The Way We Regulate Electrical Power Utilities Stifles Innovation
I’m looking forward to today’s meeting with David O’Brien, Bridge Energy Group’s Director of Regulatory Strategy and Compliance. With his permission, I will record the discussion and squeeze it into my current book project, “Renewable Energy – Following the Money.” This is important, as I realized the other day that the book is a bit light in the subject arena of David’s expertise, i.e., the regulation of power utilities and the effects these have on innovation, especially, the implementation of efficiency, conservation, smart-grid, and renewables.
My belief going into this discussion is simple:
Our current system of utility regulation is a hodge-podge of arcane rules that sprang up on a regional, ad-hoc basis over the last 125 years. These rules were designed to minimize the cost of electricity, especially to large, industrial customers, while guaranteeing the power companies extremely attractive and perfectly predictable streams of profit. They need to be ripped out by the roots and replaced with something that’s simple, fair, and understandable, while encouraging all stake holders (generation, transmission, distribution, and load) to do the right thing, i.e.,
- Invest in smart-grid as the enabler of a modern and efficient energy network
- Offer incentives that minimize consumption, especially on-peak
- Retire coal plants as quickly and as practically as possible
- Replace them with a combination of renewable energy and storage.
From my initial conversations with Mr. O’Brien, I can see that he and I agree on a great deal of this, but I fully expect to learn exactly why my assessment here is an oversimplification, or lacks other features that would make it pragmatically implementable. That’s fine; I’m here to learn.
Craig,
I too would be quite interested in hearing some suggestions that come out of this discussion.
In the world of ISO’s, most regulation – other than RPS’s, minimum capacity requirements, and frequency regulations – are basically gone.
I don’t know what you would choose to sacrifice of the current regulations, and I don’t know what you can add other than just strengthening the RPS and/or passing emissions abatement subsidies and letting the market figure it out.
Part of the issue here is there are multiple entities that have some regulatory influence over the grid: FERC, NERC, NRC, DOE, State governments, RTO’s or ISO’s, local governments (zoning), etc… But while there’s a maze of entities overlapping, there are few regulations that do anything other than help ensure constant reliable power – and I wouldn’t want to see those regulations unraveled without great care.
There is an old saying I learned about 45 years ago,
” If it ain’t broke, don’t fix it.”
I have found on occasion that an “Improvement” caused more difficulties as the situation had many more interactions, perhaps some not documented of which we were initially unaware, but the improvement knocked a-kilter. Eventually I learned to repair equipment based upon the previously working design, and not to “Redesign the Wheel.”
From a program I saw on PBS this evening, it looks as though CO2 emissions may be a greater problem than we previously realized.
Much of the CO2 in the atmosphere is removed by our oceans. However, as the concentration of CO2 in the oceans increases, they are less effective in removing CO2 from the atmosphere. Increasing ocean temperature also reduces their ability to remove CO2. In addition, the increasing concentration of CO2 in the oceans reduces their PH thereby reducing the ability of marine creatures to build shells which has other negative effects.
I am not convinced that we have an accurate understanding of the effects of CO2 emissions. It could be much more serious than is generally realized.