New Tech, Aging Regs -- What to Do?

At this week's Energy Bar Association Mid-Year Energy Forum in Washington, D.C., Peter Esposito of Crested Butte Catalysts posed this question. The answers certainly varied. Esposito sees some major drivers in the field today -- climate change and a 100-year old regulatory paradigm trying to keep up with new technology.

Nora Brownell, formerly of FERC and now with Energy Solutions, said that the industry is "relying too much on government regulators for success." The government is acting as "gate keepers." She said the old business models can't work. She urged that there should be rules to allow transmission and distribution transparency. "There must be full access to information. Customers own it. This needs to be resolved on a national basis." The old business models will be "left in the wake." She also said that political decisions don't work and "the stakeholder process is madness -- the inner circle of Hell." She thinks the carbon price avenue is good and that cap and trade is not.

Brownell also suggesting measuring the regulatory outcomes. There needs to be more accountability and regulators should not be the only gatekeeper.

Hannah Polikov, of Advanced Energy Economy described how the cost of utility scale solar has declined so dramatically. She showed a slide with nuclear at $150/mwh, utility scale solar at $50, and wind at $45. She suggested that solar plus storage is down to $36/per mwh. Also, electric vehicles are expected to become cheaper than traditional cars by 2025! She also described greater customer engagement. Policy goals include resiliency and more customer choice and control. She said the new model should decouple revenues from sales. The outcomes should be to mitigate the capital intensive bias; and to better align state, customer and utility interests.

Greg Rotenberg , CEO of Smart Wires, said the grid is surprisingly inefficient. "We need to incentivize grid innovation." Also, he urged that short-term needs should be emphasized. Smart Wires has developed a "smart valve" and he said that 7 of the 11 largest utilities are pursuing projects with the company. He said "incentives matter." He urged that there be focus on just a few issues -- like "time of using pricing." Decisions should be made about short-term incentives. Regulators are bad at predicting the future. Take a look at the short-term as well as long-term.

Susan Pope of FTI Consulting suggested that industrial customers can be motivated to reduce demand. Customers react to pricing signals. She recommends a cap and trade system or a carbon tax. Also, she said the connection between supply and demand should be improved.

Dr. Mark Jamison of the University of Florida Public Utility Research Center said these issues create a "full employment act" for lawyers and economists. He described the myths that he observed in the deregulation of the telecom market. One myth is that we can create a solution by re-arranging the components. Another myth is that we can fine-tune regulation to make it work. "We were wrong," said Jamison. Instead he suggested the notion of "learning to let go" of regulation and mentioned Alfred Kahn.

Kelly 'Speakes-Backman, CEO of the Energy Storage Association described the flexibility arising from energy storage.

I was pleased to help on the development of this thought-provoking panel.