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The New Normal

Our economic future depends on adaptability.

Fortnightly Magazine - September 2009

closing the loop between smart meters and wholesale energy resources, turning customer demand into a tradable commodity. Experiences so far in the PJM market suggest demand resources represent a fertile area for growth. And the smarter the grid gets, the more dispatchable and reliable demand resources will become (see “ Wholesale Market Realities ”). Eventually, if advanced metering continues on its current trajectory, ratepayers will become smarter consumers of electricity with minimal effort on their parts. Rising costs will provide all the incentive they need to accept new metering technologies, and green-policy programs might provide a final push.

Toward these ends, many companies across the country are seeking changes in their rate structures to ensure their shareholders’ incentives align with today’s policy priorities and tomorrow’s technology possibilities. In this way, the industry’s operating model is evolving toward something less centralized, more transactive and more cost-efficient than it otherwise might be.

Whether or not El-Erian’s new normal becomes a reality for the U.S. economy, the utility industry is facing fundamental changes. The ability to adapt to those changes—and to turn them into opportunities—will differentiate winners from losers in the industry’s new normal.

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