Minnesota’s e21 Initiative unites utilities, consumer advocates, regulators, environmental advocates, and others to develop a 21st century energy system that better aligns a financially viable utility business model with increasing customer expectations and evolving policy goals.
Emissions from utilities are one of the primary drivers of climate change. In the U.S., utilities account for 31 percent of the total carbon emitted into the atmosphere, as well as significant amounts of other greenhouse gases like methane and nitrous oxide. Regulation of utilities is one of the most effective tools we have to bring these emissions down. Yet our models for utility regulation — which date back to the turn of the 20th century, just 20 years after Thomas Edison established the first centralized electric utility in New York — are increasingly outmoded and ineffective, rewarding companies for increased production rather than for achieving critical public policy goals. We can do better.
The e21 Initiative (co-coordinated with Great Plains Institute ) brings together key constituencies including utilities, consumer groups, businesses, environmental organizations, academic institutions, and government agencies to reform utility regulation so Minnesota can retain its leadership role on clean energy and climate policy.
e21 participants employ two fundamental strategies to align utility interests with public policy goals and modernize utility regulation:
Give consumers more options in how and where their energy is produced and how and when they use it. This customer-centric approach would replace the current one-size-fits-all utility business model that provides customers with few options and produces grid electricity largely from large central station generation facilities.
Evolve utility regulation so utilities are no longer paid solely based on the amount of electricity they sell or the capital they have invested in infrastructure. Moving incrementally away from this "sell more/build more" model to one that includes incentives for achieving agreed-upon performance outcomes that the public and customers want — such as energy efficiency, reliability, affordability, emissions reductions, and predictable rates — will better prepare our utilities to serve 21st century customers.
The result will be an electric system that is cleaner, more flexible, more secure, more resilient against attack and natural disaster, and able to empower customers to manage and reduce their energy costs while maintaining the system’s high level of reliability. It will also bring about an electric system that is more distributed, flexible, intelligent, efficient, real-time controlled, and open to more participants.
Technology, market, and policy forces are inexorably transforming the energy economy and technology landscape, impacting utilities and their customers in profound ways.
e21 presents an opportunity to develop a broadly applicable state-based model demonstrating how a new customer-centric, performance-based regulatory approach and utility business model can enable both economically viable utilities and the achievement of public policy goals.
e21 Initiative Phase I Report: Charting a Path to a 21st-Century Energy System in Minnesota
e21 Phase II Report: On Implementing a Framework for a 21st-Century Electric System in Minnesota
e21 at Great Plains Institute
Grantee Spotlight at McKnight Foundation
Media: Initiative aims to reinvent utility industry the Minnesota way (Environment & Energy) (news, Nov 2015)
Emerging State Models for Energy Efficiency webinar (recording)
Towards a Customer-Centric Utility: The e21 Initiative (blog, Dec 2014)