ORIGINAL REPORTING:Bringing More People In On Power System Decisions

A utility regulatory process for the 21st century gets a test run in Hawaii; A set of regulatory workshops advanced a more collaborative process among stakeholders and a reduced utility role to more quickly facilitate the power sector's transformation

Herman K. Trabish, March 19, 2019 (Utility Dive)

Editor’s note: The Phase 1 of this proceeding described here recently moved to Phase 2 as planned with all stakeholders reporting they were accurately represented in the commission order. This suggests success for the new approach.

Regulation of utilities has always had the formal, legalistic qualities of a courtroom without the drama that high crimes and TV fiction add. But a new effort to bring out the more collaborative part of the regulatory process was recently introduced in workshops as part of Hawaii's ongoing proceeding to develop a new business model for the state's regulated utilities. Led by facilitators from think tank Rocky Mountain Institute (RMI), the workshops stressed stakeholder interactions as a way build to consensus without compromising the legalistic underpinnings of the process.

Driven by customer demand, climate change and reliability needs, utilities and others are finding that rapid changes in today's power sector require something beyond traditional regulation. But while renewables and distributed energy resources (DER) have become practical and least-cost options, outdated regulatory approaches continue to support utility investments in traditional assets, impeding the power sector's transformation and making reform necessary, veterans of the process told Utility Dive.

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"Existing regulatory processes were designed for the different purposes of the 20th century system and won't work in the rapidly transforming 21st century," Regulatory Assistance Project (RAP) Principal David Littell, a former commissioner with the Maine Public Utilities Commission, told Utility Dive. "Utilities used to be the initiators of new ratepayer costs and were protected by formal and intimidating legalistic regulatory processes that made it hard for the public to engage," he added. Companies who sell DER, their customers and DER advocates "are beginning to participate and it is opening up the old processes."

The need for reform of the regulatory process was echoed in the February 2019 launch of the Renovate initiative, which is being convened by the Smart Electric Power Alliance and launched in partnership with the National Association of Regulatory Utility Commissioners and 10 other groups. The initiative aims to evolve state regulatory processes and open opportunities for "innovative technologies and business operating models that support the transition to a clean and modern energy grid," the organizations said in a statement.

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But while new stakeholders are intervening in regulatory proceedings on rates and technology, commission processes often do not make it easy for their voices to be heard, according to a new paper from RMI on leveling the playing field for advocates of the new power sector. The RMI paper proposes a commission-initiated reform when interaction with stakeholders reveals the need and opportunity for a new process. The commission should then make clear its "vision" of what that new process should achieve and open a docket to bring stakeholders further into the process. Reform would culminate with the implementation of a new regulatory process.

The RMI-led workshops on Hawaii's performance-based regulation proceeding were a major test of the RMI ideas, effective in part because "the [public utility] commission set the agenda, and the utility was just one of many parties participating," Earthjustice Attorney Isaac Moriwake, who represented environmental advocacy group Blue Planet Foundation in the proceeding, told Utility Dive. The Hawaiian Electric Company (HECO) declined to comment on its participation in the RMI workshops but Moriwake and other participants saw the workshop as evidence that a regulatory process can help level the playing field between the utility and other stakeholders… click here for more

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