Ben Moffat

Thursday, July 27, 2017

Corporation commissioner: Market change forcing regulators to adapt

WASHINGTON – For most people, electricity is simple: Flip on a switch or plug into the wall and power your devices.

But for power companies and the regulators who oversee them, emerging technologies and innovations have introduced complications that are forcing administrators to rethink how they do their jobs.

That was the message Arizona Corporation Commissioner Doug Little brought to Washington, where he was part of a panel discussion this week at the Smart Electric Power Alliance’s Grid Evolution Summit. Little told the audience of industry officials and policy experts that regulators need to “stay out of the prescription business” when it comes to finding the best way forward, both for themselves and for the power companies they oversee.

“What’s happening in terms of the way that the industry is evolving, and in terms of the technology innovations and the way the industry is changing, people are asking their utility companies today for things that, 25 years ago, they never would have considered asking them for,” Little said.

As an example, Little pointed to the initial clamor for compact fluorescent lights when they were first introduced.

“There was a time that CFLs were designated as being the best way to reduce energy consumption and get away from incandescents, and now if I drop a CFL in my house, it turns it into a toxic waste site,” he said.

“LEDs were not even on the horizon, but now I think we all agree that LED technology is absolutely the way to go,” he said. “The market found a way to make it happen, not the legislators saying, ‘This is the best technology.’”

-Cronkite News video by Noelle Lilley

But Little also questioned whether the market always makes the right decisions, and said free-market capitalism needs to be balanced with regulated monopolies, like Arizona Public Service.

“What we’ve seen happening is, in some of the organized markets, you’re driving to the lowest cost per kilowatt-hour, and some of the things that are important to the stability and resiliency of the grid… traditionally have just come along for free,” he said.

“When we had coal, when we had nuclear, when we had gas – the introduction of renewables has changed that equation a little bit,” Little said in the session.

Tanuj Deora, an executive vice president of SEPA, said Little took a “thoughtful” approach on the four-man panel, which was composed of two Democrats and two Republicans, two regulators who were elected and two who were appointed. Deora said that while the content at the conference may have flown over most people’s heads, it was still an important topic.

“It touches our lives all the time,” he said. “All the equipment here comes from electric power. Really, the electric power system is fundamental to modern civilization.”

But, he said, the power grid is too important to ignore.

“On some level, everyone should care,” Deora said. “But, of course, we often take it for granted because we just expect it to be there when we need it.”

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