This is the fifth in a six-part series on utility business model reform provided by Rocky Mountain Institute, America's Power Plan, and Advanced Energy Economy Institute, originally published by Utility Dive.

Technologies are quickly advancing, providing a wide array of industries from transportation to healthcare to financial services with tools to modernize their products and services, while utility regulation has struggled to keep up. A key stumbling block is that many solutions are only offered as services rather than capital investments that a utility owns and operates. Utilities earn a rate of return on capital equipment, such as poles, wires, transformers and on-premise IT systems. By contrast, operating expenses, such as salaries, maintenance and payments for services, come out of a limited budget, so utilities manage these expenses to avoid overspending and eroding their earnings. The net effect is a significant disincentive for utilities to procure service-based solutions provided by private advanced energy companies. This limits utilities from taking advantage of many new technologies that are solely offered through service contracts, such as cloud computing, since these services displace an earnings opportunity.

In order to encourage utilities to make IT investments that are in the best interests of both them and their customers, two states — New York and Illinois — have looked at changes in how cloud services are treated for accounting purposes. These accounting innovations could potentially be applied to other utility needs that could be met more cheaply or flexibly as services than as capital assets.

Media Day at the Washington Auto Show kicked off with remarks by EPA Administrator Andrew Wheeler defending the Trump Administration’s efforts to roll back CAFE emission standards for light-duty vehicles. AEE was also on hand, focusing on something Wheeler never mentioned: Electric vehicles (EVs) have arrived, and are driving toward the future of U.S. mobility.

With the budget sucking up the legislative oxygen in Colorado, AEE hosted an Advanced Energy Lobby Day in Denver, supporting a number of bills that will reshape the state’s energy market, creating significant investment opportunities for a rapidly growing industry here. Like other Western governors, Gov. Jared Polis entered office on the promise of expanding clean energy investments while ensuring a just transition for the communities impacted by the shifting economics of energy. The bills supported by AEE would help him fulfilled that promise. We navigated the Capitol, meeting with legislators between committee hearings and floor votes, communicating the business message on advanced energy. With a little less than a month of session remaining, we push forward on bills that would reduce barriers to EV charging infrastructure, securitization of coal-fired power plants to be retired, and carbon mitigation plans. 

Today, Florida Congressman Matt Gaetz (R-FL-1) released a “Green Real Deal” resolution in response to the Democratic proposal authored by Sen. Ed Markey (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY-14). The introduction of each proposal marks a significant shift in the focus on advanced energy at the federal level. Over the previous 24 months, the advanced energy industry spent much time and energy – often with a coalition of unusual allies – beating back proposals that would have provided out-of-market payments to uneconomic power plants to the tune of $34 billion. Fast forward to today, and both parties are putting forward visions on federal energy policy with advanced energy at the center. Neither is going to become law any time soon. Rather, they represent starting points in a discussion that will take place over the coming years. Here’s what each of these starting points contain for advanced energy. 

The advanced energy industry employed just over 3.5 million U.S. workers in 2018, an increase of 125,000 jobs over 2017. Advanced energy employment grew 4% last year, more than twice as fast as overall U.S. employment growth, at 1.5%. And the growth continues: Employers expect to add 6% more advanced energy jobs in the coming year. These are some of the findings derived from the 2019 U.S. Energy and Employment Report (USEER), produced by the Energy Futures Initiative (EFI) in partnership with the National Association of State Energy Officials (NASEO), using data collected and analyzed by BW Research Partnership. Want more proof that advanced energy is a major source of employment? Comparison to other significant U.S. industries might help.