ORIGINAL REPORTING: Better Price Signals To Customers for New Energy

Beyond fixed charges: 'Disruptive Challenges' author charts new utility path; If Peter Kind's 2013 paper put the utility sector on notice, this one could give it whiplash

Herman K. Trabish, November 12, 2015 (Utility Dive)

In "Pathways to a 21st Century Utility," Peter Kind – who warned utilities of coming "Disruptive Challenges" in 2013 – proposes a profound shift in how business should be done in the sector. The ultimate aim, he told Utility Dive, is a more nimble and competitive sector, likely made up of smaller utilities, that would help resolve the regulatory bickering between utilities, policymakers, and third party energy providers that has characterized the period since the publication of his 2013 work. And that new sector wouldn't be one that pushes policy proposals like high fixed charges.

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When that disruption begins to impact investor returns, “the cost and availability of capital to fund the utility sector will suffer,” he warns. “We must revisit the industry model to ensure alignment with customer and policy goals, while also ensuring that utilities and third-party providers are properly motivated to support their customer, societal and fiduciary obligations,” Kind writes. Four key changes are needed for a 21st Century electric utility, the paper reports:

-The utility must be engaged to be at the center of resource integration and stakholder collaboration, and achieve policy objectives through accountability and incentives.

-Regulators must shift focus to integrated distribution system planning and develop transparent accountability metrics.

-Utility revenues must reflect incentives earned for deployment of DERs, energy management services, and other new technologies, and must be penalized if this does not happen.

-Utility planning must identify the most cost-effective technologies and cap customer incentives based on the most economical options to achieve policy goals…” click here for more

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