Utility leaders stress collaboration with regulators to maintain affordable, reliable power amid clean energy transition
Getting state utility regulators and electric utilities on the same page to ensure electricity remains reliable and affordable has never been more important.
“Collectively, we and commissioners should remind customers that our service is extremely inexpensive,” NorthWestern Energy President and CEO Brian Bird said. “People don’t often think about what power costs. We need to work together to continue providing low cost, but to do that in a reliable way.”
During a discussion about regulatory perspectives on the energy transition at the Edison Electric Institute’s annual meeting in Las Vegas last week, state regulatory commissioners and electric company leaders also said there is a need to rely on natural gas to ensure reliability until enough new sustainable and clean technologies are put in place to replace it.
Jose Esparza, senior vice president of public policy at Arizona Public Service, said ensuring reliability during the shift to clean energy in his state would require reliance on natural gas.
“The harsh reality is, we don’t feel we can do it without gas. I mean, when the temperatures are what they are, we need that dispatchable energy,” Esparza said. “We don’t see a way around that. And if there were something else on the market that we can go to that would be great. We just don’t see it for the next decade. We have a responsibility to our customers today to have reliable, affordable service. I would agree, there’s probably something to be said about climate and temperatures are increasing. We live it every day. But I just don’t see another way around that.”
Bird agreed.
“We’ve been in a situation of extremely low growth, as all utilities in the U.S., and so it’s allowed us to proliferate into resources we’ve had on fossil fuels, and we’ve been able to add on renewables,” Bird said. “But what we’ve done is we’ve leaned heavily in that regard, and now we’re starting to see problems. The issue is from a resource adequacy standpoint. Now you have increasing load and that load is growing very rapidly. And you’re going to try and replace dispatchable resources with those that are not. And that’s extremely difficult.”
Bird said currently there were 133 gas plants being built in the United States and that the country needed twice that number to address resource needs.
Tricia Pridemore, commissioner of the Georgia Public Service Commission and the first vice president of the National Association of Regulatory Utility Commissioners, also underscored that the work utilities and commissioners do together should focus on customer affordability.
“We want for that system to work first and foremost to benefit the customers,” Pridemore said. “And the way that we do that is our long-standing, highly effective integrated resource planning process. For a year we plan for the IRP; for a year we do the IRP; and for a year we implement the IRP. And then we start the process all over again. And it’s a way that the utility can align directly with the state’s goals and with the Commission’s goals.”
But sometimes federal regulations present challenges for utilities and commissions.
“I want customers to pay for what they use, and I want customers to pay for the service that they’re paying for,” she said. “The single greatest line item on customer bills in Georgia is the environmental compliance fees. It’s complying with the EPA, and whatever they’ve come up with this week. Those are outside costs that I argue provide little to no benefit to customers. And yet, they’re still shouldered with the cost of that.”
“I think that there are ways that we need to be looking at how we can keep the ever-changing political winds from directly impacting customer wallets,” Pridemore added.
Bird is also increasingly concerned about the financial solvency of utilities in the face of extreme weather disasters.
“This is the first time utilities really are exposed to bankruptcy, and I’m talking about the wildfire risk,” Bird said. “We’ve got rising interest rates, commodity costs, more volatile resource adequacy issues, wildfires … Trying to be cleaner, but also be reliable, affordable, is extremely tough… it’s crucial. For you to support growth, you have to have a strong, financially healthy utility. And I think there’s a lot of concern that there’s going to need to be a tremendous amount of capital to take us from where we are today to a cleaner economy, to more resourceful and resource adequate utilities… We can’t do that if we’re not financially healthy.”
Recent heatwaves are an example of how climate change will shape the future of utility investments.
“We’re experiencing right now almost unprecedented heatwaves across the country and I think there might be some political upside,” said Jamie Van Nostrand, chair of the Massachusetts Department of Public Utilities. “I don’t think there’s any question, we need to address the concentration of greenhouse gas in the atmosphere. On the climate change issue, I think we need to be very, very mindful. There’s a reason we’re going down this path; it’s going to be expensive.”
