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Utility 2.0: Adapting to the New Business Reality

Event Description and Agenda:

The proliferation of new technologies and improved cost competitiveness of energy efficient and distributed energy resources (DER) — solar PV, energy storage, microgrids and electric vehicles — are moving into mainstream use and being integrated to the grid. These new technologies are changing the dynamics of energy delivery and consumption at a fundamental level, even prompting some to predict a "death spiral" and other dire outcomes for traditional utilities.

It is true these recent developments in technology, coupled with public sentiment for cleaner energy sources, are rapidly bringing forth a new paradigm of energy production and delivery patterns. This emerging landscape will require significant updates both to utility business models and to the electric grid on a technical level. Utilities are increasingly acknowledging this: 90% of utility executives are in agreement that the utility business model needs to undergo important changes between now and 2030, according to a global survey conducted by PwC. As for the future grid, some are imagining an interactive platform in which all the emerging technologies — solar PV, storage, electric vehicles — are strategically interconnected in a way that makes them far more accessible, practical and economical for customers.

Many, perhaps even most, traditional utilities are embracing the necessity for innovations with their customers and in their business models. They recognize that the century-old utility business structure of rate cases and revenue tied to load seems increasingly less equipped to adapt profitably to the new technologies. Yet, they cannot unilaterally transform their business. The success (or failure) of their efforts is tied closely to whether their governing regulatory bodies will allow and accommodate their migration from monopolistic to pluralistic business practices. Thus, this program is designed for utilities, regulators, and innovators to think critically about future business adjustments that will enable a future grid that is resilient, environmentally sustainable, and that holistically integrates technology to offer more customer control and service options than ever before. It will explore alternative cost-recovery methods and offer case studies, insights and strategies to invest in new frameworks that allow utility business to evolve, while ensuring the continued reliability and affordability of electricity service.

 

Monday, August 10, 2015

8:00 - 8:30 a.m. :: Registration and Continental Breakfast

I. Emerging Technologies & Energy Management Options

 

8:30 - 10:30 a.m. :: Utilities and Policymakers: Coming to Terms with Distributed Energy Resources

This session will focus on how utilities can achieve greater operational and business value through distributed energy resources (DER) and related, advanced grid investments. It will emphasize policy-making processes for successful DER integration, addressing needs and opportunities for increased collaboration between market participants and regulatory policy. The session will also discuss progressive initiatives across the country such as the Distribution Resources Plan (DRP) in California, New York's Reforming the Energy Vision (REV) process, and as embodied in the Hawaii Public Utility's ‘Inclinations' document that describes a vision of utility alignment with customer and policy interests. Also presented will be case-studies on the emerging proliferation of distributed solar in Georgia and the rate-case debate to increase residential customer fixed charges in Wisconsin. Through these examples, a panel of experts will explore the questions:

  • What are the challenges, lessons learned, and essential ongoing practices to DER implementation?
  • What are cohesive approaches for integrating functional-level DER planning with traditional power system operations and infrastructure?
  • What are the barriers for increased collaboration between market participants and regulatory policymakers that limit the adoption of DER and advanced grid infrastructure by power markets?
  • How can regulatory bodies adjust their rate-making policies to encourage innovation and allow for increased utility management of de-centralized energy assets?
  • How can, or are, utilities being re-structured to help maximize the utilization of resources and reduce the need for new infrastructure through expanded demand management, energy efficiency, renewable energy, distributed generation and energy storage programs?

Moderator:

Sara Baldwin Auck, Director-Regulatory Program, Interstate Renewable Energy Council (IREC)

Panelists:

The Hon. Lorraine Akiba, Commissioner, Hawaii Public Utility Commission (invited)

Anna Ching, Project Manager - Regulatory Policy Strategy, Southern California Edison (SCE)

The Hon. Lauren ‘Bubba' McDonald Jr., Commissioner, Georgia Public Utilities Commission

Eric Rogers, Regulatory Affairs Team Leader, We Energies

Richard Sedano, US Programs and Policy Manager, Regulatory Assistance Project

10:30 - 10:45 a.m. :: Morning Break

10:45 - 11:45 a.m. :: Community Solar Programs Hold Promise of Aligning Customer and Utility Interests -Utilizing Defined Objectives to Build Win: Win Programs

In several service territories across the United States, community solar programs are serving as an innovative tool for utilities to facilitate an increase in customer solar participation. Community solar has a lot of potential for utilities across the country, as these projects provide a flexible opportunity for utilities to collaborate with their customers and solar companies to develop utility-connected solar projects. This session will explain key components of the value proposition to the utility, project developer and customer. It will also explore what regulatory adjustments may be necessary to allow a utility to deploy this strategy.

Eran Mahrer, Senior Director of Utilities, FirstSolar

Bart Rupert, Chief Management Officer, Clean Energy Collective

11:45 a.m. - 1:00 p.m. :: Group Luncheon

1:00 - 2:15 p.m. :: Utilities and Microgrids, Battery Storage and EVs: When Will They Hit "Prime Time"?

Utilities are now facing the power of disruptive innovation and the same kind of competitive pressures that have fundamentally changed other industries. These technologies offer potential for some consumers to self-generate 100 percent of their own electricity needs in the future, threatening the utility business model that makes money by selling only power. This session will explore the rate of advancement and application in microgrid, storage, and electric vehicle technologies, as well as how the pace of change will influence the utility business model. Specific case studies and applications of these emerging technologies will illustrate how the utility business can adapt to innovation and potentially even leverage these technologies for new business opportunities.

Darren Hammell, Chief Strategy Officer & Co-Founder, Princeton Power Systems

John Bernhardt, Outreach and Communications Director, Clean Coalition

 

II. Utilities and Customers: Is Bi-lateral Engagement Really Possible?

2:15 - 2:45 p.m. :: S&C Electric's Vision for Grid Advancement

S&C Electric Co. has contributed substantially to the technological advancements of the electric grid. This session will review S&C's innovative work around the globe with grid modernization in the areas of smart grid technologies, self-healing distribution systems, electric storage installations, and renewable energy resources. It will discuss how the company is pursuing its vision for grid modernization, especially how it is utilizing a strategic planning process and collaborating with governmental agencies as well as other stakeholders to spearhead its corporate work.

Wanda Reder, Chief Strategy Officer, S&C Electric Co

2:45 - 3:00 p.m. :: Afternoon Break

3:00 - 4:00 p.m. :: Can Customer Data Be Used for New Business Opportunities?

The deployment of new technologies such as smart meters, real-time monitoring grid equipment, and third-party data platforms are exponentially expanding the amount and improving the quality of data that utilities have on their customers and system. Some utilities are offering new products and services for energy consumers to control, manage, and gain access to their energy data. Generally, however, utilities are to a large degree navigating in uncharted waters as they determine what they can (and can't) do with this data deluge: how to structure utility data practices, how to deal with privacy issues, what products they can offer within the construct of their business franchise, assuring data security and so on. This session will discuss data management strategies for utilities and opportunities for creative data use and increased customer offerings without crossing over the line. It will offer the perspective of a data requestor on the role of effective policy needed to open up public access to data and improve energy management programs, as well as the utility perspective of the challenges of data management and what utilities should be concerned about in the new era of ‘big-data'.

Jon Brock, President, Desert Sky Group

Kelly Crandall, Senior Rates & Research Analyst for EQ Research

Andrew Quirk, Product Development, Xcel Energy

4:00 - 5:30 p.m. :: Pathways for Converting the Promise of the Intelligent Grid into Value for Utilities and Consumers

As utilities are faced with adapting to new technologies, due diligence and strategy on both the technical and policy side are necessary to ensure the development of a future grid that brings greater value to utilities and their consumers. This round-table discussion will explore the visionary aspects of what kind of future grid the power industry should strive to create, discussing key components necessary for continued success. It will also discuss the practical application and best policy strategies for utilities and innovators to implement smart technologies that will enable an ultimate ‘intelligent' grid capable of two-way communication, interoperability, and greater efficiency and system resiliency. Specifically, this panel discussion will explore:

  • Methods to overcome policy and technical barriers to power system design improvement
  • Necessary upgrades to infrastructures and the grid
  • Re-thinking utility infrastructure plans to include integration of smart technology
  • Best practices for accommodating renewable sources, storage and microgrids into the grid
  • Successfully expanding demand response, energy efficiency and customer empowerment
  • Applications for engaging customers through home technologies and connective devices
  • Applying technology to improve power system resiliency, performance, and reliability

Moderator:

Jim Lazar, Senior Advisor, Regulatory Assistance Project

Panelists:

Karlynn Cory, Senior Energy Analyst and Manager, National Renewable Energy Laboratory (NREL)

Dan Halperin, Director of Distributed Generation, Pacific Gas & Electric (PG&E)

Wanda Reder, Chief Strategy Officer, S&C Electric Co

Matthew Croucher, Director- Demand Side Analytics, CPS Energy

5:30 - 6:30 p.m. :: Networking Reception

Tuesday, August 11, 2015

8:00 - 8:30 a.m. :: Continental Breakfast

 

III. Case Studies of Utility Business Innovation

8:30 - 9:00 a.m. :: Minnesota e21 Initiative: Customer Choice and Performance-Based Regulation

The e21 Initiative was launched in February 2014 to evolve the regulatory system in Minnesota for better alignment with how utilities earn revenue, accommodate changing public policies, and stimulate new customer markets. This voluntary initiative, made up of a diverse group of stakeholders, intends to shape the 21st century electricity system (e21) by shifting toward utility business models that provide more customer choice, and toward a regulatory system that rewards utilities for achieving agreed-upon performance outcomes. This session will represent an utility perspective of e21, exploring:

  • How and why the e21 Initiative came together
  • Who are the stakeholders
  • The process utilized
  • Guiding principles
  • Overview of phase 1 recommendations
  • Update on phase 2
  • Implementation progress

Carolyn Broulliard, Manager - Regulatory Policy & Strategy, Xcel Energy

9:00 - 9:30 a.m. :: Arizona Public Service: Opportunities and Challenges for Greater Customer Participation in Time-of-Use Programs

Time-of-Use (TOU) rates are a common strategy for utilities attempting to control their peak demand. Over the past five years, millions of smart meters have been installed in the country as a means to try to encourage reduction in peak-time electricity demand through TOU pricing rates. However, many utilities have seen limited success, as encouraging customers to actually think about when they use power is no easy task. Arizona Public Service (APS) is one utility around the country that has seen progress with its TOU programs, having successfully enrolled 40 percent of its customers. This session will:

  • Discuss the APS experience with its TOU program
  • Identify the implementation challenges and successes
  • Indicate the specific design of the TOU program
  • Relate how APS engaged customers to participate

Leland Snook, Director - Rates & Rate Strategy, Arizona Public Service (APS)

9:30 - 9:45 a.m. :: Morning Break

9:45 - 11:15 a.m. :: Municipal Innovation: Utility + Technology Integration

Since their rates are not subject to PUC approval, municipal utilities (munis) are perfect platforms for innovation in the energy industry, and offer promising case-studies for technology integration and new business practices. This session will discuss the experience of leading munis from across the country and how they are adapting to changing customer expectations. It will discuss specific examples of how they are working to integrate renewables, storage, and connected smart devices onto the grid, as well as how these technologies improve customer service offerings and satisfaction. It will discuss how municipals source funding and financing for their innovative efforts, and provide insight on how these changes are transforming their load management practices now and in the future.

Heather Bailey, Executive Director of Energy Strategy & Electric Utility Development, City of Boulder

Matthew Croucher, Director- Demand Side Analytics, CPS Energy

 

IV. Regulatory & Legislative Influences on Utility Business Model and Rate Design

11:15 a.m. - 12:15 p.m. :: What Do the Financial and Investor Markets Think About Utility 2.0?

This session will focus on financial market attitudes and potential reactions to the changing energy industry and utility business. It will explore how environmental issues and regulations such as the Clean Power Plan, as well as distributed generation and new technologies, are impacting perceptions of risk and what that could mean for the market. It will analyze which trends are of most concern, and discuss how the changing landscape of the energy industry may affect utility investment decisions in the future. It will explore strategies that both utilities and regulators can follow to be more proactive in risk assessment. It will also examine methods for utilities to maintain an attractive stock and positive quality of company credit.

Denise Furey, Principal, Regent Square Advisors

12:15 - 1:15 p.m. :: Group Luncheon

1:15 - 2:45 p.m. :: Regulatory Reform: The Key to Utility Transformation

The regulatory compact is a primary challenge in the effort of utilities to keep up with the evolving energy markets. If utilities are going to have a chance to successfully change with the times, fundamental shifts are necessary in the regulatory model. From Hawaii to New York, it is apparent that the 20th century regulatory model is not keeping pace with 21st century technology or customer expectations. This session will focus on regulatory barriers to utility business transformation, exploring strategies to improve regulatory bodies' pursuit of an updated "compact" that walks the line between oversight and collaboration. Panelists will consider the historical compact, current cases that are shaping the compact, and the outlook for arriving at a compact that serves all stakeholders. Within this context, the session will consider the issues of:

  • Structural imbalances in the current regulatory system
  • Drivers of industry change and the changing role of consumers, utilities and regulators
  • State of regulatory reform — challenges, progress, and future opportunities
  • Specific approaches for state regulators to enable utility transition to a different paradigm

Moderator:

Richard Sedano, US Programs and Policy Manager, Regulatory Assistance Project

Panelists:

The Hon. Lorraine Akiba, Commissioner, Hawaii Public Utility (invited)

Carolyn Broulliard, Manager - Regulatory Policy & Strategy, Xcel Energy

Leia Guccione, Manager, Rocky Mountain Institute (RMI)

Owen R. Zinaman, Technical Lead—21st Century Power Partnership, National Renewable Energy Laboratory (NREL)

2:45 - 3:00 p.m. :: Networking Break

3:00 - 5:00 p.m. :: Revenue Sources and Options for Future Utility Business Models: Challenges and Opportunities for Fair Pricing in the New Energy Paradigm

Under traditional utility regulatory practices, the more electricity a utility sells, the greater its profits. In this cost-based framework, a tariff is provided that is based on a fair return on the investment in assets serving the public. However, the electric utility landscape is rapidly changing. Recent years have seen a decline in electric sales growth while grid maintenance costs increase, and significant changes in the economic equation — such as the changes brought on by the proliferation of distributed generation — undermine traditional utility revenue and earnings. Furthermore, most traditional rate models effectively penalize utilities for meeting the stated goals of energy efficiency, higher renewable penetration, load loss to DG and so forth. This presents a significant challenge for utilities and regulators that requires consideration of fundamental changes in rate-design and financing incentives. The panel session will discuss various ways utilities are re-designing their residential electricity rates to flex with these structural changes. It will explore varying perspectives on different rate-design solutions, honing in on such issues as:

  • Are Performance-Based Rates (PBR) part of the answer?
  • Applying fixed charges to residential customers
  • Solar DG, net metering and averting "grid defection"

Moderator:

Virginia Lacy, Principal, Rocky Mountain Institute

Panelists:

Jim Lazar, Senior Advisor, Regulatory Assistance Project

The Hon. Lauren ‘Bubba' McDonald Jr., Commissioner, Georgia Public Utilities Commission

Eric Rogers, Regulatory Affairs Team Leader, We Energies

Samantha Williams, Staff Attorney, Natural Resource Defense Council

5:00 p.m. :: Conference Adjourns

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