Cyber Security and Cost Recovery Karl McDermott Ameren Professor of - - PowerPoint PPT Presentation

cyber security and cost recovery
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Cyber Security and Cost Recovery Karl McDermott Ameren Professor of - - PowerPoint PPT Presentation

Cyber Security and Cost Recovery Karl McDermott Ameren Professor of Business and Government University of Illinois Springfield And The Center for Business Regulation 1 Current State Approaches to Cost Recovery The Good, the Bad and the


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SLIDE 1

Cyber Security and Cost Recovery

Karl McDermott Ameren Professor of Business and Government University of Illinois Springfield And The Center for Business Regulation

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SLIDE 2

Current State Approaches to Cost Recovery

  • The Good, the Bad and the Uncertain
  • Two Major Categories

– Restructured States – Traditional States

  • Conclusions

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SLIDE 3

Good, Bad and Uncertain

  • There are a number of approaches that state

commissions can employ in reviewing the costs of “modernizing the grid”

  • Cyber security is just one of these costs
  • You need to keep this in mind when examining

commission policy

  • The costs of upgrading, adding smart grid and

all software starts to added up

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SLIDE 4

Regulatory Perspective

  • Whether in traditional or Restructured states

the issue is cost and the approach is present discounted value.

  • Smart grid and cyber security are front end

loaded programs with “uncertain” benefits

  • Even large long-term benefits get significantly

reduced in the discounting process

  • Regulators are economist not engineers so

they ask how much and why

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Status of Revenue Recovery

  • Good

– California

  • Bad

– Maryland

  • The Uncertain

– New York – Illinois

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Conclusions

  • Expect an uphill struggle
  • Smart grid benefits look like they are oversold

– As market prices slide down harder to show net benefit

  • Prudence reviews

– Any cost overruns will be looked at closely

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