It’s tempting to attribute the recent slowdown in electricity demand growth entirely to the Great Recession, but consumption growth rates have been declining for at least 50 years. The new normal rate of demand growth likely will be about half of its historic value, with demand rising by less than 1 percent per year. This market plateau calls for a new utility strategy.
Image:
Author Bio:
Ahmad Faruqui is a principal at The Brattle Group, and Eric Shultz is a research analyst. This article was revised from Faruqui’s presentation at the Goldman Sachs Power & Utility Conference on Aug. 14, 2012. The authors acknowledge research assistance by Jennifer Palmer.
As efficiency programs mature, utilities and regulators will be challenged to keep producing demand-side resources. A systems-oriented approach can yield cost-effective results.
Author Bio:
Hossein Haeri, Ph.D., is an executive director, Heidi Ochsner an associate and Jim Stewart, Ph.D., a senior associate at The Cadmus Group, Inc.
Changes in regulatory requirements, market structures, and operational technologies have introduced complexities that traditional ratemaking approaches can’t address. Poorly designed rates lead to cross-subsidies, inequitable outcomes, and perverse incentives. An objective-based approach can better communicate costs to customers in a way that better serves operations and policy goals.
Image:
Author Bio:
Philip Q Hanser is a principal with The Brattle Group. He acknowledges the contributions of Brattle colleagues Ryan Hledik and Ahmad Faruqui, as well as Ken Costello of the National Regulatory Research Institute. He also acknowledges editorial assistance from Heidi Bishop and Shannon Wentworth at Brattle. The opinions expressed in this article are Hanser’s and don’t represent those of The Brattle Group or its clients.
Historically, grid operators tapped into voluntary load reduction as a last resort for keeping the lights on. But now, smart grid technologies and dynamic pricing mechanisms bring vastly greater potential for using load as a dispatchable resource. Effective implementation requires advanced technologies—and also foresight in creating programs, policies, and market mechanisms.
Image:
Author Bio:
Audrey Zibelman is co-founder and CEO of Viridity Energy, and formerly was chief operating officer at PJM. Chika Nwankpa is a professor and Director of the Center for Electric Power Engineering (CEPE) at Drexel University. Alain Steven is co-founder and executive vice president of strategy at Viridity Energy, and formerly was chief technology officer at PJM. Allen Freifeld is senior vice president of law and public policy at Viridity Energy, and formerly was a commissioner on the Maryland Public Service Commission.
Yet another sweltering summer is causing its share of outages and supply problems, with predictable backlash from customers and policy makers. And with the advances we’ve seen in recent years, perhaps again we should be asking whether we’re adequately focused on our most critical mission: keeping the power on.
Author Bio:
Michael T. Burr is Fortnightly’s editor-in-chief. Email him at burr@pur.com.
