Distributed Energy Resources to Dominate at Gathering of Nationwide Utility Regulators
By Diane Munns, Senior Director, EDF Clean Energy Collaboration
On November 13, 2016, the nation’s state and federal utility regulators — also known as the National Association of Utility Regulators Association (NARUC) — will meet for their 128th annual meeting in La Quinta, CA and host over 1000 participants. As a former NARUC president and seasoned observer of these meetings, I study the issues that rise to the top for the limited amount of meeting time available. The topics making the cut offer a snapshot of what is trending nationally in the various regulated sectors.
Distributed resources — like residential solar, storage, and electric cars — not long ago nascent technology, are now mainstream. At this year’s NARUC meeting, issues related to the impact of distributed resources on business models and regulation dominate the electricity agenda as states strive to capture their benefits.
The conversation will tackle next-level questions of grid modernization, interconnection, valuation, business models, and rate design. Utility planners aim to correctly set conditions for continued growth in the transforming electricity sector. The meeting topics reveal changed thinking, from fixing “problems” caused by these technologies to maximizing their potential benefits.
This year’s annual meeting agenda explores these next-level issues.
The Staff Subcommittee on Consumer Affairs will examine attitudes towards residential solar, and the Staff Subcommittee on Rate Design will do a deep dive into the states with the most experience in residential solar: Arizona, California, and Nevada. That staff subcommittee will also preview a framework for how to increase residential solar use and preview its manual on properly valuing distributed energy resources.
The Committee on Energy Resources and Environment has a session on disaster response and grid resiliency, recognizing the unique attributes of distributed resources.
Once again, the prevalence of distributed energy resources in the agenda recognizes that we are in a transformational time and genuinely desire to update ratemaking to capture the benefits of these resources.
The Electricity Committee will discuss capturing the locational value of power sources that are dispersed throughout communities, rather than centrally located. The National Regulatory Research Institute, NARUC’S research arm, has a session on interconnection rules for a future where customers plug-and-play their own distributed energy resources.
Finally, there are sessions on grid modernization, rate design and electric vehicles, performance-based ratemaking, and storage. Once again, the prevalence of distributed energy resources in the agenda recognizes that we are in a transformational time and genuinely desire to update ratemaking to capture the benefits of these resources.
You can also expect a finalized Distributed Energy Resource Compensation Manual to be presented through a case study at the final session of NARUC 2016.
NARUC’s work on the manual to guide public utility commissions when designing electricity rates began last year at the 127th annual meeting through a resolution that created a Staff Subcommittee on Rate Design. The resolution creating the subcommittee recognizes the increasing interconnectedness of rate design and forward-thinking policy, most notably as it applies to helping the new distributed-energy economy.
Then incoming president for 2016, Travis Kavulla, quickly put the subcommittee to work, charging them to prepare the Distributed Energy Resource Compensation Manual to help utility commissions around the U.S. navigate the challenges, considerations, and policy developments related to properly valuing distributed energy resources.
The subcommittee released a draft Manual and convened a Town Meeting to receive comment in advance of NARUC’s July meeting in Nashville, TN. Opportunity for comment continued and the manual that will be presented next week is a culmination of this extensive collaboration and review. The decision to cap off the annual meeting with a general session devoted to use of the manual demonstrates the importance of this work.
NARUC leadership will once again transition at this meeting, and the new president will set the organization’s priorities for the following year. President Kavulla and the association’s leadership are to be commended for acknowledging and focusing on the impact of distributed energy resources on the grid and regulatory system. Their work has created a positive agenda and an initial set of rate design tools to approach the complicated issues related to the emergence of distributed generation. This is not an end to the work, but marks an important milestone in providing practical guidance and assistance to its members to ensure the transformation results in clean, affordable, efficient energy available to all Americans. We have every expectation that the incoming president and leadership will build upon this good work.