • Under revenue per customer indexing, the allowed revenue per customer is subject to automatic escalation for price inflation. This can in principle be accomplished by having a company's cost per customer rise at the average rate of a suitably chosen peer group. However, most RPC indexes approved to date have relied on the theoretical result that the growth in cost per customer is the difference between input price and productivity growth. These indexes have inflation - X formulas, where X reflects a productivity target and also corrects for any inaccuracy of the chosen inflation index as a measure of energy utility input price inflation. This approach has a solid scientific foundation and is apt to generate considerably more attrition relief than a revenue per customer freeze. Utilities who have operated under this kind of RAM include Enbridge Gas Distribution, Southern California Gas, and Vermont Gas Systems.

  • Under the "inflation-only" approach to RAM design, the revenue requirement is adjusted only for growth in a familiar macroeconomic inflation measure such as the Gross Domestic Product Price Index. This is tantamount to a revenue per customer index in which X is set equal to customer growth. This approach has been approved for use in decoupling plans for Southern California Gas, and the gas and electric services of Pacific G&E and San Diego G&E.

  • Under the "all-forecast" approach, revenue requirement escalation depends on a multi-year forecast of the growth in total cost. This is tantamount to a rate case with multiple forward test years. The revenue requirement in the "out" years is usually scheduled to rise in a "stair-step" pattern. This approach to RAM design has been used extensively in California and is now being used in New York state. It has the disadvantage of being non-responsive to unforeseen hyperinflation.

  • Under the "hybrid" approach to RAM design O&M expenses are typically escalated using an index, whereas capital cost escalation is based on a multi-year forecast. This general approach has been the third most popular overall and has been used chiefly by California utilities. It is currently used by the three Hawaiian Electric companies.
Forward Test Years

Many utilities are still compelled to use historical or hybrid test years in rate cases. These approaches were designed for an earlier era of rapid volume per customer growth and are often uncompensatory under today's business conditions. A forward (aka fully forecasted) test year allows the utility to set its rates using forecasted costs, investment levels, and revenues. Forward test years are now used in more than twenty states and most Canadian provinces.

Capex Trackers

Many energy distributors are engaged today in accelerated programs of system modernization. Vertically integrated electric utilities face an additional challenge when engaged in a multiyear program to install scrubbers on its generating units. Assets with appreciable value become used and useful each year, and timely recovery of the cost of plant additions can require frequent and even annual rate cases. Capex trackers can help utilities achieve timely recovery of new investments without frequent rate cases. The majority of U.S. regulatory jurisdictions have employed a capex tracker.


PEG Research Capabilities

PEG possesses North America's most experienced staff of energy Altreg consultants. We are especially well-known for our pathbreaking work in the PBR field. Our research and testimony has helped establish PBR in numerous jurisdictions. Our staff has over sixty man-years of Altreg experience.  We have advised the Edison Electric Institute on Altreg issues for more than a decade. Work for a mix of utilities and commissions has given us a reputation for objectivity and dedication to good regulation. We routinely extend the frontier of Altreg with cutting edge research. Applications we have worked on include most major energy utility services.

  • ELECTRIC POWER: Transmission, Distribution, Customer Care, Energy Procurement, and Bundled Power Service
  • NATURAL GAS: Transmission, Distribution, and Procurement

Many of the leading PBR jurisdictions in the world are now located outside the US.  PEG is active in many of these venues, including Australia, Canada, and New Zealand.  We also like to share our expertise with less developed countries. 


Plan Design

PEG has helped many energy utilities design Altreg plans.  We have worked on a variety of Altreg mechanisms:

  • Multiyear rate plans
  • Revenue decoupling
  • Cost trackers
  • Award-penalty mechanisms for reliability and other indicators.

Revenue decoupling has been a major focus of our recent work. We have filed relevant testimony in proceedings leading to the approval of numerous decoupling mechanisms. A special strength is the design of broad-based revenue adjustment mechanisms.

We are not wedded to any single approach to Altreg and are committed to helping our clients find the approach that makes sense for them.  Our plan design services include the monitoring of Altreg developments across utility industries and around the world. This includes Altreg for major plant additions.   Clients can quickly access our extensive collection of Altreg documents.

Incentive Power Model

The benefits to utilities from alternative regulatory systems are critical issues in Altreg plan design and advocacy.  Utilities care about earnings levels and risk.  Customers care about price levels and stability.  In research for several clients, PEG has developed a sophisticated model to quantify these impacts of regulation for alternative concrete regulatory systems. For each system considered, the model generates results for:

  • Strength of incentives
  • Earnings
  • Customer benefits

Using a sophisticated optimizing algorithm, we have modeled how rational companies respond to several key features of regulatory systems. These include:

  • Plan Term (e.g. 2 - 10 years)
  • Rate Reset Provisions (e.g. full rate case, efficiency carryover mechanisms)
  • Earnings sharing mechanisms (e.g. symmetric vs. asymmetric, deadbands)

Our results show that if the Altreg plan is not designed appropriately, some initiatives will not be pursued and utilities and their customers will both lose. Results can also help managers plan for success under Altreg. For example, some of the biggest benefits of a PBR plan may not be realized unless there is timely implementation.

Our Incentive Power model can help clients appraise established regulatory options, identify promising new options, and present supportive evidence.

Empirical Research

Altreg plans often require a solid foundation in empirical research.  We have undertaken a wide range of Altreg-related empirical work, including the calculation of industry input price and productivity trends for many utility services.  PEG personnel have provided the research supporting many approved indexing plans for energy utilities.  In work for the Ontario Energy Board ("OEB") and other clients, we have played a leading role in the spread of PBR to the populous provinces of Canada.

Regulatory Support

A sound regulatory strategy is essential to the ultimate success of a Altreg initiative.  PEG provides a full range of regulatory support services, from involvement in technical and settlement conferences to expert witness testimony.  Our experience as expert witnesses in Altreg proceedings has no rival in the consulting industry.  Our record goes beyond appearances on the witness stand to include the achievement of solid results for clients.

Publications and Public Appearances

PEG has organized, chaired, and sponsored a series of highly acclaimed national forums on Altreg. Contact us if you need a speaker on Altreg issues.  PEG personnel have also made a number of contributions to the literature on Altreg, including influential white papers for EEI and the Electric Power Research Institute.  Articles have been published in respected professional journals.

Benchmarking

What is Statistical Benchmarking?

Statistical benchmarking is a scientific approach to performance measurement that makes extensive use of data on utility operations. Indicators are chosen that reflect important dimensions of company performance. Company values are then compared to benchmarks that reflect the performance of other utilities. The change in a company's performance over time can also be measured.

Benchmarking has long been used by utility managers, including Boards of Directors, to appraise operating efficiency. Today, it is also playing a role in regulation. For example, utilities, intervenors, and regulators all use benchmarking to appraise the reasonableness of historical costs and forecasts of future costs. The results can be used to help set rates in rate cases and the out-year provisions of multiyear rate plans. Companies investing in utilities outside the US are especially likely to encounter benchmarking studies in the regulatory arena.

PEG Research Experience

PEG Research is a leading consultant on statistical benchmarking for energy utilities. Our personnel first testified on benchmarking for Southern California Edison in 1994. We pioneered the use of scientific benchmarking methods in North American regulation. Recent benchmarking work for the Australian Energy Regulator and the Ontario Energy Board is helping the regulators use benchmarking in British-style PBR applications. Company President Mark Newton Lowry and Senior Advisor Larry Kaufmann have chaired several benchmarking workshops and conferences. Our methods are also useful in management since they produce the most accurate performance measures available. We can help managers track trends in their company's performance and identify areas of strength and weakness.

Available Methods

PEG Research uses a range of sophisticated benchmarking tools.

Unit Cost Indexes Unit cost metrics are most commonly used in cost benchmarking by North American utilities. A unit cost index is the ratio of cost to a measure of operating scale. It facilitates cost comparisons between companies with different operating scales.
Experienced benchmarkers will have encountered the challenge of deciding which measure of output should be used in unit cost research. A distributor, for instance, may find that it stacks up much better on a cost per customer basis than on a cost per line mile or volume delivered basis. The output quantity indexes we use in our benchmarking work help to finesse this problem. These feature multiple output quantity measures with weights that reflect their relative importance as cost drivers.


Productivity Indexes  A productivity index is the ratio of an output and an input quantity index. Productivity trend indexes capture the change in a company's cost over time that is not due to changes in its input prices or operating scale. Productivity level indexes capture differences in the costs of sampled companies that are not due to differences in their input prices or scale. Since input prices and operating scale are major cost drivers, productivity indexes are useful measures of operating efficiency. They permit the use of data from companies facing different input prices and operating scales in benchmarking a company's efficiency.


Productivity indexes are widely used in government and industry as performance measures. They are most commonly employed to measure performance trends over time. For example, they can measure the annual productivity growth of a company and compare it to that of other companies in a specified region. This is a great way to appraise the ongoing success of efficiency initiatives.

Productivity indexes can be calculated at various levels of detail. Total factor productivity (TFP) indexes summarize the efficiency with which all inputs of a company are utilized to provide a bundle of services. Partial factor productivity indexes can address the productivity of specific input groups (e.g. operation and maintenance inputs).

Econometric Cost Models An econometric cost model explains the relationship between utilities' costs and an array of quantifiable business conditions in their service territories. Model specifications are guided by economic theory. Model parameters are estimated using historical data on the costs and business conditions (cost "drivers")of a sample of utilities. Statistical tests can ensure that the model contains only significant cost drivers. The model can then be used to predict a utility's past, current, or future cost given the exact business conditions that it faces in its service territory. This reduces the need to choose a peer group of companies. Models can also be used to predict the change in a company's cost given expected changes in local business conditions (e.g. input price inflation and customer growth).

    Econometric cost models have important advantages over unit cost and productivity metrics in performance measurement.

  • A model simultaneously can consider the impact on cost of a wider array of business conditions. Examples include the extent of undergrounding of a power delivery system and whether companies distribute both gas and electricity.
  • Statistical tests can be conducted of hypotheses regarding deviations from efficiency norms. Confidence intervals used in these tests reflect, as they should, the size of the sample and the success of the cost model in explaining the variations in cost in the historical sample.

Capital Measurement Capital accounts for the largest share of the cost of most utilities. Capital cost containment is therefore the single most important dimension of long run utility operating efficiency. Many benchmarking consultancies nonetheless focus on O&M expenses due to the difficulty of comparing capital costs across utilities. Moreover, their studies usually take little account of the amount of capital utilized even though it has a major impact on the amounts of O&M inputs used. PEG Research uses rigorous capital measurement methods that can surmount this barrier to comprehensive efficiency measurement. We routinely benchmark capital cost and consider a utility's capital holdings when benchmarking O&M expenses.

Econometric Reliability Models Like cost, the service quality of utilities also depends on local business conditions. These conditions can vary between utilities and account for much of the variations in quality that utilities achieve. PEG Research has developed econometric models that benchmark the reliability of a utility given local business conditions. Models have been developed for SAIDI and SAIFI. Model parameters are estimated using only data in the public domain that conform to IEEE standard 1366. The models are useful in setting reliability targets and in evaluating prudence. The econometric approach to benchmarking is especially advantageous given the paucityof utilities with publicly available, standardized data which are candidates for inclusion in peer groups.

Other Methods Other benchmarking methods, including data envelopment analysis (DEA), are sometimes used in the regulatory arena. PEG Research personnel are familiar with DEA and can advise clients on the comparative advantages of alternative benchmarking methods.

Applications

PEG Research can provide index and econometric cost benchmarking studies for all of the major services of gas and electric utilities and relevant combinations thereof.

    ELECTRIC POWER
  • Generation
  • Transmission
  • Local Delivery
  • Customer Accounts
  • Distribution (Local Delivery and Customer Accounts)
  • T&D (Transmission, Local Delivery, and Customer Accounts)
  • Bundled Power Service
  • Reliability (e.g. SAIDI and SAIFI)
    NATURAL GAS
  • Transmission
  • Storage
  • Local Delivery
  • Customer Accounts
  • Distribution (Local Delivery and Customer Accounts)
  • Integrated Transmission, Storage, and Distribution

For each service, studies are available for detailed cost categories as well as for total cost and we can appraise performance levels and changes in performance.

Benchmarking Workshops

Many clients today want to strengthen their in-house benchmarking capabilities. PEG Research can conduct benchmarking workshops to help staffers new to benchmarking get up to speed and to sharpen the skills of more experienced staffers. Workshops can be held on site, at our Madison office or at an attractive retreat location. PEG Research can also provide real world data for a benchmarking exercise.

Expert Witness Testimony

PEG Research personnel have testified on benchmarking for some of North America's best known utilities. Utilities have also submitted our research to regulators overseas, where formal rate cases are rare. Impressive results have been achieved for clients in several instances.

Other Statistical Cost Research

PEG Research's expertise in statistical cost research has a number of other useful applications in utility regulation.

Cost Forecasts

Indexes and econometric models are both useful in the preparation of cost forecasts for internal budgeting and forward test years. For example, it is well established that

Growth Cost = Growth Input Prices - growth Productivity + growth Output

PEG Research can prepare utility specific input price indexes, output metrics, and tough, but attainable productivity targets that permit custom forecasts of O&M expenses and total cost. Formulas of this kind, developed by our personnel, are currently used by the Essential Services Commission in Melbourne, Australia to establish multiyear O&M budgets for gas and electric power distributors. This research is also useful for quantifying the financial attrition that results from historical test years and delays in making rate case decisions.

Scale Economies Estimates of economies of scale and other aspects of the cost structure of utility services have uses in utility management and regulation. For example, our personnel used a study of scale economies in gas distribution to help the Comision Reguladora de Energia in Mexico decide how many gas distributors to create in Mexico City. Our research was nominated for an award for the best applied economic research in Mexico.

Code of Conduct Issues

PEG personnel have been active in fashioning public policies regarding utility company diversification into competitive markets and codes of competitive conduct. We have authored several Edison Electric Institute white papers on these issues, including The Cost Structure of Power Distribution, Branding Electric Utility Products: Analysis and Experience in Regulated Industries, and Controls for Cross-Subsidization in Electric Utility Regulation. Our brand names paper was filed in a California code of conduct proceeding and has been credited with influencing the CPUC's decision on the brand name issue. We have testified in support of relaxed restrictions on utility diversification in Wisconsin.

Industry Structure

The efficient structure of the energy industries has been a key policy issue for nearly two decades. PEG personnel have performed several pathbreaking studies that shed light on this issue.
  • For Mexico's energy regulatory commission, we prepared a study of future scale economies in gas distribution that supported their decision to establish two franchises in metropolitan Mexico City.
  • For the Edison Electric Institute (EEI) and the National Electricity Distribution Forum of Australia, we have written white papers on the cost structure of power distribution.
  • For a group of Massachusetts power distributors, we prepared a study and filed comments on scale economies in local power delivery, metering and billing.
  • For Hawaiian Electric, we have studied and testified on the natural monopoly characteristics of Hawaiian power markets.
  • For Western Power, we have studied the natural monopoly characteristics of the power industry of western Australia. We have also performed a critical examination of problems with retail competition initiatives around the world.
  • We have written two white papers for the Edison Electric Institute (EEI) on metering and billing competition.
  • We have written white papers on the cost structure of power distribution for the Edison Electric Institute and the Electricity Supply Association of Australia.

INTERSTATE Gas Transmission

PEG personnel are active in gas transmission proceedings before the Federal Energy Regulatory Commission (FERC) and Canada's National Energy Board. We provided econometric models, market power analyses, and expert testimony in the first FERC case where an interstate natural gas pipeline successfully received authority to charge market-based rates. We recently testified in a proceeding on alternative plans to expand gas transmission capacity to Wisconsin.

Mergers and Restructurings

As two major forces, competition and consolidation, alter the landscape of utility operations, PEG has been in the forefront helping companies develop and implement effective business and regulatory strategies. We have specialized software and analytic tools to aid in strategic decisions. These include:

  • Models to estimate cost and revenue synergies related to mergers.
  • Models to prepare pro forma balance sheets, income statements and cash flow statements for merging companies, both with and without projected synergies and merger related costs.
  • Share price and dividend models to track the various merger components and to provide valuable information to boards of directors and senior management as to a potential merger's accretive or dilative effects.

We have developed complex marketing and demand analyses for utilities moving from regulated to competitive markets. In most of these cases, PEG provided expert testimony before either state or federal regulatory commissions, or both.  We have developed presentations for boards of directors and upper management identifying the strategic issues involved in moving from a regulated to a competitive environment, and assisted in developing appropriate strategies for implementing these changes.

For several utility and non-utility clients, we have identified and screened potential merger candidates and acquisition targets in the United States and abroad. We have analyzed the financial aspects of potential mergers and issued fairness opinions. We have analyzed and provided expert testimony regarding vertical and horizontal market power issues related to mergers.

Rate of Return Analysis/WACC

PEG is often asked to determine a just and reasonable Return on Equity (ROE) as well as a Rate of Return (ROR) and Weighted Average Cost of Capital (WACC). In addition to our work in the United States, our experience includes international/country risk adjustments for various nations in Latin America and Asia. PEG uses these analyses for regulatory proceedings, due-diligence, and forming opinions.

Other Utility Services

PEG personnel have addressed a wide variety of additional issues in utility regulation. Here is a partial listing.

  • Gas and power purchase contracts
  • Hydroelectric relicensing
  • Natural gas storage

Civil Litigation

PEG has provided litigation support in several fields, including antitrust, intellectual property, taxation, health, and the environment. The Pasadena office has taken the lead in this field. Our effectiveness in litigation is enhanced by our expertise in such varied industries as agriculture, automobiles, computers, electronics, electric power, food processing, metals, natural gas, oil pipelines, petroleum, petrochemicals, pharmaceuticals, pesticides, postal services, retailing, real estate, cable, and telecommunications.

We strive to ensure that we have no stake in the matters for which we are retained. This enables us to apply objective ideas and analyses to the issue at hand. We have not limited our practice to working for only plaintiffs or defendants. For example, we have worked for defendants against claims brought by the government in tax and other courts, and we have worked for the government in antitrust matters and cases involving a bank's failure to properly escheat unclaimed bond funds to the state government. We have worked for environmental groups and have defended industrial clients against inappropriate environmental damage claims brought by both private and public plaintiffs. We have developed damage analyses for plaintiffs in patent infringement and other intellectual property cases. We have also provided defense testimony in intellectual property cases, exposing flawed damage analyses presented by opposing experts. PEG also has extensive expertise in designing surveys and critiquing surveys used in a wide variety of litigation and management consulting situations.

The use of econometric methods in litigation support is a PEG specialty. Partner Jeff Dubin is an Adjunct Full Professor of Economics at UCLA's Anderson School of Business where he teaches econometrics.

Antitrust and Market Power

PEG has provided expert testimony and analysis in a variety of antitrust and market power cases. We have addressed a wide-ranging set of issues, including but not limited to allegations regarding monopolizing open heart surgery in a Wisconsin hospital, price fixing allegations on a natural gas pipeline, unfair marketing allegations involving an electric utility merger, market power analyses for oil pipelines, natural gas pipelines, and energy marketers, price consequences of mergers (cardio ultrasound equipment and bakeries), and price fixing in the corn-syrup manufacturing industry.

Contract Disputes

PEG personnel have provided expert analysis and testimony in a wide range of contract disputes, providing independent analyses for both plaintiffs and defendants.

Copyright and Patent Infringement

PEG personnel have provided expert analysis in many copyright and patent infringement cases. We have ascertained damages in disputes ranging from the similarity in greeting card design to instant cameras to micro motors used in automobiles and small appliances.

Environment

PEG has extensive experience in natural resource damage assessments. Our personnel have worked in more than a dozen cases critiquing government sponsored contingent valuation models (CVM), hedonic property analyses, and stigma effects, travel cost models, habitat equivalency analyses (HEA), and more. PEG also performs alternative damage assessments, and designs counter surveys. Our work for clients has drawn on the academic research of Drs. Cicchetti and Dubin.

Preservation and Development

PEG personnel have been involved in several high profile disputes over preservation vs. development. These have ranged from issues concerning placement of telephone wires across historical sites to the development of new ski areas to the optimal sitting of the Trans Alaska Pipeline.