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Utilities’ changing roles and related trends discussed at National Press Club

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Utility regulation may seem complex and technical, but this morning’s breakfast meeting at the National Press Club provided far-ranging insights and broad trends useful to investors, planners, cities, developers, utilities and regulators.

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Kelly Speakes-Backman, a Commissioner at the Maryland Public Service Commission, and Miles Keogh, Director of Grants and Research at the National Association of Regulatory Utility Commissioners, spoke to a crowd of 85 people.

“The data from the smart grid will be transformative,” Keogh said.

Keogh predicted that the data electric utilities will obtain from people and businesses through a smart grid may become more important and valuable than the electricity itself.

In order for a smart grid to operate effectively, utilities must have installed smart meters and state regulatory commissions must have approved dynamic pricing of electricity. Together, they allow the utility and its customers to exchange data, such as electricity prices and customer demands, in real-time.

Knowing who uses power, how much they use and the locations of high electricity demand could allow planners to identify the best places for new local electricity generation, as well as optimal locations for new commercial stores and other large buildings.

This kind of data analytics offer cities and regional planners valuable insights.

Commissioner Speakes-Backman spoke about the changing nature of electric and gas utilities and the shifting focus of the state agencies that regulate them.

“The Maryland Public Service Commission is shifting from being an economic to a risk-management and accountability agency,” Speakes-Backman said.

“Maryland is making decisions based on reliability and resiliency of the grid,” she said.

People want their lights on. They want their power restored quickly after outages. What is the cost of providing that reliability? What is the cost difference between levels of reliability? Those are the kinds of risk and accountability questions the Maryland Commission is asking, Speakes-Backman said.

“[W]e need to look at the big [societal] picture. “We listen to people who tell us they have to open their oven because they cannot pay for electricity….It will break your heart,” she said.

Today’s breakfast meeting was part of a regular series presented by ICF International, a consulting a technological solutions firm whose expertise includes energy and efficiency issues. This morning’s presentations focused primarily on utility issues in Maryland against the backdrop of national trends.

Both Speakes-Backman and Keogh talked about risk and managing risk.

But Speakes-Backman highlighted the risk of paying for infrastructure improvements, such as smart meters and reliability upgrades, while Keogh focused on the uncertain market and regulatory conditions in which state regulatory agencies must make their decisions.

Commissioner Speakes-Backman identified electric grid reliability and resiliency, the interest of protecting the environment and protecting ratepayers from price increases as competing interests.

“Ultimately, [we need to focus on] who is bearing the risk of payment,” Speakes-Backman said to the friendly audience.

Keogh focused on the flaws in the current decision-making process.

State regulators make decisions that affect broad markets. But energy markets do not fit neatly into state jurisdictional boundaries.

The decisions of state regulators have long-term consequences, 50 years or more. But regulators, whose average term is 2.7 years, make those decisions based upon 5-year gas price data.

“We need a better process on decision-making,” Keogh said in a folksy tone.

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