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The regulator’s role in a world divided by distributed generation.

Fortnightly Magazine - September 2014
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At a time when there are numerous questions about what the increased use of distributed generation (DG) will mean for the electric utility, many are looking to regulators for answers and guidance. One thing is clear: continued growth of DG means changes to the historical utility business model. Such changes will create challenges and opportunities for utilities, consumers and regulators alike. In order for utilities and consumers to accept these challenges and embrace opportunities, regulators must ensure a smooth transition into the future by starting a dialog with all stakeholders, including utilities, DG and non-DG customers.

For utilities, increased use of DG can mean a loss of customers and a decline in revenue. The falling cost of solar combined with rising grid costs is making solar an affordable and attractive option for many consumers. In fact, in the U.S., there was more solar installed in the first quarter of 2014 than any other source of electricity. (GTM Research, FERC Energy Infrastructure Update, March 2014.) Additionally, the development of battery storage technology has the potential to enable some customers to drastically reduce their purchases and perhaps, in the future, detach from the grid completely.

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