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 second part of a three-part series.
There is increasing momentum across the country to address customer expectations in this new digital economy – and the Utility of the Future – and regulators must be able to respond to challenges like aging infrastructure, volatile weather, and cyber and physical security.
Regulators need to be forward looking, just like the technologies that utilities are designing, to enhance customer value and promote energy efficiency.
It’s essential that Illinois begin to think about how to develop these policies and continue its leadership role in the industry.
What this evolution calls for, and what is really needed to get it right, is more collaboration and a transparent planning process as we develop a regulatory framework that will serve the public interest and help the Utility of the Future fulfill its potential.
Today there are more questions than answers and that’s where the hard work begins.
For example, we must get a better understanding of the emerging trends and forecasts for key areas driving change such as DER growth, EV penetration, grid defection, forecasting load and future demand, changing load shapes, and the evolution of markets for energy products and services.
Some of the big questions we need to answer through this process include: How are customers empowered to fully benefit from the utility of the future?
What are the key facts about utility service that customers should understand in order to benefit from changes in the energy landscape?
What are the best options for ensuring universal service and assisting low-‐income customers? Should the role of the utility be modified or redefined and what are the pros and cons of identified options?
Should the distribution utility be redefined as a Network Service Provider to facilitate integration of DER and new technologies?
Would Illinois benefit from separating the function of electricity delivery from the function of Distribution System Platform Provider?
What new energy products and services would maximize the value of the investments that Illinois utilities are making to better serve customers and promote energy efficiency as a result of the smart grid law?
What are the best ways to encourage innovation and investment, promote efficiency, and improve the environment?
What about the regulatory process and procedures?
Is there a need to streamline regulation in the face of rapidly evolving technology and circumstances?
How can regulation encourage innovation in services while maintaining consumer protections?
Is there a need for heightened oversight of competitive providers of energy services? Are changes needed in data access and protection rules and protocols?
What rate design is needed?
How can AMI and new technology be used to align rates with costs, improve load shapes, and mitigate cost-‐shifting between customers?
What are the effects of alternative rate designs on different customer groups?
Again, these are just a few questions and I am sure the process will generate many others. What I can say with certainty is that a transformed energy landscape poses new challenges and opportunities, and a clear definition of the regulatory scope and responsibilities is needed to effectively facilitate the development and implementation of smart technologies and digital networks, as well as to address the changing function of public utilities.
Brien Sheahan is chairman and chief executive officer of the Illinois Commerce Commission.