Holding an informal dialogue among its members at its 2003 Summer Committee Meetings in Denver, CO, the National Association of Regulatory Utility Commissioners (NARUC) explored how regulated cost recovery can be used to encourage adequate investment in critical infrastructure.

At the first-ever NARUC Critical Infrastructure Cost Recovery Workshop, speakers addressed categories of security costs, how to assess the needed investment at the state, regional and national level, current cost recovery models, and what security investments could be prudent and reasonable.

Stressing the important role that state utility commissioners play in addressing critical infrastructure cost recovery, New Jersey Commissioner Connie O. Hughes, Chair of the NARUC Ad Hoc Committee on Critical Infrastructure, said, “Every utility faces significant costs to protect their properties, systems, and workers from possible future attacks. As regulators, it is our responsibility to ensure that such costs are prudent for the provision of safe, reliable service at reasonable costs to all ratepayers.”

She added that “there are a host of questions that must be addressed before state of federal policy-makers decide if cost recovery should be mandated.”

NARUC said the importance of the state role is highlighted in the National Strategy for Homeland Security, which states that “the federal government must look to state governments to facilitate close coordination and cooperation among all levels of government — federal, state, and local” to advance homeland security concerns.

The group pointed out that state regulatory commissions typically have expertise in the nature of infrastructure in electric, gas, telecommunications and water utility infrastructures located in their regions. In addition, state commissions can be a valuable resource to assist in identifying interdependencies within and across utility sectors.

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