Advanced Energy Perspectives

The times they are a-changin’. There have been a lot of discussions around the country of late about the regulatory changes needed to create a 21st century electricity system. New business models are needed to integrate higher levels of distributed energy resources, take advantage of new technologies, meet environmental goals, and address changing customer needs and expectations. In an industry that has been slow to change historically, there is a lot at stake for utilities, advanced energy companies, and consumers. In order to understand what transformations are needed, it’s first necessary to understand how electric utilities make money today.

It’s not the way most companies do. Electric utilities are monopolies, so they have to be carefully regulated in order to protect the interests of their captive customers. 

At most times of the year, much of the electricity generating capacity in the United States stands idle. In fact, on average we use less than half of the available capacity.That’s because the electric power system is built to handle demand at its peak - those few sweltering summer days when everyone’s AC is running full blast. What utilities pay for power at those times of peak demand drives up the price we pay for electricity around the clock and all year long. One way to reduce spikes in demand is with rates that vary by time of use. By pricing electricity higher at times when demand typically peaks, consumers large and small have an incentive to reduce their electricity use when it matters most to the power grid - reducing the costs of the system overall.

Does your utility sell you power from its own power plants, or procure power on the open market on your behalf? Do you have the right to shop around for your electric power among competitive providers? Do other states do this the same way? Do you even know?

Now you can know all this - and more.

Note: some links in this post reference documents in DocketDash, BillBoard or PowerPortal, applications in AEE's energy policy software platform, PowerSuite. Click here and sign up for a free 14-day trial of PowerSuite.

In 1932, only three utility holding companies controlled almost half of the investor-owned utilities around the country. In response to the Great Depression and the ensuing antitrust government crackdown, the Public Utility Holding Company Act of 1935 was passed by Congress in order to limit the size of utility holding companies and to keep the regulated entities separate from their unregulated affiliates. That law was repealed with the Energy Policy Act of 2005, which cracked open the door for consolidation of the utility industry. Now, that door has swung wide open.

To kick off 2015, we look at 10 key issues before state public utility commissions this year, from comprehensive grid modernization to rate design and utility mergers. Note: some links in this post reference documents in DocketDash, BillBoard or PowerPortal, applications in AEE's energy policy software platform, PowerSuite. Click here and sign up for a free 14-day trial of PowerSuite.

1. New York PSC to Issue First Major Orders in Trailblazing Reform Effort

The New York Public Service Commission’s multi-stage Reforming the Energy Vision Proceeding continues into 2015, with the Track One order expected early in 2015. That order is expected to address the major system design aspects of REV, including the role of distribution utilities in enabling market-based deployment of distributed energy resources (DER). A straw proposal addressing Track Two of REV, expected in the second quarter, will examine changes in the regulatory structure, tariffs, and incentives needed to better align utility interests with achieving the state’s policy objectives (of more efficient energy use, deeper penetration of renewables and widespread DER adoption). After stakeholder input on the straw proposal, a Track Two order will likely be issued in the second half of 2015. Following the issuance of the Track Two order, REV will move into its next stage, which will include an extensive implementation period of utility-specific filings and additional stakeholder input on a number of issues.