1

Extracted from text:

Another new potential role for distribution companies is in the deployment of innovative technologies such as distributed storage, EV recharging infrastructure, and advanced metering infrastructure. In this case, the main question to be addressed by policy makers and regulators is whether these technologies should be considered as the distribution operator’s assets (and thus regulated as part of the system operator’s natural monopoly) or treated as assets to be delivered in a competitive fashion. The selection of one of these alternatives will be influenced by considerations of efficiency and economies of scope, market dominance, conflicts of interest, and existing unbundling rules.

What does it mean to be 'treated as assets to be delivered in a competitive fashion'? Like prone to be sold?

Thanks.

  • It's not really a personal finance question as stated. If you asked something like, 'how does this crap affect me as a consumer', that's less likely to be closed as off-topic. – richardb Jul 6 '18 at 7:14
  • @richardb if I were going to buy shares in this company I'd want to know what that meant too. are these assets subject to local monopoly laws (which could involve seizure) or not? – MD-Tech Jul 6 '18 at 13:16
2

Assuming this is regarding the United States electricity market, the choice here is a political one for the regulators of the electrical market. Not every state is the same but there is a trend to partitioning what used to be generally geographically single vertically integrated utility monopolies into multiple entities: a single, regulated, noncompetitive infrastructure operator (that sets it's rates charged to consumers via an opaque and political process that includes a number of factors and stakeholders) and multiple competitive distribution companies that can charge almost any rate they want. Since this is a transformative and major change, many legacy utility companies are still in both categories as they reorganize or spin off generating stations.

The question is, are "the listed new technologies" to be treated like part of "the grid" of transmission lines and transformers (that is, distribution operators' assets) or generating stations and solar fields, fuel stockpiles, hydro reservoirs, etc (that is, assets to be delivered in competitive fashion). The "to be delivered" phrasing is a little awkward - a piece of the generating company's assets (an owned quantity of potential energy) is being delivered but not the title to the entire asset. This determination affects which group has an interest in building these out, and how to evaluate and finance them.

To the extent that both kinds of electricity company are available in the public stock market and this understanding would impact an investor's assessment of the potential future of an Exelon or PGE this is a fair enough question here.

Not the answer you're looking for? Browse other questions tagged or ask your own question.