Industry Reform? 'You have to overcome a lot of inertia'

By now you’ve already heard that Arizona’s utility regulators have rejected new rules to boost renewables for the second time.  The proposed rules would have required the state’s utilities to get 50 percent of their power from ‘clean’ sources by 2035 and to adopt 100 percent clean power by 2070.  However, Arizona’s second largest utility, Arizona Public Service said it would stick to its commitment to have 100 percent clean power by 2050.  "We recognize that clean, reliable and affordable energy is essential to Arizona’s future," the company said.  While the new rules were blocked in Arizona many feel it’s only a matter of time before proposals like these become law.  

Jim Kelly, Vice President for Hawaiian Electric said, "If you think that you can put it off, maybe you can for a few years, but it's probably going to happen in some form or another.”  States like Hawaii are taking the lead on decarbonizing electricity.   The state has already begun implementing a system of incentives and penalties to speed up the transition to 100 percent renewable energy.  “With no federal legislation in sight, I think it becomes even more important for states to develop the policies and regulations that are required to incentivize utilities to decarbonize,” said Cara Goldenberg, manager on the carbon-free electricity team at Rocky Mountain Institute.

Not putting off the inevitable, investors are already responding to anticipated policy changes.   It is estimated, that no less than $5 trillion could be invested by 2030 to reach net-zero emissions, according to the 2021 ‘Net Zero by 2050’ report from the International Energy Agency (IEA).  States and utilities should start identifying areas now that will be in need of new transmission and consider how they will gain community input on siting.

While Hawaii hopes to be the template for achieving net zero.  One size does not fit all. What works in Hawaii for power generation won’t work in every state.  However, the transition plans, incentives and penalties are worth taking a closer look.  Other states implementing elements of performance-based regulation and comprehensive restructuring, like Hawaii, include New York, Rhode Island, Minnesota, and Massachusetts, Washington, Illinois, North Carolina and Connecticut. Marissa Gillett, Chair of Connecticut's Public Utilities Regulatory Authority said about energy transition and utility reform, "I am sensitive to the fact that this is an industry that's existed for centuries at this point and moving them in a different direction you have to overcome a lot of inertia." 

Today concerns about the lack of federal backing on proposed decarbonization roadmaps were voiced.  For utilities, the concern is reducing fossil fuels while maintaining reliability. Is more spending on natural gas and distribution systems necessary to facilitate the influx of variable clean energy resources?  Will utilities be able to reach the ambitious goal of net zero by 2050?