Kevin Stark reports: The Illinois Attorney General’s Office doesn’t like a proposal by state regulators to let utilities recover the cost of cloud computing services.

The proposed rule change at the Illinois Commerce Commission would create financial incentives for utilities to invest in software services that could help unlock the energy savings potential of smart meters and other new technology.

In a series of briefs recently filed with the Commission, Senior Assistant Attorney General Susan Satter argued that a rule change is not necessary.

“There are many, many reasons other than the utility earning a profit on its expenditure that would lead a utility to move to cloud computing,” Satter said. “All businesses are moving in that direction because it’s cheaper, because it’s more secure, because it’s more efficient, and because it simply makes sense.”

The ICC docket follows a recent report by the Advanced Energy Economy Institute (AEE Institute), which has been pressing state regulators to consider cloud computing software as a capital investment and allow utilities to make money off of these investments.

A problem is that heavily regulated utilities make money through capital investments in stuff like power plants, transformers, or even computer hardware. But utilities don’t make money on investments in cloud software, which is considered an operational cost.

“The best way to do it is to make sure the regulatory framework is pushing them in that direction,” Danny Waggoner, a manager of regulatory transformation with AEE Institute, said. “In terms of being a profitable business, they do that by investing capital in assets. If it remains a service expense, utilities will be taking a hit...”

See the entire Midwest Energy News story here.