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Efficient Regulation, Efficient Grid

Intelligent infrastructure requires an intelligent policy framework.

Fortnightly Magazine - August 2009

for a series of checks and balances as the current state of the utility system serves as the baseline with critical performance metrics inserted and revisited on a regular basis. This allows regulators and other governing bodies to monitor performance to insure the value created is properly distributed to customers as well as investors or financiers. Also, the GEF can be factored into the integrated resource planning (IRP) process, for those jurisdictions requiring it, using measures that recognize the full value of these programs, including the carbon, energy and capacity reductions. At the planning level, this will stimulate additional and alternative investments since important inputs into an economic life assessment of a generation alternative will be altered. In order for the GEF methodology to take hold, a different view of utility technology investments will need to be developed. Given the relatively nascent nature of intelligent infrastructure, the next few years will require significant analysis of the benefits of a more efficient grid. Regulatory support is at the heart of moving the entire system ahead. And, as the quid pro quo for that support, utilities will need to invest in high levels of monitoring, measurement and verification to justify the investment and near-term rate impacts. GEF will require utilities to make bold moves that will help protect their futures, lower carbon and increase efficiencies. It will require regulatory encouragement and financial support, including all types of utility oversight. Additionally, it will require public education and understanding, and explicit financial certainties including working carbon markets.

Success in the early years of the GEF will require companies to have a deep understanding of electricity markets and the regulatory environment. It will require utilities to bring together all sides in the discussion and thoughtfully balance the interests of all parties. This balancing of interests will require analysis down to the feeder level and back across its smart grid and related investments in order to gain regulatory support for AMI and smart-grid investments.

A new GEF will redefine the way the nation justifies and implements intelligent infrastructure, and this will be the foundation that attracts the capital that will make it happen.