Guidehouse
Chris Smith is a director in Guidehouse’s Communities, Energy & Infrastructure segment, where he specializes in energy policy and regulatory strategy. Leveraging his firsthand experience working at large investor-owned and municipally owned utilities, Chris advises utilities in the development and execution of strategies for meeting organizational goals, pursuing growth opportunities, mitigating risk, and achieving ambitious policy objectives.
With a background in utility regulation, ratemaking, wholesale power markets, energy resource planning, and decarbonization strategies, he brings a deep understanding of the complex regulatory and stakeholder engagement processes that impact utility planning, rate design, and program design.
What near-term actions should utilities take to address the prospect of exploding load growth and what should they be doing to deliver necessary capacity and optimized outcomes for all stakeholders?
Chris Smith: Arguably no issue has received more industry attention over the past year than rising electricity demand. The confluence of data centers to power AI, onshoring manufacturing, and longer-term electrification of buildings, transportation, and industries indicates an extended growth period not witnessed since the 1980s.
A recent Grid Strategies report, “Strategic Industries Surging: Driving US Power Demand,” that analyzed public filings, determined that U.S. electricity demand could rise one hundred twenty-eight gigawatts over the next five years – a seventeen percent increase. This growth will likely be concentrated in certain regions, so it could significantly strain aging electric systems absent substantial new capital investment on an accelerated timeframe.
Meeting this challenge requires focused attention if utilities are to maintain reliable and affordable service. Today’s electric system planning, construction, and regulatory processes are designed to manage moderate levels of growth, but lack the flexibility, scaling, and pace needed to manage sustained surges in new customer connections and large load additions. Further, building new infrastructure to connect large customers introduces financial risk if loads do not manifest at the anticipated size.
A multi-faceted, integrated approach using a centralized capital programs office could accelerate the new ways of operating and planning systems. Key elements include:
Planning – Identifying planning needs and least-cost solution alternatives;
People – Scaling and capability building to manage an increased capital portfolio;
Process – Standardizing project management practices to scale and gain process efficiency improvements;
Technology – Enabling advanced analytical capabilities through AI and automation;
Policy and regulatory – Identifying and advocating for needed policies and regulations; and
Value realization – Establishing a framework for identifying and realizing business benefits.
By combining these elements into an integrated strategy, a utility can optimize outcomes for its customers, reduce operational and financial risk, and strengthen its reputation. With improved line of sight, leadership can direct resources where they are needed most so that the utility is ultimately viewed as an enabler, rather than a barrier, to continued growth.
