Advanced Energy Perspectives

Coley Girouard

Recent Posts

Top 10 Utility Regulation Trends of 2019 – So Far

Posted by Coley Girouard

Jul 18, 2019 4:15:10 PM

Top 10 Utility Regulation Trends of 2019 So Far-500

In January, we published a list of the top 10 utility regulation trends of 2018. With 2019 at around the halfway point, we check in on the top public utility commission (PUC) actions and trends so far this year. Ten prominent trends and actions stand out above the rest, from renewables increasingly dominating utility resource plans, to wildfires sparking utility safety and liability concerns in California, to transportation electrification investments becoming more widespread from coast to coast. Here is the full round-up of the top 10 matters before PUCs so far in 2019.

Read more

Topics: 21st Century Electricity System, Regulation

UK RIIO Sets Out to Demonstrate How a Performance-Based Regulatory Model Can Deliver Value

Posted by Coley Girouard

Jun 6, 2019 11:00:00 AM

RIIO case study-500

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

In the United States, the traditional utility business model has served us well for many years, but it is increasingly out of step with a new set of market conditions — aging infrastructure, advances in technology and flat-to-declining load growth driven by rising deployment of energy efficiency, demand response and other distributed energy resources. Traditional cost-of-service regulation favors utility capital investment in long-lived assets rather than rewarding utilities for their performance against desired policy objectives and it discourages utilities from taking advantage of the general shift in the economy to service-based solutions provided by third parties. A decade ago, the United Kingdom's Office of Gas and Electricity Markets, known as Ofgem, set out on a mission to develop a new regulatory framework that would reward utilities for innovation and for meeting the changing expectations of consumers and society. The culmination of that process was the development of a framework referred to as RIIO.

Read more

Topics: 21st Century Electricity System, Regulation, Utility Business Model Reform Case Studies

Making Cloud Computing and Other Services Pay for Utilities and Customers

Posted by Coley Girouard

Apr 17, 2019 12:45:17 PM

CLOUDCOMPUTING IMAGE - 500

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.

Read more

Topics: 21st Century Electricity System, Regulation, Utility Business Model Reform Case Studies

BQDM Program Demonstrates Benefits of Non-Traditional Utility Investments

Posted by Coley Girouard

Mar 19, 2019 1:14:24 PM

BQDM Blog Image_3.19.19

This is the fourth 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.

Incentives inherent in the traditional cost-of-service utility revenue model discourage utilities from investing in non-traditional solutions. This is because non-traditional solutions, such as demand management programs and distributed energy resources (DER), are normally treated as operating expenses, which are passed through to customers without earning a return. Instead, if a utility invests in a traditional "poles and wires" solution, it is given the opportunity to earn a rate of return — creating a profit motive. But it doesn't have to be this way.

Read more

Topics: 21st Century Electricity System, Regulation, Utility Business Model Reform Case Studies

Oklahoma's Energy Efficiency Incentives Give Utilities a Business Reason to Save Customers Money

Posted by Coley Girouard

Feb 27, 2019 1:01:52 PM

Copy of Case Studies in Utility Business Model - FINAL (1)

This is the third 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

Incentives under the traditional cost-of-service utility revenue model are fundamentally misaligned with the implementation of energy efficiency programs. This is because, traditionally, utilities collect revenues based on the amount of energy they sell, whereas energy efficiency programs attempt to reduce energy consumption, thereby reducing utility revenues and profits.

Read more

Topics: 21st Century Electricity System, Regulation, Utility Business Model Reform Case Studies

About

Advanced Energy Perspectives is AEE's blog presenting news, analysis, and commentary on creating an advanced energy economy. Join the conversation!

Subscribe to Email Updates

Recent Posts