Utilities, regulators focus on renewables, transport electrification, and new business models

Jordan Smith
By Jordan Smith
For business
Utilities and regulators are focusing on renewables and other priorities.

A new report by the Advanced Energy Economy summarizes the top 10 trends for utilities and regulators so far this year. They can be broken down into three main areas: renewable energy, transport electrification, and new business models.

Renewables dominate future planning

According to AEE, utilities’ long-term resource plans are now dominated by renewables. This is due to the fact that, in most states, it is now cheaper to build renewable facilities, such as wind or solar installations, than to replace retiring power plants with coal or natural gas. An additional factor is that prices for renewables continue to decline, promising even better returns for utilities in the months and years ahead.

During the first six months of this year, New Mexico became the latest state to commit to retiring all of its coal-powered generation, which it wants to achieve by 2031. A total of nine states, plus Puerto Rico and Washington, D.C., now have 100 percent clean energy targets in place.

Responding to customer demands, utilities are also introducing new ways to access renewable energy. In Minnesota, for example, Xcel Energy has been running a tariff for businesses to buy renewable energy, known as Renewable*Connect as a pilot project. Earlier this year, Xcel filed to the Public Utilities Commission to transform Renewable*Connect into a permanent program, which would triple it in size.

Similar programs were introduced earlier this year by Dominion Energy, one of the major utilities in Virginia. The Green Power Program allows customers to purchase renewable energy certificates (RECs) attached to energy providers that meet the standards of a national certification program. Rider REC is a cheaper alternative that sells RECs linked to facilities that failed to meet the criteria for the Green Power Program.

Electrifying the transport network

As sales of electric vehicles continue to increase, utilities are moving to secure their place in the market for charging infrastructure. California is one of the leading states on this issue, which is hardly surprising given that 49 percent of electric vehicle sales in the U.S. take place there. The PUC has begun a program earlier this year aimed at creating a Transportation Electrification Framework across the state to support the growth of zero-emission vehicles (ZEVs).

The aim of the initiative, according to the Commission, is to establish a “better alignment of internal and external state agency resource planning processes while also addressing key questions about the role of utility transportation electrification investments in meeting the state’s ZEV adoption targets and greenhouse gas emission reduction goals.”

California’s PUC has already approved close to $1 billion in residential and commercial infrastructure spending by the state’s three main utilities, Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric. A further $1 billion is awaiting approval.

Texas is also seeing progress on the electric vehicle front. In January, the Texas PUC opened a comprehensive review of the issues related to electric vehicle usage. Topics to be considered include the role of utilities in charging infrastructure, payment models, and the impact on the rest of the electricity grid.

New business models for utilities

A number of new business models for utilities have been pushed forward in the first six months of 2019 in several states. These include performance-based regulation, distribution system planning, and investments in non-wire alternatives for transmitting energy.

One of the major benefits of performance-based regulation is that regulators can use it to reward utilities which move towards agreed-upon goals, like the reduction of CO2 emissions. In January, Minnesota’s PUC passed an order to begin the next stage of performance-based rate setting. The goal is to finalize the metrics that will be used for calculating electricity rates by October.

One example of the new approach to energy distribution is Colorado, where legislators ordered the PUC to create rules for the state’s utilities to submit new distribution plans. The regulators will aim to encourage the integration of distributed resources like rooftop solar, which can allow customers to create their own energy and supply any excess to the grid. Additionally, they will look to promote energy efficiency measures and steps to shift energy consumption from peak times to low demand periods of the day.

“There are a lot more tools available to utilities now than in the past. This planning process is a way to make sure the utilities are looking at alternatives rather than just pursuing the same old pole-and-wire solutions,” explains Erin Overturf, deputy director of the clean energy program at Western Resource Advocates.

Jordan Smith is a freelance journalist and translator covering issues related to energy, the environment, and politics. His work has appeared on the independent news site Opposing Views, and at the Canadian Labour Institute.