NARUC summer conference to tackle rate design, other hot topics in energy sector

Published on June 15, 2016 by Tracy Rozens

The National Association of Regulatory Utility Commissioners (NARUC) is gearing up for its summer committee meetings, where participants will discuss some of the thorniest energy-related topics confronting state regulators, including rate design, the Clean Power Plan and more.

To be held July 24-27 in Nashville, Tennessee, the NARUC conference will bring together state public service commissioners who regulate utilities that provide essential services, such as energy, telecommunications, power, water and transportation.

“Our meetings are always a blend of education and the sharing of best practices and trying to achieve some kind of common ground on where we stand on issues of the day,” Travis Kavulla, president of NARUC, told Daily Energy Insider in a recent interview.

NARUC will hold a public discussion at the conference after it unveils its draft Distributed Energy Resources Compensation Manual, developed by the NARUC Staff Subcommittee on Rate Design. The manual will offer guidance to regulators who are grappling with the complex issue of rate design for distributed energy.

Today, more customers are participating in the production of power through rooftop solar generation and determining how to compensate them for selling back energy capacity to the grid is one example of why rate design discussions can be difficult.

“There are all these retail side actions that are really backfilling what would conventionally be the job of the utility industry,” Kavulla said. “That more multi-dimensional relationship where retail customers are both consumers and producers and the utilities are not just producers but also buyers in these transactions, that is making the whole rate design conversation much more complicated.”

With these issues in mind, NARUC has developed an authoritative document that lays out a number of approaches on designing rates and the economic theory behind them, while also offering practical advice on how to implement those approaches, Kavulla added.

In a much-anticipated event on July 25, Kavulla will moderate a Q&A discussion with Christopher Crane, president and CEO of the Chicago-based Exelon Corp., the largest electric utility and nuclear power plant operator in the United States. Exelon has been an advocate of organized wholesale markets, Kavulla said, but due to depressed energy market prices, some of Exelon’s nuclear plants are failing to produce adequate revenues in order to cover operational costs.

Kavulla is interested in learning about where Crane sees the utility business model heading in the future.

“The question of whether markets are working and how one achieves some of the long-term environmental policy objectives like carbonization are pretty much of interest to everyone at this point,” Kavulla, who also serves as a commissioner for the Montana Public Service Commission, said.

Another panel discussion at the event will focus on the Environmental Protection Agency’s Clean Power Plan and the key drivers behind decarbonization of the electric sector, including regulation and market forces.

While acknowledging that NARUC’s members have different views on the Clean Power Plan, Kavulla said, “It basically makes the power sector at large all about carbon planning. What we’re still trying to get our hands around is what exactly that means and how well in practice this environmental regulation will work.

“Hopefully our members will be in a position of being able to step up and insist that whatever the law may be on carbon dioxide, that people accomplish compliance with the regulation in the most cost effective way possible.”

The issue of how big data and analytics are modernizing energy efficiency programs and the related public policy implications will be another topic of discussion at the NARUC conference.

“As we become more digitized and as we produce more data, it’s well worth asking whether data analytics should have a role and what role in the utility industry,” Kavulla said.

On the final day of the conference, a roundtable discussion will be held on topics in electric transmission, with participation from a member of the Federal Energy Regulatory Commission (FERC).

“I think generally states have been pretty supportive of certain things that FERC has been doing with trying to promote cost discipline and cost containment in the building of electric transmission lines,” Kavulla said.

The NARUC summer committee meetings will offer a forum for state public service commissions from across the nation to discuss the challenges and opportunities that they face in the regulation of utilities.

“Hopefully they will be able to look across state borders and at the very least commiserate that other people are having the same problems, but also think about some practical ways they might achieve some of the their public policy goals around resource adequacy and environmental concerns,” Kavulla said.