Fortnightly Magazine - March 2017

FERC, Renewables and Potatoes

Hidden Costs of Externalities

We continue to rush towards a renewable future without considering overall system design, the costs that various renewable scenarios impose on grid operation, and the operation of the grid with these scenarios. When the externalities of climate change and ocean acidification create an overwhelming mandate to move away from fossil fuels, we have no choice but to go forward. Shouldn't we try to pick the cheapest path?

Risk and Utility Sector Cyber Attacks

Extreme Weather Events Give Insight to Regulators' Response

Over the past several years, Moody's Investors Service has published original research on cyber risk as a factor of growing importance to credit analysis. Lesley Ritter leads Moody's cyber risk research from the perspective of the utilities sector, and addresses some key questions.

Investing in Innovation

Utilities Scaling-Up

Innovation success will require that utilities build distinct internal capabilities combined with parallel, directed future investment. However, they will supplement this activity simultaneously with external leverage through venture capitalists, start-ups, OEMs, partners and acquisitions. This formula is already being followed by a number of companies that have been leading the sector in formalizing innovation as a capability.

Helping Legislators Understand and Manage Utility Risks

Performance, Political, Customer Expectation, and Fiscal Risk

It is important to help legislators and regulators understand the utility's risk management decisions so that they can approve of the company's risk management strategies. Legislators and regulators are accustomed to thinking in terms of insuring against failures.

Why Are We Still Arguing About NEM?

Competitive Market Will Take Care of Next Burning Issue

I do not understand why we are still distracted by Net Energy Metering (NEM). It worked well when we had not-so-smart meters and were trying to encourage rooftop solar penetration. People in general and students of regulation in particular are left confused and can easily find some support for both sides. This results in conflicts and proposed compromises that keep the debate going at full tilt. Two things are missing or mostly overlooked in all this regulatory discourse.

What if Elasticity is Changing?

New Risk for Electricity Sellers and Investors

A downward shift in peak usage may mean a beginning change in elasticity of demand. A more rapid and pronounced downshift in peak demand might suggest a less robust utility franchise value.

The Electric Utility in 2030

Fat or Skinny?

Debates over utility business and regulatory models have sidestepped a fundamental question: What do state legislators and regulators want the electricity utility of the future to do? Do they want "fat" utilities that play a larger role in implementing public policy and delivering energy services to customers? Or "skinny" utilities that are more narrowly focused on the ownership and upkeep of the grid?

Arizona on Value of Solar

Turning Point for Distributed Energy

In December 2016, Arizona's utility regulators set in motion a new policy many believe is likely to undermine investment in solar and other distributed technologies in the state. We urge advocates and regulators looking for sustainable models of state DER policy to think carefully before following Arizona's example.