EDITOR’S NOTE: Brien Sheahan, the top utility regulator in Illinois, the nation’s fifth most populous state, delivered a major address on the future of utility regulation at the Empowering Customers and Cities conference in Chicago earlier this month. Following is an excerpt from that speech, the first part of a three-part series.
With rapid changes in the traditional utility paradigm occurring globally and nationally, Illinois should embrace its historical role of energy innovator and leader by crafting solutions to minimize energy costs to customers, maximize beneficial deployment of new technologies, reduce environmental externalities, improve the competitive electricity market, and enhance utilities’ ability to ensure adequate, efficient, reliable, safe, and least-‐cost public utility services.
Evolving consumer interest, more stringent environmental standards, and the steady advance of new technology are driving the transformation we are witnessing. And although this transformation is disruptive to the electricity sector, it is revolutionizing how we think about, produce, and use power.
These changes are also compelling regulators in Illinois, and throughout the nation, to address some of the most important issues the industry has faced in more than a century while balancing the interests of consumers and utilities.
Today’s new dynamics of electricity supply, demand, and storage hold great promise for consumers and significant social benefits; all facilitated by our restructured markets and the quickly developing smart grid.
These new dynamics also present significant challenges and opportunities to utilities that will have to seamlessly integrate distributed energy resources, and offer solutions that empower customers to make smarter energy choices while also protecting the interests of low-‐income customers. There is a growing consensus that while the role of utilities has been relatively static since the turn of the 19th century. Their job is going to dramatically change in years to come.
This changing energy landscape poses new challenges, and opportunities, for customers, suppliers, and regulators who must understand the expanding array of new options to make good choices; seek to enter new markets; and ensure that customers are treated fairly. Utilities will continue to have to provide energy security, affordability, and sustainability.
Importantly, processes designed to ensure consumer protection must also evolve and adapt to this new faster pace of change and continue providing effective safeguards while supporting—not hindering— innovation.
The Illinois Commerce Commission is considering an approach to help make this happen—a stakeholder engagement process that will be focused on developing a shared base of information, facilitating engagement, and addressing critical issues facing the electricity utility industry in the coming decade and beyond.
This initiative is being developed as a non-‐docketed collaborative process that will conduct research and analyze Illinois’ electric industry with the ultimate goal of reaching consensus on how to meet the evolving needs of customers and the utilities that serve them. The process would be consistent with Illinois’ history of leadership in energy policy.
Passage of the Electricity Restructuring Law in 1997 opened the door to energy competition, customer choice, and innovation, and has resulted in tens of billions in cost savings for Illinois electricity consumers. As a result of this important reform, Illinois moved from being the highest-‐priced state in 1997 to being among the lowest.
Almost a decade and a half later, Illinois continued to lead with adoption of the 2011 Energy Infrastructure Modernization Act, also known as the Smart Grid law, which is modernizing the grid infrastructure. Installation of smart meters will improve reliability, resiliency, and security, while also creating thousands of jobs.
In addition to initiating substantial investments to improve the reliability and operational efficiency of the grid, the legislation also authorized upgrading the grid with new digital communications and control technologies to enable customers to better manage energy consumption and costs through emerging technology and services.
These developments in energy technology and services present an opportunity for Illinois to build upon a restructured market and smart grid energy policies.
Brien Sheahan is chairman and chief executive officer of the Illinois Commerce Commission.