Power Sector of the Future and the Changing Tide of Regulation
Today’s power sector offers customers more choices than ever with distributed energy resources (DER), new technologies, and competitive service offerings. Not only can DER be the purveyor of clean energy options, it can also act as a low-cost grid enhancement to strengthen reliability, provide an alternative to central fossil fuel generation, and allow customers to manage their own energy usage. However, unless energy policy evolves to keep pace, the decline in utility sales and revenues from DER can work at cross-purposes with the public interest in low-carbon energy solutions. At the same time, grid resilience is becoming increasingly important in the wake of severe climate events. In order to address these challenges, some states are re-examining their traditional utility models and considering regulatory changes.At a meeting of the Michigan Public Service Smart Grid Collaborative, Janine Migden-Ostrander encouraged regulators to consider public policies that advance low-carbon energy, while taking into account the utility’s revenue needs, economic incentives for DER, and the need to protect non-DER customers from bearing a greater burden for utility lost revenues. She explores the impact of growing distributed generation on utilities and customers, considerations for equitable rate design, as well as utility business models, such as performance-based regulation and decoupling.