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BERLIN - SEPTEMBER 07: A visitor looks at a presentation of new energy-efficient washing machines and dryers at the Bosch home appliances stand at the 2010 IFA technology trade fair at Messe Berlin on September 7, 2010 in Berlin, Germany. The IFA 2010 is open to the public from September 3-8. (Photo by Sean Gallup/Getty Images)

Utilities Set New Era Priorities

Ralph Izzo, PSEG chairman, president and chief executive, will discuss his views on the utility business model in the next decade

EDITOR’S NOTE: Ralph Izzo, PSEG chairman, president and chief executive, will keynote the Energy Times Executive Briefing in Washington on March 19. Below are some highlights of the themes he will address. PSEG is New Jersey’s largest electricity provider and Izzo is a key industry thought leaders on the utility of the future.

Energy Times: What will be the main changes in the utility business model in the next decade?

Izzo: The future of the utility industry will be driven by three forces. Technological advancements are changing the way energy is generated, delivered and used. There is increasing customer demand for reliability, while reliability is becoming harder to maintain. There is an urgent need to reduce greenhouse gas emissions.

Energy Times: How hard will it be for utilities and energy companies to pivot and change their culture to deal with change?

Izzo: While these changes pose significant challenges, if we create the right policy framework and set the right investment priorities, they can be met. Utilities will need to expand their mission to align with the changes in customer behavior and society, focusing on ensuring reliability, reducing customer bills and combating climate change. Utilities should be held accountable for their performance on meeting these outcomes.
However, the current regulatory framework must also change to incent utilities to expand their mission and deliver on these goals.

Energy Times: How important will energy efficiency be going forward?


 

Ralph Izzo

 

Izzo: Unleashing the full power of energy efficiency has the potential to save
consumers billions of dollars nationwide, while making a lasting contribution to the fight against climate change. Energy efficiency’s bang for the buck from a carbon reduction
standpoint is unmatched by any other clean energy solution including renewables. When done right, all consumers can benefit, regardless of their income, home ownership status, or credit rating. Energy efficiency is not just less expensive than all other clean energy options, but less expensive than all energy options, including
traditional generation.

Energy Times: What is the best way to motivate energy users to become more efficient in their energy use?

Izzo: Customers are in the dark about their usage until their bills come each month. Customers also don’t understand the real value; they underestimate benefits and overestimate cost. What’s needed is better data, tools and programs to reduce usage given as a basic service to all utility customers. To enable consumers to pursue energy efficiency investments, we need to equip all customers with the tools they need to make energy efficiency accessible and easy to implement.

Energy Times: What energy policies are needed most to change the electric sector?

Izzo: We need a new regulatory structure which better aligns the utility’s interest with its customers and society. The framework should empower utilities to make investment decisions while holding them accountable for the results customers and policymakers demand. Utilities should be given an incentive (or at least be made indifferent) to invest in energy efficiency as compared to traditional grid improvements.  

Energy Times: Any additional points you care to make?

Izzo: Now is a great time for us to achieve our energy efficiency goals. Customers have been largely spared the bill impact of necessary infrastructure investments because of low gas prices. In fact, they have reaped substantial savings from abundant, low-cost gas supplies while enjoying the benefits of improved reliability. PSEG combined electric and gas customer bills have declined more than 23 percent since 2008. This has helped in the short term but over the long term energy efficiency is the best way to help customers save on their bills, as we continue to invest in our infrastructure.

 

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