Illinois Approach to Regulating Distribution Utility of the Future

Deck: 

Annual formula rate is working to stabilize distribution ratemaking.

Fortnightly Magazine - June 2016
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It is clear that the electric utility industry is in a state of transformation. It is also becoming increasingly clear that this does not signify the end of the electric grid.

Certainly it will cease to exist as we have historically known it over the past century. But this transformation is logically redefining the grid in a manner that increases its value to all participants in the industry.

This is an industry that is quickly moving from a monopoly system, based on one-way power flows from large central station generators, to a decentralized and increasingly competitive system featuring proactive consumers who can instantaneously, automatically, and without notice switch back and forth between being electricity loads and electricity sources. All this will require a highly reliable and resilient electricity grid to serve as the foundation (the backbone, if you will) of these emerging markets. Without it, these markets will not emerge and cannot exist.

Therefore, one necessary condition for a market transformation that ultimately benefits all is the continual upgrade and maintenance of the electric grid. This brings into question whether the current and traditional method of regulating public utilities best accommodates the anticipated changes in the electric distribution services industry.

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