Historically, residential consumption of electricity has been a simple, one-way transaction. The consumer purchases power, which is supplied by the local utility. With customers now generating their own power, universities implementing combined heat and power systems, and innovators establishing microgrids, the distribution system is in a state of flux. Utilities perceive these changes as both threats and opportunities—yet the need to embrace customers as a resource is inevitable in light of the exponential growth in distributed generation.

In a discussion on the transformation of the power sector hosted by the Center for Strategic and International Studies, Richard Sedano demonstrated how thoughtful regulation of the distribution system can better reflect the value of distributed generation—thus sending the right prices signals—and promote access to the grid. He also highlighted the important role played by regulators in striking an equitable balance between regulation and markets in the transition. Note: Mr. Sedano’s portion of the event recording begins here, at 1 hour, 5 minutes.