3 Things Public Utility Commissions are Doing All Wrong (and 3 They are Getting Right)

Posted on February 28th, 2011 by
   

I admire the dedication and good intentions of our commissioners. Most of them have to oversee not just electricity, but often natural gas, water, wastewater, telecommunications and transportation as well. I wouldn’t want their jobs. But since they are public servants, they are fair game for criticism and suggestion, because their decisions affect all of us. If we don’t fix the regulatory mess soon, we’re going to fall behind (some would say even further behind) China, Japan, Korea, the Middle East and a wide swath of Europe.

What regulators are doing right

 

1. They work very hard to get and stay up to speed on the smart grid and its new technologies.

2. They are in favor of the smart grid. Or better said, in favor of the benefits the smart grid can bring to ratepayers. Benefits such as choice and control; improved reliability; fewer new power plants; and support for renewable energy. (But only if those benefits can be achieved at a reasonable cost, of course.)

3. They zealously watch out for local interests. They are very loyal to their states.

What regulators are doing wrong

 

1. They (over)zealously watch out for local interests. In today’s interconnected era, “act local” only makes sense if it is teamed with “think global.” Many commissioners have a warlord mentality: defend the tribe at any cost; us against them; fight first, ask questions later. Our patchwork of incompatible, state-by-state regulations is holding us back and costing us billions we shouldn’t have to spend. We need a national energy policy and a clear set of uniform regulations.

2. They focus too much on first costs. Regulators want to minimize costs to ratepayers. So far, so good. But they focus far too much on initial, short-term costs instead of total lifetime cost. Quite often, it is cheaper in the long run to spend a little more money up front. And that is certainly true of the smart grid. It will pay in the long run if we spend a little money to upgrade our infrastructure.

3. They focus too little on new business models. As hard as they’ve worked to study new technology, they are hopelessly far behind in studying new business models for utilities. Most states still operate under regulations developed in the 20s, 30s and 40s – the “build and grow” era. We are now in the “do more with less” era – less building, less cost, less carbon. Regulators top priority should be studying and experimenting with new business models. It no longer works to have regulations that reward utilities only for building big things and for selling more electrons. It’s not fair to the utilities and it’s not fair to the country.

Which states have the smart grid mojo – and which do not?

 

Some state regulators are notably more smart grid-savvy than others. My personal all-star list includes Texas, California, Ohio, Pennsylvania and Ontario. (And yes, I realize that Ontario is not a state. Yet.) Close behind are Idaho, Maryland, British Columbia and Alberta.

The worst of the lot? I nominate Washington State, but I’d like to hear your opinions. Use the Talk Back form to suggest winners and losers. And to say what you think our regulators are doing right and doing wrong. We’ve also go a discussion going on this topic over at Smart Grid News Talk, so you may want to stop by and see what folks are saying.

Written by Jesse Berst, Smart Grid News

Jesse Berst is founding editor and chief analyst for Smart Grid News, which produces daily news analysis, email newsletters, and the Web’s largest collection of Smart Grid-specific resources, including research papers, case studies and project updates.

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One Person has left comments on this post



» gerard said: { Feb 28, 2011 - 02:02:25 }

I am curious to hear why you think Washington State is on the “worst” smart grid list? I just came out to the Pacific Northwest from the Northeast, I would be interested to hear more about Washington/Oregon.



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