12 Dec 2014

This crowd-sourced platform for integrating solar could enlighten policymaking

Written by Jim Pierobon

If you could start from a clean slate to regulate electric utilities, how would you begin and how would you reflect the changing dynamics in the electricity industry, especially with respect to solar energy and distributed generation?

In what could be a very interesting exercise, the Solar Electric Power Association (SEPA) is asking for fresh thinking about how to balance the conflicting interests of stakeholders. SEPA’s calling it “The 51st State Challenge”.

At the core of this exercise are questions such as:

1. Is it more or less an opportunity to showcase the interests of utilities trying to protect their turf? Or might policies that can benefit all stakeholders, including suppliers and financiers of solar and other distributed energy systems be provided balanced, credible and transparent treatment?

2. What rights to homeowners, small business owners and other organizations have to generate their own electricity and without excessive monthly charges beyond their monthly bills? And how should any excess generation be reflected be treated through improved net metering policies?

3. What rights to utilities have to inhibit or effectively block solar investments that benefit economies where it operates through regulations and legislation?

4. How are the interests of non-solar ratepayers affected? How best to determine if they are hurt financially?

“Our goal,” SEPA states, “is not to identify one outcome but rather to find multiple frameworks that resonate and provide a platform for all stakeholders to participate in our energy future together.”

If you look at who is going to be judging the submissions, which are due February 27 starting here, there is reason to believe the submissions will be assessed fairly. Three of the five reviewers – Ron Binz, Susan Tierney and Jigar Shaw — have staked their careers on cleaner energy businesses and /or policies that are sustainable economic and environmentally. Only one – former Duke Energy CEO Jim Rogers – has worked most of his career utilities.  See below for brief profiles.

Submissions, which are to be shared online as soon as all of those meeting the deadline are in and packaged for viewing on the web, are supposed to focus on constructive suggestions without attacking anybody or industry positions. They are to “allow for continued growth of the solar and DER (distributed energy resources) markets” while providing for cost recovery without promoting “any specific product or tool.”

SEPA also is asking submitters to discuss how their proposals affect “each stakeholder group” and to explain the underlying tenets of those proposals for rate structures. Submissions are to use principles of public utility rates widely associated with James C. Bonbright, who co-authored Principles of Public Utility Rates in 1988. The process is open to alternative approaches.

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This flow chart illustrates the screening criteria to be used by staff at the Solar Electric Power Assn. and then the scoring criteria to be used by the five reviewers. CREDIT: SEPA

Fast forward to the presentation of some visionary ideas: one or more of said ideas could help all stakeholders move forward productively. But in states such as several in the Southeast U.S. where utilities exert a lot of control over electricity policy, e.g. Dominion Virginia Power, will any idea or the process matter?

Bob Gibson, Vice President of Education and Communication at SEPA, said in an interview “We hope it will be taken seriously by them” referring to Dominion, which is a current member of SEPA.

“Solar is that bellwether change,” Gibson said. “Customers are now getting control over their energy future. That really is forcing attention. We have every reason to hope new ideas will take hold.”

Gibson credited John Sterling, SEPA’s Senior Director of Utility Strategy (photo), for jump-starting the idea of a “clean slate”. The ensuing staff discussion began with: “What if we offered to bring together the best ideas  . . .”

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John Sterling,  Senior Director of Utility Strategy at the Solar Electric Power Association, is credited with the idea of asking utility stakeholders to submit ideas to better govern solar and distributed energy. Photo from John Sterling’s LinkedIn profile.

Gibson said SEPA doesn’t expect one organization or person will come up with “The Plan”; rather SEPA is looking for “elements of a better plan” from a variety of submissions. “Given the realities (of solar’s dramatic growth and utility shareholder interests), how can we let the solar market flourish”, Gibson asked.

Here are short profiles of the five reviewers:

Ron Binz is utility policy consultant.  He was appointed by Colorado Governor Bill Ritter to the Colorado Public Utilities Commission in January 2007 and served until April 2011. As Chairman, Ron led the Colorado PUC in implementing the many policy changes championed by the Governor and the Legislature to bring forward Colorado’s “New Energy Economy.” Ron meanwhile was an active member of the National Association of Regulatory Utility Commissioners.  President Obama nominated Binz to become chairman of the Federal Energy Regulatory Commission but following a confirmation hearing in a U.S. Senate committee reflecting opposition to his priorities, he asked the president to withdraw his name from further consideration.

Nancy E. Pfund heads a venture capital firm whose goal is to combine top-tier financial returns with meaningful social, economic and environmental returns. She currently sponsors or sits on the board of directors of several companies, including; SolarCity and BrightSource Energy and prior to their public offerings, Tesla Motors and Pandora Media. Before  founding DBL, Ms. Pfund was a Managing Director in Venture Capital at JPMorgan. Previously, Ms. Pfund worked at Intel Corporation, the State of California, Stanford University and the Sierra Club. Ms. Pfund was featured #17 in the FORTUNE World’s Top 25 Eco-Innovators.

Jim Rogers was chairman of Duke Energy’s board of directors and served as the company’s president and CEO from April 2006 until July 2013. Over the course of his 25 years as a CEO in the electric utility industry, he delivered an average total shareholder return of more than 12 percent per year by focusing on sustainable growth, stakeholder engagement and finding business solutions to environmental challenges. Rogers has served more than 50 cumulative years on the boards of directors of eight Fortune 500 companies. He is also active with numerous nonprofit boards, including his current role as chair of the Global Sustainable Electricity Partnership, a nonprofit organization composed of the world’s leading electricity utilities.

Jigar Shah is best known for his foray into realizing his vision of climate wealth with the founding of SunEdison in 2003. SunEdison became and remains one of the world’s leading solar services companies for the way Shah simplified solar as a service by implementing the power purchase agreement (PPA) business model.  The SunEdison business model enabled massive, scalable deployment of existing solar technology that turned solar into a multi-billion dollar industry worldwide. He is author of the book: Creating Climate Wealth: Unlocking the Impact Economy. He runs a consulting business and serves as a board member of the Carbon War Room, the global organization founded by Sir Richard Branson and Virgin United to help entrepreneurs address climate change. He served as the Carbon War Room’s first CEO from 2009-2012. Prior to SunEdison, Shah worked within strategy at BP Solar.

Sue Tierney is Senior Advisor at Analysis Group in Boston. She is an expert on energy policy and economics, specializing in the electric and gas industries. She has consulted to companies, governments, nonprofits, and other organizations on energy markets, and economic and environmental regulation and strategy. She previously spent over a dozen years in state and federal government – as Assistant Secretary for Policy at the U.S. Department of Energy; and as cabinet officer for environmental affairs, public utility commissioner, and chair of the Massachusetts Water Resources Authority in Massachusetts. She currently chairs the External Advisory Board of the National Renewable Energy Laboratory, chairs the ClimateWorks Foundation Board, and is a director of World Resources Institute, the Alliance to Save Energy, Resources for the Future, and the Energy Foundation.

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