(August 2011) Economic consultant Michael Rosenzweig challenges Constantine Gonatas’s proposal for ensuring FERC’s demand response rulemaking achieves its objectives. Also, Juliet Shavit...
Technology for the Masses
The consumer-centric smart grid and its challenge for regulators.
innovators out of this market seems an impossible goal. Managing the process and keeping order seems like a more achievable aspiration.
If all this makes a new round of regulatory scrutiny inevitable, the threshold regulatory question is: Who owns and can access the use data of regulated consumers? One obvious answer is to start with the proposition California 12 recently adopted that consumers have a right to know and have access to useful information related to energy use on their premises. This might also lead regulators to conclude that consumers should also be allowed to designate an approved third party to access and use the available energy use information for specific software applications to improve energy efficiency. If regulators decide that the ownership and responsibility for accuracy of the meter falls to the utility, the regulatory answer for access, particularly for third party designees, becomes more complex and far less certain or obvious. Some state regulators have also needed to consider and address privacy and security issues.
The privacy issue might appear to be a red herring because the very obvious solution would be simply to deny third-party vendors access to the utility’s billing domain, where energy use and price information is supplied to consumers. Since most consumers often find their bills to be incomprehensible, this could prompt renewed efforts to revise and reform current bills to make them more user friendly. Regardless, when the details emerge in regulatory filings across the nation, regulators and other parties will quickly realize that there are vexing complexities that can’t be casually dismissed. Information needs to be accurate, meters designed to be mostly tamper resistant, and the definitions of either a utility or utility services often must reflect legislative judgments and language based on very different technologies and applications. These matters can’t be avoided, but they need not be daunting. The benefits and rationale for addressing and bringing them to a sensible resolution are potentially great. 13
The various state regulatory commissions quite likely will have different approaches and answers to the information access questions. A single utility industry answer is also unlikely to emerge. Regulators will need to determine whether the information should be made available to customers or their agents in something close to real time. A related matter is the extent to which appliance-specific management or control is a regulated utility service under load-management retail tariffs, and by extension, whether it will be made available to third-party demand-side management aggregators or even sold into wholesale markets. If yes, then the developers of the software and hardware that complement utility meters would compete to sell their solutions directly to utility companies. If no, what happens on the other side of the meter is mostly a consumer decision. This scenario is akin to the consumer as ruler of his or her domain. Utilities would become much like telephone companies that have virtually no say in what devices people choose and how they use them. If utility companies or their regulators push back or procrastinate, pressure will mount from both consumers and entrants that offer