Why Did SEPA Launch Renovate To Tackle State Regulation? A Conversation With Julia Hamm, SEPA CEO - [an Energy Central Power Perspectives™ Interview]
- Mar 19, 2019 7:31 pm GMT
As the composition and dynamics of the electric grid changes, regulations have failed to keep pace with changes.
Consider the case of the Philadelphia Rate Case book, which was authored in 1983. It was revised a good thirty-five years later. During that time, natural gas and renewable energy emerged as viable constituents of Pennsylvania's electric grid. (Natural gas accounts for a majority of electricity supplied to Pennsylvania and renewable energy is responsible for 4.5%). “It’s very helpful, except that none of what has occurred in the last 35 years is included” was the familiar grievance," wrote authors of the original rate handbook, when it was finally revised last year.
Along with a group of industry stakeholders, non-profit Smart Electric Power Alliance (SEPA) has taken the lead in helping to facilitate that process. It recently launched Renovate, an initiative to revise regulatory processes at the state level.
“We are now sitting on a really exciting set of innovations (both technology and approaches) that are changing the way we produce, consume, and interact with electricity and its related services,” explained Julia Hamm, SEPA CEO. “Our regulatory institutions that were created a century ago for one-way distribution of electrons and centralized power production facilities need to evolve to handle this new pace and the added complexity of today’s market.”
The press release announcing the initiative referred to it as an “evolution of state regulatory processes and practices in order to address the scalable deployment of innovative technologies and business operating models that support the transition to a clean and modern energy grid.” Hamm said there are processes, practices, and structures (within the grid) that could evolve. As an example, she said there should be statutory deadlines to get rate cases and other proceedings to ensure that work is done within a “reasonable time frame.” “These type of deadlines exist in some markets but are not mainstream across the country,” she wrote in an email interview.
In these Trumpian times, most headlines relating to regulation are about their impact at the federal level. Even as the federal government makes one controversial decision after another, states are taking an independent stance and staking out their position.
Renovate has chosen to focus its efforts at the state level. “There is a tremendous amount of decision making happening at the state level and much of the rapid change happening in the power sector is at the distribution level,” said Hamm. “State public utility commissions determine what the fundamental distribution and generation investment incentives will be in their states.”
Renovate intends to customize its approach to problems on a state-by-state basis. “..so that states have the ability to evolve their processes, procedures, and structures in a way that works based on their own unique circumstances,” says Hamm.
To accomplish its goals, Renovate has created a task force that consists of a smorgasbord of experts, commissioners, and environmental advocates to formulate solutions. The task force met in February to define problem statements to define problem statements or issues that it intends to tackle in the coming months. Current draft problem statements span a broad spectrum and include issues on steep learning curve for all industry participants and managing system risk and uncertainty as well as managing increased rate of change. After finalizing the problem statements, Renovate team members will produce case studies of markets that are ahead of the curve in implementing solutions to these problems. Finally, industry thought leaders will be called to “co-create” solutions that have not yet been implemented.
During her email exchange with me, Hamm clarified that SEPA is a non-advocating organization, meaning that it will not advocate for any form or type of energy or solution to a regulatory conundrum. “Rather other industry players can leverage the work of Renovate as appropriate in those situations,” she said.
A revision to regulatory practices in the energy sector could also act as a spur for more innovation. “In this fast-changing environment, regulation needs to enable innovation that meets customer needs and expectations while continuing to ensure clean, affordable, safe and reliable electric service,” said Hamm.
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