Renewable energy industry encourages Illinois regulators to finalize cloud-based computing rule

Published on April 10, 2019 by Chris Galford


Warning: Undefined variable $post_id in /var/www/dailyenergyinsider.com/wp-content/themes/dei/single.php on line 31

Warning: Undefined variable $post_id in /var/www/dailyenergyinsider.com/wp-content/themes/dei/single.php on line 36
© Shutterstock

A proposed rule by the Illinois Commerce Commission (ICC) that would financially treat utilities’ cloud-based computing software the same as on-site computing systems has found strong support from the renewable energy industry.

Todd Foley, senior vice president of Policy and Government Affairs for the American Council on Renewable Energy (ACORE), said the rule would level the playing field for all parties.

“This rule, proposed by the Illinois Commerce Commission, would allow utilities to treat cloud computing resources as a capital expense, the same accounting treatment as traditional on-site computing resources,” Foley said in a written statement. “Advanced technologies, like cloud computing resources, promote a more flexible grid system which is key to increased generation of renewable energy resources, grid reliability, low-cost power for consumers and emissions reductions.”

The rule is currently under consideration by the the Illinois Joint Committee on Administrative Rules (JCAR), who held a hearing on the matter on Tuesday. Last week, the CEOs of ACORE, the American Wind Energy Association (AWEA) and the Solar Energy Industries Association (SEIA) wrote to the joint committee, giving unanimous support to efforts that would allow the renewable energy industry to better manage large amounts of data quicker and cheaper. In that way, they emphasized, more rapid deployment of renewables to the grid would be possible.

The CEOs noted in a joint letter that in recent years utility-scale wind and solar energy have grown to provide nearly 8 percent of the nation’s electricity with even more growth expected.

Distributed generation and distributed energy resources have transformed the energy grid with  two-way power flows and increased interconnections across the distribution system. “All of these new technologies are creating large amounts of data and require advanced data management systems for utilities to be able to efficiently accommodate these technologies into the grid,” the letter said.

“While we do not propose to know which computing system is best for a utility, we are confident that we do not want utilities to be forced to make technology decisions based on outdated accounting rules,” the CEOs wrote.

The CEOs pointed out that utilities are disincentivized from introducing cloud computing resources due to the present nature of regulatory accounting models. That model treats such costs as operating expenses, whereas on-site computing systems are a capital expense.

What the ICC has proposed is to provide a new, more comparable accounting treatment for cloud-based computing solutions and more traditional computing elements. Any public utility would be able to utilize this rule change to minimize differences in regulatory accounting, dubbing cloud computing as a regulatory asset, and thus, a capital expense. They could then include such costs in rate cases, which would be subject to the Commission determining that the costs were reasonable.

This would not be without restrictions. Only costs incurred through a given period, in relation to cloud computing solutions or services, would be able to be designated regulatory assets. They would have to be associated with specific service contracts and properly amortized. Utilities would also have to report specific information regarding such assets to the ICC.

The rule is on its second notice with the joint committee, which is set to expire in May. The rule was originally posted last year, following stakeholder input. Other groups, such as the national business group Advanced Energy Economy (AEE), have also been supportive of the effort as it works its way toward enactment.

“This is a big step forward and will enable utilities to choose the best technology solutions, whether they be cloud-based or traditional on-site IT, to meet operational needs and serve their customers at the lowest cost,” Lisa Frantzis, senior vice president of the 21st Century Electricity System for AEE, said in June 2018 after the ICC approved the first notice rule. “Utilities have a path forward to capture the benefits of cloud computing, just like other industries.”

The proposed rule is supported by several major companies including Amazon Web Services, CPower, Energy Savvy, EnergyHub, First Fuel, GE, Itron, Nest, Oracle, Salesforce, Siemens and Simple Energy.

In a letter of support for the proposed rule sent to the ICC in Dec. 2017, AEE and the companies wrote, “Ratemaking can and should allow a utility to be rewarded for the critical investments that it makes in the systems that are clearly driving improvements in reliability and service for the end consumer. Regardless of the deployment approach, ratemaking should reward the utility for delivering systems in the most effective and reliable manner.”

ACORE’s Foley added, “We urge JCAR and the ICC to finalize this important rule as soon as possible.”