Regulatory options for new business models promote utility success


New utility business models are key to energy transition, according to a new whitepaper issued by Rocky Mountain Institute, America’s Power Plan and Advanced Energy Economy Institute.

The report ‘Navigating Utility Business Model Reform: A practice guide to regulatory design‘ provides policymakers, utilities and consumers with regulatory options they can adapt to develop and manage the 21st-century grid.

The whitepaper comprises 10 utility business model reforms addressing emerging customer demands, policy changes, environmental concerns and grid resiliency challenges.

The reform options include revenue decoupling, platform revenues, performance-incentive mechanisms and multiyear rate plans.

The paper includes five case studies on driving factors and how energy stakeholders are solving challenges resulting from the introduction of new grid-connected software and technologies.

Factors driving utility investments in grid modernisation include:

  • The need to reduce carbon emissions
  • Increasing portfolios of distributed energy resources such as solar, wind, energy storage systems
  • More customer demand for energy choice
  • Need for resilient grid networks to withstand extreme weather

Dan Cross-Call, a manager at RMI and one of the report’s authors, said: “The grid is experiencing rapid changes in its shift to a 21st-century system, and electric utilities have a fundamental role to play in ensuring this transition strengthens resilience, improves environmental performance and protects the interests of customers while maintaining essential features of affordability and reliability.

Projects explored in the whitepaper include:

  1. Oklahoma’s energy efficiency incentives being deployed by the Public Service Co. of Oklahoma and Oklahoma Gas & Electric in which the two are sharing expenses to maximise consumer energy efficiency savings and programmes.

2. Maryland’s behavioral demand response Programme in which Baltimore Gas & Electric is working with customers to reduce summertime demand driven by the use of air-conditioning.

3. Regulatory accounting of cloud computing in Illinois and New York.

4. Brooklyn queens demand management programme by Con Edison.

The whitepaper is available for download here…