Change is constant for the electric utility industry and government regulators. New York State has been facing this change by “reforming the energy vision” (REV) – a far-reaching statewide energy policy initiative. REV demonstrates successfully managing large-scale change depends upon context, commitment, collaboration, and consultation.
Electricity from competitive wholesale power markets keeps the lights on for two-thirds of all Americans, but things may be about to change – for the better. Four factors will make 2016 a turning point for policymakers, clean energy providers, and wholesale market operators to work together and modernize America’s regulated wholesale power markets.
With the Paris talks just ending and policymakers thinking about how to meet national commitments, it is a useful time to review the current status of U.S. power sector emissions and energy trends shaping the next decade.
Market forces are precipitously changing the role of utilities. Private companies are offering customers more choices and control over their electricity through energy efficient products and services, demand management, self-generation like rooftop solar, smart electric vehicle chargers, and on-site storage. At the same time, the role of utility-scale wind and solar is growing, as costs have plummeted since 2010.
One year ago, the D.C. Circuit Court of Appeals decided to vacate FERC Order 745, holding that demand response could not be traded in wholesale energy markets. Now that the Supreme Court has held oral arguments in the appeal of the case and a final resolution is imminent, we contemplate how DR will fare and how the market might evolve.
If Charles Dickens were an energy analyst, he’d probably say the past ten years have been the best of times and the worst of times for wind power in America. Yet comparing the two regions with similar total installed wind capacity adds another twist to the story: the importance of good transmission planning.
Oftentimes, more can be learned about utilities’ top priorities by listening to shareholder earnings calls than regulatory proceedings. As with any investor-owned company, managers of investor-owned utilities are obligated to maximize shareholder value. So it pays when regulators can find ways to align shareholder value creation with the public interest. Enter performance-based regulation.
Renewable integration in the West has forced reconsideration of system operations, planning, and markets. In order to develop a bulk electric grid that will be resilient in a dynamic future, the manner in which the system is planned and operated and the means by which entities are compensated for the energy, power, ancillary services, and emissions reductions they provide will need to evolve.
Like other distributed energy resources (DERs), customer-owned distributed storage puts competitive pressure on utilities by reducing customers’ reliance on the grid. As costs of DERs come down, customers can afford to rely less and less on the grid for electricity service.
Policymakers used to operating, planning, regulating and legislating in an environment where capital deployment happens over the course of years and assets maintain their value over the course of decades need to adapt their practices to account for accelerating change and disruptive feedback loops.