As a utility executive, it is the best of times, it is the worst of times. It is the age of innovation, it is the age of stagnant tradition. With a nod to Charles Dickens, it is the epoch of environmental improvement, it is the epoch of continued pollution.
Perhaps no state better represents those extremes than Illinois, where Commonwealth Edison (ComEd) in the north is considering new business models and embracing greenhouse-gas reductions, while Ameren in the south is rejecting change and virtually anything related to clean energy.
We all know exercise is good for our hearts and bodies, and who doesn’t enjoy stepping on the scale after weeks of good workouts to confirm progress was made?
In a way, power companies are just like people.
As they begin to invest in smart meters and other grid modernization efforts, utilities want to know how well they do. Can they measure success and prove to investors and regulators they’re making smart decisions?
To that effect, Illinois’ largest electricity provider, Commonwealth Edison, is the first in the country to adopt a new tool that calculates clean air benefits from investments such as advanced meters.
Beyond bringing tangible rewards to ComEd, this little-noticed milestone can have major implications for the entire power industry.
UPDATE: Since the March 2016 publication of this original blog post, the Indiana Utility Regulatory Commission (IURC) last week issued an order officially approving a settlement agreement Environmental Defense Fund, along with several other stakeholders, helped negotiate for Duke Energy’s grid modernization plan. The IURC’s order approved the settlement (details of which are outlined in the post below) without change. Now Duke Energy can proceed with the $1.4 billion plan, which will bring many clean energy benefits to Duke’s 800,000 customers.
Help is on the way to reduce harmful pollution in Indiana, which has the seventh highest level of greenhouse gas emissions in the country.
Environmental Defense Fund (EDF) joined a settlement filed this week for Duke Energy’s grid modernization plan. The settlement calls for Duke – the largest utility in the country, which serves over 800,000 Indiana households – to invest $1.4 billion over the next seven years to improve its electric grid. Doing so will deliver major benefits for Duke’s customers. Read More
As a former state utility regulator, I know the difficulty of balancing competing interests in making decisions and communicating those decisions to constituents. Solutions deemed “fair” by some parties may have harsh or unintended consequences for others.
This challenge of balancing competing interests is playing out with the current debate on electricity rate design as the system struggles to deal with the impact of new, distributed forms of energy like rooftop solar. From Nevada and Arizona, to Kansas and New Hampshire, we’ve seen these debates leave the hearing rooms of public service commissions and enter the public arena. Increases to fixed charges, changes to net metering, demand charges, time-of-use rates, minimum bills, or a combination of these options, are just some of the policies that states have either implemented in response to this debate, or are currently considering.
But many questions remain about the best path forward: What design will adequately compensate utilities for their investments, support the need to upgrade the electric grid, and encourage new technologies and innovation, while being perceived and accepted as fair? To answer these and related questions, a “good” rate design process needs to be put in place – one built on transparency, fairness, accessibility, and accountability. Read More
Late last month, New York took a major step toward rethinking utility economics when it issued the “Order Adopting a Ratemaking and Utility Revenue Model Policy Framework” (also known as Track 2 Order). This action aims to better align New York’s electricity system with Reforming the Energy Vision (REV), the state’s initiative to transform the electric grid into a cleaner, more efficient, and affordable system.
But buried in this 180-plus page document is another important development for New York’s clean energy future: Nearly 10 pages are dedicated to re-examining the state’s controversial standby tariff.
Frequently cited as a major obstacle to distributed power generation (e.g. combined heat and power (CHP) systems, rooftop solar panels, energy efficiency, and storage), the standby tariff is a special electricity rate charged to large commercial and industrial customers who produce some of their own electricity but remain connected to the grid. While utilities say they need standby tariffs to recover the costs of maintaining a reliable electric grid, many potential and existing large electricity customers producing their own power see standby tariffs as perversely designed to undermine the business case for distributed generation.
Unless the standby tariff is fixed in a manner that clears the way for investment in customer-owned and sited distributed generation, it will be hard to make REV’s revolutionary vision for a decentralized, competitive electricity market a reality. Read More
Throughout the United States, utilities earn a profit through a tried and true regulatory model that has worked well for over 100 years. This model was built on the assumption that customers would use ever increasing amounts of electricity, and it worked for some time. But, as the need to save power and make electric systems more efficient becomes essential to adapt to climate change, this and other assumptions no longer hold true. Without changing how utilities are compensated, we run the risk of experiencing a true irony: utilities, the cradles from which our modern civilization rose, may become the chains preventing us from advancing toward a clean energy future.
Last week, the New York State Public Service Commission (PSC) – which regulates the state’s utilities – took action to transition to a new model aligned with Reforming the Energy Vision (REV), the state’s initiative to transform the electric grid into a cleaner, more efficient and affordable system. By issuing the “Order Adopting a Ratemaking and Utility Revenue Model Policy Framework,” the PSC is changing how New York’s utilities will be compensated, taking a major step to break the chains holding utilities back, and moving from a system where utilities get paid according to how much electricity they sell to one where utilities are compensated for producing environmental benefits aligned with the public good. Read More