The utility’s role is changing, and regulation must change along with it – to spur innovation and respond to evolving customer needs. Modernizing the industry will require a dynamic approach.
A Consuming Passion
Ratepayer advocate Michael Shames has been fighting utilities for a quarter century.
few in the policy world who support the notion of promoting renewable, decentralized power more than I. Yet, I have never been a fan of the mandates, as I don’t believe that the technologies are ready for prime time. So California will be paying a premium for wind, geothermal, and biogen whereas we should be applying that hefty premium to solar, fuel-cells, and other hydrogen-based generation technologies.
I wish we also were applying a portion of that premium to demand-side technologies, such as LED lighting or other energy-reduction technologies. I have long been an advocate of the Lovins doctrine (see “People in Power,” June 2007, p. 12) that negawatts are the cleanest form of energy available to the United States. California, for all of its commitment to demand-side investment, really has just touched the surface of demand-side potential.
Fortnightly: In your job as a consumer advocate, how do you balance the goal of low rates versus the seemingly huge costs of developing renewables and controlling carbon emissions? Have you begun to warn consumers of future rate increases?
Shames: I would argue that a responsible consumer advocate is neither compulsively parsimonious nor a knee-jerk naysayer. Rather, the advocate god that I worship requires that one have a vision to advocate for as well as against.
So when it comes to renewables or carbon emissions, I try to focus more on the need for regulators to promote distributed generation and emerging technologies. And if those investments require increases in rates, I try to find areas where rates can be decreased.
In the 21st century, regulators should be expecting and demanding higher rates of productivity of utility management—at least comparable to private industry. So I believe that some of the upward pressure on rates can be balanced by more realistic regulatory expectations on the part of utility management.