Advanced Energy Perspectives

Coley Girouard

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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.

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Topics: 21st Century Electricity System, Regulation

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.

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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.

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Topics: Advanced Energy Buyers Group

Behavioral Demand Response Gives Baltimore Gas and Electric a Business Reason to Reduce Peak Usage

Posted by Coley Girouard

Feb 6, 2019 12:48:38 PM

Case Studies in Utilitity Business Model - BGE-500

This is the second 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.

At most times of the year, much of the electricity generating capacity in the United States stands idle. 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. In fact, approximately 10% of infrastructure investments in the United States focus on serving demand in just 1% of hours of the year. This leads to the question: are there more efficient ways to manage this demand — and make it in utilities' business interest to implement them?

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Topics: 21st Century Electricity System, Regulation

Top 10 Utility Regulation Trends of 2018

Posted by Coley Girouard

Dec 19, 2018 4:52:37 PM

powerlines-sunset-Tom-Burke-cropped-730

Photo by Tom Burke, used under a Creative Commons license

In July, we published a list of the top 10 utility regulation trends of 2018 – so far. With 2018 winding down, we check in on the top public utility commission (PUC) actions and trends of the year. Ten prominent trends and actions stand out above the rest, from renewables continuing their downward price trajectory, to electric vehicle charging infrastructure build-outs getting approved, to exploration of utility business model reforms and non-wires alternatives to traditional distribution investments. Here is the full round-up of the top 10 matters before PUCs in 2018.

Note: some links in this post reference documents in AEE's software platform, PowerSuite. Click here and sign up for a free trial.

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Topics: PUCs, 21st Century Electricity System

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