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PowerForward Ratemaking and Regulation  day three recap

By Kristin Clingan

COLUMBUS, OH (March 8, 2018) - After a day of technical presentations on electric vehicles and energy storage, the Public Utilities Commission of Ohio (PUCO) turned to familiar faces and a familiar topic: Ohio’s retail electricity market. The day started with the PUCO’s very own Federal Energy Advocate Dr. Hisham Choueiki.

As the saying goes, part of knowing where you are going is knowing where you’ve been. Choueiki reviewed the restructuring of Ohio’s electric market starting with Senate Bill 3 in 1999 and moving through the passage of Senate Bill 221 in 2008. SB 221 defined the utilities’ default electric service, or standard service offer. Today Ohio utilities’ default generation rate comes completely from competitive procurement in the wholesale market. “Through staggering and laddering, we buy six different products per year and come up with a blended price to reduce price volatility,” Choueiki noted.  

Choueki also reviewed the more familiar form of competition, customers shopping for their own energy supply. The fundamentals are that government aggregation has been successful from the start, shopping is increasing and the market is developing. “PowerForward is perfect timing to be developing, innovating, researching innovative services and how to make them happen; the market is ready to develop beyond energy services.”

This is the fourth industrial revolution.  Everything is changing.

Photo: Direct Energy

PowerForward then turned to two panel presentations by current participants in Ohio’s retail market. Deborah Merril, President and Co-Chief Executive Officer of Just Energy Group shared her perspective on how retailers see the world, stressing their entire business is built on delivering innovative products and services to customers and that data access is the key enabler of that innovation. “We don’t have a right to customers, we have to earn them.”

Joe Bentley, Vice President & Market Business Leader for AES, noted that necessary stabilization of the distribution system and visibility across the system makes utilities best positioned to act as custodians. “Utilities are good at planning and you need that level of expertise for ‘plug ‘n play,’ where to put them, where to incentivize to put them,” Bentley said.

Phil Dion, Vice President, Technology Business Development for American Electric Power echoed the sentiment and emphasized the importance of system planning—with shorter planning horizons—as customers have increasing choices. “Even as the VP of TBD, I have no playbook for what’s next.” Dion also suggested that utilities be willing and able to partner with suppliers on customer solutions. “You leave a lot of value on the table if you leave the distribution utility to their traditional role.”

Bolstering the case for the role of the distribution utility came later in the day from Bradley Williams, Vice President, Utilities Innovation & Engineering for Oracle Utilities and Sandy Simon, Vice President, Grid Modernization for BRIDGE Energy Group. “We’re talking about all the moving pieces and parts that allow this far more penetrated and dynamic platform to occur,” Simon said. The speakers reiterated the need for utilities to have full view of the system, including behind-the-meter resources, and noted the importance of setting standards for how parties interact with the system in order to mitigate unintended consequences.

Matt Wheatley, Vice President, Sales and Commercial for Direct Energy; Matt White, General Counsel, Regulatory & Legislative Affairs for IGS Energy; and Dan Shields, Director of Analytical Services with the Office of the Ohio Consumers’ Counsel drew a line, however, arguing that competitive services should not be provided by the distribution utility. “Distribution is the platform, not the product,” Wheatley said, analogizing that apps fit the phone, the phone doesn’t fit the apps. The panelists stressed the importance of keeping competitive services truly competitive and on a level playing field. 

The afternoon kicked off with former PUCO commissioner Paul Centolella and the concept of a transactional market and services marketplace. Going beyond the physical assets and grid operations discussed to date, Centolella described the use of platforms to connect customers to a variety of products and services.

Joshua Wong, Chief Executive Officer, Opus One Solutions referenced previously used “walk, jog, run” images and urged the Commission to “run towards a decentralized energy economy.” Wong noted that while markets are not new and planning is not new, integrated distributed planning is new, and it is the absolute first step for good market design.

Another former PUCO commissioner then took the stage. Cheryl Roberto of TFC Utilities emphasized changing customer interests and that today some customers are willing to pay more for enhanced services. “They’re not looking for the absolute cheapest, they’re looking for value.” Roberto went on to describe a proposed Million Rate Base Program in which utilities would play the role of matchmaker, leveraging utility access to data and capital along with established customer trust to bring utility services into the home.  

To close the week, Paul Sotkiewicz, President and Founder of E-Cubed Policy Associated cautioned that one centralized marketplace is essential to ensuring reliability. In introducing the concept of a distribution-level market operator, Sotkiewicz suggested it wouldn’t mean reinventing the wheel and lessons learned from the wholesale market could be applied. “We, the Eastern Interconnect, are all part of the same machine; it should treat it as a single machine.”

Phew, what a week! Through 42 speakers we gained invaluable information to advance the PUCO's dialogue on grid modernization issues, and even found a few lighter moments to honor some greats like George Lucas, Steven Jobs and Jack Nicholson . Our thanks to everyone for your interest, time and insight at PowerFoward.

We’re taking a week off to charge our batteries and come back energized. Tune back in on March 20 to see watts next!