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Visions and Models for the 21 st Century
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  1. Visions and Models for the21st Century Symposium: An Energy Agenda for the Future May 22, 2014 James M. Van NostrandAssociate Professor West Virginia University College of Law Center for Energy and Sustainable Development

  2. Overview • Drivers • Regulatory economics • Necessary elements of the new utility model Center for Energy and Sustainable Development

  3. Drivers • Enhanced capabilities of communication and information technologies • Improved efficiencies and declining costs in DG technologies • Growing dependence on electricity in digital economy • Aging infrastructure and need for large capital investments • Flat sales base with growing peak demand • System stresses from increasingly severe weather events Center for Energy and Sustainable Development

  4. Drivers • Climate change • Mitigation of greenhouse gas (GHG) emissions • Clean DG resources, energy efficiency • Adaptation • Experience of Superstorm Sandy • Where did the lights stay on? • DG resources and microgrids • Where does the utility want to spend ratepayer money? • T&D infrastructure and system hardening Center for Energy and Sustainable Development

  5. Drivers • Climate change (continued) • Goal: A more resilient grid to withstand future extreme weather events • Decentralized system • Seamless integration of DG resources • Customer-centered utility system Center for Energy and Sustainable Development

  6. Economics • What are the natural monopolies in utility service? • What are the other services that can be opened up to competitive forces? • How can the platform be designed to ensure fair competition? Center for Energy and Sustainable Development

  7. Economics • The lessons from restructuring of the electric industry at the Federal level • Regulate the natural monopoly aspects of utility service • Ensure fair competition where markets are competitive • Open, fair and non-discriminatory access to the grid Center for Energy and Sustainable Development

  8. Elements • Ensuring “open, fair, and non-discriminatory access” to the platform • Functional unbundling • Continued rate regulation of the natural monopoly elements (i.e., the platform) • Performance-based ratemaking • Symmetrical system of rewards & penalties • Clearly enunciated metrics Center for Energy and Sustainable Development

  9. Elements • Policy objectives for performance-based ratemaking • Reduction in GHG emissions • Energy efficiency, clean DG resources • Empowering customers • System resiliency • More efficient system (i.e., lower costs) • Promoting competition for competitive services Center for Energy and Sustainable Development

  10. Questions/Comments? James M. Van Nostrand West Virginia University College of Law Center for Energy and Sustainable Development james.vannostrand@mail.wvu.edu (304) 293-4694 Center for Energy and Sustainable Development