Media: America's Utility Of The Future Forms Around Performance-Based Regulation (EI at Forbes)
May 8, 2018
Excerpt from Energy Innovation at Forbes:
The utility business model is evolving in response to a fundamental shift in our power system economics. Traditional utility models were built on the engine of inexorable electricity demand growth, which became less certain as America’s power system was built out and energy efficiency programs succeeded – electricity demand growth has been flat for 10 years, and it’s expected to stay that way...
...Midwesterners are known for their friendly nature, so it shouldn’t be a surprise Minnesota has had the most success getting stakeholders spanning every element of the utility-customer spectrum to agree. The state’s e21 initiative launched in 2014 by convening utilities, environmentalists, consumers, cities, businesses, state officials, and regulators to determine how regulations could achieve state goals.
Through the structured “transformative scenario planning” process, e21 revealed that all power-sector stakeholders thought the existing business model and regulatory framework needed to change, even if they wanted change for different reasons. This set the table for change, and after a series of regular meetings, the group published consensus recommendations for future regulations prioritizing PBR. The recommendations guided several subsequent regulatory decisions, most notably approval of Xcel Energy’s 2016-2020 rate plan, which closely aligned with e21 recommendations.
Minnesota then proceeded through e21’s Phase Two, focused on determining how to best implement PBR, and began working with Xcel and stakeholders to develop PBR along two tracks: create performance metrics, and identifying where performance incentives could overcome consumer shortfalls in the existing utility regulatory model.
While Minnesota’s utility business model revisions may be taking more time than other states, they’re notable because of the degree that stakeholder agreement has improved outcomes and prevented disagreements...
Read the full article on Forbes
e21 Initiative website