Butch

California Not a Trendsetter on Energy Policy

I have watched the train wreak that is California "energy policy" develop for over 20 years. The only constant is this: fantasy posing as philosophy trumps rational thought ever time. Searcher hit the bullseye with his/her comment above.

The Need for a New Utility Regulatory Model

Your assessment that the current State regulatory structure for utilities needs to change is spot on. Most of the reasons that you present however are nothing more than an incoherent and unsupportable rant. The crux of this issue is simply that the current regulatory scheme does not offer retail customers any choice. All they get is what the regulator allows them to buy and it is based on concepts that customers do not support.

While the FERC regulations allow non-utility generating companies to sell into wholesale markets there is no retail market to complete the link the customer/consumer. The FERC has enshrined the RTOs and ISOs as the "market makers". But in they are no better than the state regulators. There is no competitive market in sense of many buyers and many sellers. Each RTO and ISO buys the energy for its service area through auctions - one buyer and many sellers. The transparency that we would have if the energy contracts were traded on the NYMEX, for example, does not exist. Customers do not and can not know if they are getting the best deal for themslves.

The customers would be better served if they bought their energy and other services from Energy Service Companies (ESCOs) that had the freedom to create products and services that the customers really want rather than what the regulatory commissions say is good for them. The transmission and distribution companies need to be decoupled from the customer in the sense of selling electricity and focus solely on transporting it from the generator to the consumer at a fixed monthly charge based on the customers' maximum contractual requirements for power.

Finally, this structure needs to be implemented across the board to all customers in all States. All utility business structures need to be put under the same set of rules whether they are investor owned utilities, municipally owned or co-ops. The current mix of different structures in different States is inherently unfair to consumers.

Smart Grid's Chicken and Egg Problem: Will Utilities or Customers Lead?

It may come as a surprise to many but what is today called the smart grid has been evolving on the utility side for 20 plus years. The primary reason for the slow evolution (relative to silicon valley time lines) is primarily two fold. First, the technology is only now becoming mature and cost effective. Second, utility regulators are charged with ensuring that the rate payers (which is what they call the customers) pay as little as possible. Their methodologies for doing this are somewhat arcane but boil down to deciding if an investment is prudent before putting it in the rate base and allowing the utility to try earn a rate of return on the investment. Until recently regulators in the US and Canada were not convinced that the automation equipment, smart meters, communications infrastructure and computer infrastructure necessary to achieve the vision of SmarGrid as it is now advertised by GE, IBM, etal would provide benefits to the consumers to justify the costs that would be incurred. Some are still not convinced. Specifically to Jade Queen's comment, the $100 billion smart grid is not necessary for time of day or feed in tariffs. These can be accomplished with much less drama than is evolving around smart grid implementation. SmartGrid has become a marketing/branding tool to sell hardware and software that is already on the market and was already being deployed in a rational manner. Similarly, wind and solar can be implemented and integrated into the utility systems without smart grid. Don't drink the kool-aid.