EDITOR’S NOTE: Patrick M. Hogan, Pacific Gas & Electric senior vice president, Electric Transmission and Distribution, recently addressed The California Renewables Rush conference in San Francisco. This article is extracted from his remarks.
The modern, resilient, dynamic electric grid offers our customers more choice, more control and more convenience when it comes to their energy.
PG&E won’t be the only player on that grid.
For example, we’re proposing a pilot project to test the idea of replacing the aging underwater cable that supplies power to Angel Island, in San Francisco bay, with a microgrid system that would combine on-site wind and solar generation with storage to manage all of the island’s energy needs, and help the state park system meet its clean energy goals.
That could involve inviting companies that make the necessary components to design parts of the system around their technology. Who would own that equipment, and how the costs and responsibilities would be divided, have yet to be decided. But we’re working with the California Public Utility Commission and others to explore the idea.
Of course, there’s another piece of the puzzle, one that can’t be forgotten amid the enthusiasm for clean energy solutions.
Unlike other businesses looking to join us in the energy space, utility companies have unique responsibilities. An essential part our job is to make sure the system works for everyone.
The investments and infrastructure that make it possible for the fortunate among us to connect private solar panels and charge an electric vehicle in the garage must also continue to serve our 1.5 million customers who qualify for low-income discounts.
That’s why we pay so much attention to the costs of integrating new clean technologies into our system, and who bears these costs. We’re already seeing how this can tilt the playing field over the long term.
The benefits of a clean-energy future have to be accessible and affordable to all. No one can be left behind. That’s a responsibility we will not walk away from.
The electric system has to be reliable for everyone. When there’s a storm or a major earthquake, people need to know there’s someone they can count on to restore power and get everyone back on their feet quickly. It’s hard to see who else would do that.
So when you take in the full picture, the more you try to plan for a clean energy economy, the more it becomes clear that our century-old pricing model -- the one which assumes the only product a customer receives from the grid is a kilowatt-hour -- will no longer make sense. Paying for the grid through volumetric rates and revenues isn’t going to work anymore.
In a future where energy is generated and used differently -- and grid loading is changed by increased energy efficiency, distributed generation, and Community Choice Aggregation -- the cost of the grid should be recovered in a way that reflects the value of the services provided, not on the amount of energy delivered.
Although some may view clean energy technologies as a way to cut ties with the utility grid, the reality is most aren’t feasible without it, and many use the grid even more intensively than before.
This means moving toward a rate structure where utilities are compensated for the grid services we provide to customers and customers receive clear value for the things they bring to the grid.
In the meantime, we’re working hard to implement new approaches to energy storage and other applications through the various efforts being led through the CPUC.
That’s part of the point, though. Clean energy technologies will continue to change and multiply, but we need the right regulatory framework that can help further the market and create a clear path instead of a piecemeal approach.
Even in an industry that has continuously changed since its inception, I don’t think there has ever been a period quite like the one we’re in now.
Except, perhaps, for those very early days, when giants like Edison and Tesla first figured out how to harness electricity for the benefit of every home and business. Like them, we have a chance to make a real difference in people’s lives, to change the world for the better, and to shape the course of the future for generations to come.
It’s a very exciting time. And we’re excited to be part of it.