The Coming Commissions Clash
State regulators in the middle of an expensive build cycle
Take a look at all the things on the agenda for utilities over the next decade or so: developing the smart grid; retiring and replacing massive numbers of coal-fired generators; building power plants of every size and stripe, including renewables and possibly nuclear; expanding transmission lines across multiple states and regions.
The word from the states is pretty clear, too. We can’t afford to do all of this.
That was the word at the EnergyBiz Leadership Forum held earlier this week in Washington, D.C., delivered by Tony Clark, a member of the North Dakota Public Service Commission and the chairman of the National Association of Regulatory Utility Commissioners. Clark spoke on a panel that delved into the turf battles that invariable exist between the states and federal regulations.
“There are two overarching themes that will have a tremendous impact on state utility commissions and on the nexus between state and federal policymakers. There’s going to be an impact on costs,” he said. “Then there’s the issue of certainty.”
The “states as laboratories” is almost a cliché in utility discussions, but the lack of federal direction on energy only makes the image more indelible. And if costs for the build cycle that utilities currently find themselves in keep escalating, the commissioners may need a new metaphor.
Clark noted that costs aren’t going to be evenly spread out throughout the country but will instead have significant regional differences.
“The problems are very real and in some states they will be very significant,” he said.
The smart grid will be expensive but the states are going to be in the position to analyze costs and benefits, with the implication that smart grid proponents may not always like what they will hear.
In states with renewable portfolio standards, the honeymoon – my word, not his – legislatures had may be coming to an end. “Those costs are starting to poke through on the utility bills in a time of economic hardship,” Clark added.
The uncertainty of what the rules for commissioners and utilities might be going forward weighs heavily, but Clark said commissioners should expect that to continue.
“Most commissioner s have accepted that we will have uncertainty,” he said. “The question is what tools do we have to deal with the uncertainty, making decisions the best we can, understanding that we will make decisions while having imperfect information.”
But the commissions don’t want the tools picked for them by the federal government.
That sounds like the very definition of the session topic: turf battle.
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Comments
Coming Clash
It may be worth noting that while all of this is coming there will be a significant exit of experience as the boomers retire. Most of us get some comfort when approaching troubled seas that our captain and crew have a lot of experience under their belts. That takes nothing away from the character of the younger crews and their willingness to do the job. Time and experience, with their benefits, come at their own pace.