Post on 08-Aug-2015
Principles of Utility Regulation
• Keep u&lity viable to provide safe and reliable power • Fair appor&onment of cost of service • Promote economic efficiency • Understandable to public and feasible to apply
BONBRIGHT PRINCIPLES (1960)
PURPA / EPACT (1980-‐2005)
TECHNOLOGICAL SHIFT (2010+)
• Promote wholesale compe&&on
• Align with Federal and State Energy Policy
• Promote innova&on
• Compensate customer for net value to system and require them to pay for services used from system
Co-Evolution of the Regulatory Compact
1960-‐1990 1990-‐2005
BUSINESS MODEL
2006-‐2014 (HAWAI‘I)
REVENUES
INCENTIVE
TARIFF DESIGN
FAIRNESS
COMPETITION
ENERGY POLICY
INNOVATION
CAPITAL EXPANSION
TRADITIONAL COMPETITION
TRADITIONAL CONSTRAINED
COST OF SERVICE COST OF SERVICE DECOUPLING
RETURN ON CAPITAL
RETURN ON CAPITAL PBR RETURN ON CAPITAL
VOLUMETRIC VOLUMETRIC VOLUMETRIC
RATE CLASSES RATE CLASSES RATE CLASSES
NONE WHOLESALE GENERATION
(RETAIL COMPETITION)
WHOLESALE + DISTRIBUTED GENERATION
SCALE MARKETS RENEWABLES EFFICIENCY
N/A ENVIRONMENTAL COMPLIANCE
• RPS • NET METERING
Co-Evolution of the Regulatory Compact: How do we align shareholders and ratepayers?
BUSINESS MODEL
2015+
REVENUES
INCENTIVE
TARIFF DESIGN
FAIRNESS
COMPETITION
ENERGY POLICY
INNOVATION
INTEGRATED SYSTEM SERVICES PLATFORM WIRES/NETWORK
DECOUPLING TRANSITION TO RIIO REVENUE CAP-‐RIIO-‐ED
SHARED SAVINGS
RETURN ON CAPITAL PERFORMANCE BASED
• RETURN ON CAPITAL • PERFORMANCE BASED
FIXED/VARIABLE FIXED/VARIABLE
• TWO-‐WAY RATES • RENEWABLE CHOICE • EXIT CHARGES
TWO-‐WAY RATES EXIT CHARGES
WHOLESALE + DISTRIBUTED/SELF
GENERATION
RELIABILITY SELF GENERATION
• SMART GRID • INTEGRATION • DISTRIBUTED • CUSTOMER SERVICES
• SMART GRID • DISTRIBUTED • CUSTOMER SERVICES
• RPS • INTERCONNECTION
ACCESS
• RPS • GRID/CUSTOMER
INVESTMENTS