In a new article and white paper published in Public Utilities Fortnightly, E3’s managing partner, Dr. Ren Orans, and his co-authors argue that debates over utility business and regulatory models have sidestepped a more fundamental question: What do state legislators and regulators want the electricity utility of the future to do?
Do they want “fat” utilities that play a larger role in implementing public policy and delivering energy services to customers? Or “skinny” utilities that are more narrowly focused on the ownership and upkeep of the grid? And, are they willing to accept the tradeoffs between these two paradigms?
The authors outline a framework to define the utility role in five areas: Network Access, Retail Choice, Ratemaking, DER Valuation, and implementing Policy Goals. Applying this approach provides a basis for policy makers to design incentive frameworks that match form and function, instead of trying to use some form of performance-based incentives to make a utility perform in a way inconsistent with its basic structure.