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.
California “Blue Book” project and the other early discussions about a “vision” of electric utility competition?
Shames: Yes, I was very deeply involved in that process. I was (and remain) very skeptical about the alleged benefits from retail competition in the electric services industry.
I believed then (and now) that the real competition to utilities will come from disruptive technologies in distributed energy generation and demand-side developments.
Fortnightly: When you say “disruptive technologies in distributed energy generation and demand-side developments,” do you mean that, just as telephone competition went nowhere before caller ID and cell phones, so too we won’t see electric competition succeed until it makes a difference in people’s lives?
Shames: Actually, I’d submit that real competition didn’t develop in the telecom arena until wireless and Internet-based telephony became marginally competitive. The Internet is closer to the disruptive technology that I have in mind, and the emergence of Voice over IP (VOIP) is more of a threat than any other that the ILECs (incumbent telephone companies) have faced. Similarly, we won’t see meaningful competition until customers begin generating their own kilowatts or negawatts. The new paradigm of customer-based energy initiatives is far more threatening to utilities than ESPs (energy service providers) offering various flavors of centralized generation.
Fortnightly: Do you see any other new technologies out there that could jumpstart electric competition?
Shames: Well, advanced metering is certainly an important factor in the equation. It may well be an essential condition precedent. I wish I could point to one “ready-for-prime-time” technology, but I can’t. But I can tell you that LED lighting and the recently announced electrode-free lighting, as in a story in The Economist, are poised to be significant developments.
I’m also closely tracking the commercial development of stationary fuel-cell generation. Each of these are notable developments in almost frenetic energy technology markets. Almost a day doesn’t pass when I don’t learn of some new, promising development in consumption or generation technologies. Indeed, it’s a very exciting and confusing time to be in energy.
Fortnightly: What issue or cause at UCAN are you most proud of? Were there any issues that, in retrospect, you now feel that the consumer advocates got wrong initially?
Shames: Oddly enough, I’m actually more proud of the work I’ve done in the privacy arena (which we started in 1995, before anyone thought that privacy was much of an issue) and telecom than in energy. But on the energy front, I think my greatest contribution so far has been to recognize the importance of the distribution system and the need to upgrade that network.
Until we instill some intelligence into the local distribution system, we will never be able to fully incorporate nor incent the benefits of the emerging energy technologies. I pushed SDG&E into incorporating interactivity and home area network functionality into its Advanced Meter Initiative and plan to continue to fight for investment in the distribution grid, as opposed to transmission or centralized generation.
Fortnightly: Are renewable mandates compatible with competitive power markets?
Shames: The renewable mandates are a vexing objective. There are