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DOE OSTI2021

Utility Regulation Through Legislation: A Cautionary Tale for Legislators, Regulators, Stakeholders, and Utilities

State legislatures in the U.S. are becoming increasingly involved in utility regulation. While state utility legislation can expand regulator authority, for example in the case of renewable energy or energy efficiency standard administration, it can also reduce it. Given the challenging nature of for-profit monopoly regulation, state utility legislation often reduces regulator authority unintentionally. This editorial begins with an examination of the outcomes of state legislation related to baseload generation in the U.S. and the resulting impacts to customers, shareholders, and state economies. The record indicates that utility regulation through state legislation has caused significant economic harm, generally by encouraging for-profit utilities to make riskier investments. A description of more recent state legislation involving distribution grids is presented, along with evidence that increases in grid investment encouraged by state legislation has not improved the reliability of U.S. for-profit utilities. The authors claim that features common to state utility legislation, particularly the requirement that utilities provide investment plans to regulators in advance, practically eliminates cost disallowance risk. This, in turn, reduces regulator authority despite legislative provisions intended to protect consumers. The authors hypothesize that the practical elimination of cost disallowance risk, combined with information and expertise asymmetry among regulators and stakeholders, encourages for-profit monopoly utilities to make grid investments that are not cost effective. The editorial concludes that legislators should avoid utility regulation through legislation, thereby preserving regulator authority, whenever possible. The authors also present their fifth annual Customer Value Ranking of U.S. investor-owned electric utilities. The ranking represents a comparison of the benefits utilities deliver to customers (measured by reliability performance and customer satisfaction) to the costs customers pay (measured by O&M and capital spending per customer).

ENERGY PLANNING, POLICY, AND ECONOMY,POWER TRANSMI↗
DOE OSTI2020

Voluntary Renewable Energy Procurement Programs in Regulated Utility Markets

Multinational corporations are increasingly purchasing renewable energy (RE) to fulfill international commitments, reduce supply chain emissions, limit environmental impact, and secure stable and affordable electricity. The potential scale of global corporate RE purchasing has been estimated to be nearly 100 GW and growing; however, many markets still lack supportive enabling environments for corporations to access RE through on-site project development or private sector transactions. Even where allowed by law, on-site generation may be insufficient due to space and technical constraints, introducing additional challenges. Utility green pricing and utility green tariff programs backed by renewable energy certificates (RECs), referred to as utility green procurement programs (GPPs) in this report, offer powerful market-based solutions to utilities, regulators, and policymakers to provide corporate and other consumers with RE product options while generating revenue to support RE development. As RE markets expand around the globe, GPPs have proven to be effective mechanisms in market regimes, ranging from fully integrated state-owned utilities to broadly liberalized power markets. GPPs utilize RECs, which are a type of energy attribute certificate and closely resemble guarantees of origin, to track and ultimately monetize RE attributes that corporations and other buyers must procure to demonstrate progress against their RE commitments and make public claims of RE use. Time-tested and transparent REC accounting mechanisms provide market confidence, while at the same time offering flexibility to utilities, regulators, and customers for a range of applications. RECs are used in all types of electricity market structures, as indicated in Figure 1, but REC-based program designs and supporting components differ depending on the type of market. Liberalized markets allow for customers to contract directly with generators for electricity and RECs, while traditionally regulated markets with vertically integrated utility structures may have greater restrictions on generation asset ownership and electricity sales. RE markets can be further defined as being either mandatory or voluntary. Mandatory markets require suppliers to deliver specified amounts of RE to grid customers, such as under a renewable portfolio standard (RPS), while voluntary markets involve no legal mandates, but demand is driven by self-imposed customer goals.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2021

Advancing Equity in Utility Regulation

Increasingly, states are recognizing equity as a goal of utility regulation, going beyond traditionally stated objectives to ensure that electricity systems are reliable, safe, and fairly priced. State initiatives are critical not only to address historical inequities, but to ensure equitable benefits and burdens in the transition to net-zero emissions by 2050. This report provides four perspectives on advancing equity in electric utility regulation, from representatives of energy justice and consumer organizations and a leading utility in this area. The authors provide recommendations related to regulatory issues such as stakeholder engagement, defining "public interest," intervenor funding, electricity infrastructure siting, access to distributed energy technologies, consumer protections, bill affordability programs, rate design, program design, and metrics to track and evaluate results of policies, regulations, and programs intended to deliver equitable outcomes.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2023

Resource Adequacy for State Utility Regulators: Current Practices and Emerging Reforms

This report was developed by staff in the National Association of Regulatory Utility Commissioners (NARUC) Center for Partnerships and Innovation (CPI). Additional support was provided from commissioners, commission staff, and other technical experts to provide foundational information for state utility regulators on the evolving nature of resource adequacy for the electric system. With the changing nature of the system, state commissioners will continue to play a vital role in their respective jurisdictions. Their roles in overseeing resource decisions are growing in complexity, with consideration for customer costs, state and federal environmental requirements, extreme weather events, fuel supply limitations, generation retirements, shifting requirements for system operators, and growing levels of intermittent and energy-limited resources (e.g., wind, solar, and battery storage). Reliability concerns continue to be an urgent and immediate priority for utility regulators in most parts of the United States. The information in this report is designed to support state commissioners and their respective staff members as they navigate an evolving resource adequacy landscape to maintain reliability amidst a rapidly changing system.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2021

The Role of State Utility Regulators in a Just and Reasonable Energy Transition: Examining Regulatory Approaches to the Economic Impacts of Coal Retirements

The ongoing trend of coal retirements has disproportionately affected the socioeconomic health of communities where power plants are located. For many public utility commissions, these impacts have led to important questions around the scope of PUCs’ statutory authority to analyze, consider and mitigate losses to host communities within their role as utility regulators. Due largely to variations in state legislative charges, commissions have taken different approaches to articulating what lies within the public interest.This report examines the authority of PUCs across the country to consider non-energy economic impacts beyond direct ratepayer effects, and summarizes approaches that PUCs, utilities and other stakeholders have used to mitigate the economic fallout of coal retirements, specifically.

01 COAL, LIGNITE, AND PEAT↗
DOE OSTI2024

Defense Energy Resilience Engagement Framework for Utility Regulators

The purpose of this document is to provide public utility commissions with a framework to facilitate engagement with in-state military stakeholders and support consideration of defense-related utility applications. The framework also includes questions that would benefit the U.S. Department of Defense’s (DoD) stakeholders as they prepare for future engagements and regulatory proceedings with commissions and utilities.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2022

Models for Incorporating Equity in Transportation Electrification Considerations for Public Utility Regulators, An addendum to the NARUC report, Electric Vehicles: Key Trends, Issues, and Considerations for State Regulators

Momentum for the electric vehicle (EV) transition is well underway, and the utility sector plays an important role in supporting its success. For frontline communities, the transition offers a promising solution to improve environmental and public health outcomes, economic development, affordability, and transit equity. However, the transition will need to involve care and intention to ensure that the needs of underserved communities are prioritized throughout the planning, decision-making, and implementation processes. States have taken the lead in some cases, as profiled in Box 6. Whether driven by state commissions or utilities themselves, utilities have a range of options available to ensure equity is central in their transportation electrification plans and programs by drawing from a variety of existing and emerging experiences, as summarized in Table 1.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2022

Models for Incorporating Equity in Transportation Electrification Considerations for Public Utility Regulators, An addendum to the NARUC report, Electric Vehicles: Key Trends, Issues, and Considerations for State Regulators (2019)

Momentum for the electric vehicle (EV) transition is well underway, and the utility sector plays an important role in supporting its success. For frontline communities, the transition offers a promising solution to improve environmental and public health outcomes, economic development, affordability, and transit equity. However, the transition will need to involve care and intention to ensure that the needs of underserved communities are prioritized throughout the planning, decision-making, and implementation processes. States have taken the lead in some cases, as profiled in Box 6. Whether driven by state commissions or utilities themselves, utilities have a range of options available to ensure equity is central in their transportation electrification plans and programs by drawing from a variety of existing and emerging experiences, as summarized in Table 1.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2025

Economic Evaluation of Modernization Expenditures for Electric Utility Distribution Systems: A Guide for Utility Regulators

Cost-effectiveness evaluation of potential grid modernization solutions is integral to integrated distribution system planning (IDSP). This report synthesizes and updates prior cost-effectiveness approaches identified by the U.S. Department of Energy for grid modernization investments, incorporating multi-objective decision-making. The structure of the report follows the IDSP process, from identifying objectives and priorities to prioritizing grid solutions. The report details two methods for conducting initial cost-effectiveness screening of individual and interdependent grid components: (1) Lowest Reasonable Cost and (2) Benefit-Cost Analysis. Drawing on solutions that passed the initial cost-effectiveness screen, the utility prioritizes grid solutions based on policy objectives and priorities, regulatory compliance, operational efficiencies, and other factors to develop a portfolio of distribution solutions. The utility uses multi-objective decision-making to assess each proposed expenditure against each objective and respective metric. The utility applies a weighting factor, reflecting the priority ranking of the objective, to the total numerical “score” based on the contribution of the proposed solution to addressing each objective. Ultimately, the utility ranks each expenditure from highest to lowest priority using the final score for each solution as well as its cost. The report includes examples of emerging best practices for states and utilities and a cost-effectiveness process checklist.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2018

ENERGY STAR® Retail Products Platform (RPP): Conditions and Considerations in Evaluating Market Transformation Programs and Evaluation Guidance for RPP

The purpose of this guide is to provide a resource for state utility regulators, utilities, the evaluation community and regulatory stakeholders on methods to measure energy savings from the ENERGY STAR Retail Products Platform (link is external). The guidelines outlined in this document were developed by evaluation experts.

29 ENERGY PLANNING, POLICY, AND ECONOMY↗
DOE OSTI2025

Bridging the Gap on Data, Metrics, and Analyses for Grid Resilience to Weather Events: Information that utilities can provide regulators, state energy offices, and other stakeholders

A growing number of states require regulated utilities to file resilience plans to improve the electric grid’s ability to anticipate, withstand, adapt to and recover from increasingly severe weather events. This report aims to help state regulators identify and request data, metrics, and analyses from utilities and use it in decisions on utility resilience plans and investments. The report reviews state requirements and utility plans focused on overall grid resilience, climate change resilience and vulnerabilities, infrastructure modernization, storm protection, and wildfire mitigation. It details types of data, metrics, and analyses across five categories--and provides examples of each from the utility plans. The first category is vulnerability assessments, or evaluations of the susceptibility of systems, communities, or assets to potential harm from identified hazards. The second is data on hazards and the exposure of utility assets and customers to these hazards. The third is attribute metrics, or system characteristics that contribute to or describe the resilience of a system. The fourth is performance metrics, which are impacts of resilience investments on system performance--typically a reduction of negative impacts from hazard events. Finally, evaluation and prioritization are analyses that utilities conduct to estimate impacts from resilience measures (evaluation) and prioritize measures based on costs and estimated impacts (prioritization). The report concludes with examples of key trends and emerging best practices for states and utilities, and identifies areas for further research.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2020

Artificial Intelligence for Natural Gas Utilities: A Primer

Modern natural gas utilities face numerous challenges and competing priorities from various stakeholders. Policymakers, customers, and advocacy groups want to see gas utilities improve performance on safety, reliability, resilience, affordability, and environmental stewardship. State utility regulators — public utility commissions — are responsible for overseeing utility performance, ensuring that ratepayer funds are being spent in the public interest, and aligning utility goals with public goals. The use of new technologies is critical to enabling cost-effective performance on these attributes. Artificial intelligence (AI) is a widely used term among utilities and regulators, but the term means different things to different stakeholders, and it is often used to describe data analytics approaches that fall short of the formal definition of AI, which is: “…the ability of a machine to receive inputs and produce a behavior or reaction similar to that of an intelligent human being.” AI (and related tools, techniques, and technologies) can help utilities solve current and emerging challenges. By combining customer and system data with analytical tools and technologies, AI can augment human decision-makers by assisting in identifying problems and events before they occur, enabling resources to be more efficiently directed across utility infrastructure. The intended primary audience for this primer is state regulators, although utilities and other stakeholders might also find it useful and relevant to improve their awareness of AI. The objectives of this primer are to: (a) offer a set of broadly applicable definitions for AI and related terms, allowing regulators, utilities, and other stakeholders to speak the same language; (b) discuss how AI is currently being implemented in the gas utility sector; and (c) understand the challenges affecting AI solutions and how tools might be implemented in the future. This primer fits within NARUC’s goals of providing impartial information to improve the ability of public utility commissions to regulate in the public interest. As such, this primer does not seek to recommend AI over any other investment, nor does it endorse any particular vendor, product, or approach. It does seek to prepare state regulators to oversee AI investments by sharing information about the current landscape of commercially available tools. To these ends, the primer is organized as follows: Section I discusses the current environment in which natural gas utilities operate and how AI, when thoughtfully designed and implemented, can enable utilities to achieve performance goals; Section II offers definitions of AI and related terms within the data analytics discipline; Section III provides three current opportunities for which AI can offer solutions: replacing aging gas distribution infrastructure, preventing excavator damage to gas distribution infrastructure, and improving energy efficiency programs. This section discusses each problem statement in detail. Second, Section III includes a discussion of how costs and benefits of investments to solve each problem are measured. And third, this section offers real-world examples of utility implementation of AI solutions; Section IV discusses challenges with implementing AI, both from the perspective of utilities and regulators; Section V suggests areas in which AI could feasibly be implemented in the near future; Finally, Section VI offers concluding thoughts and areas for further research.

03 NATURAL GAS↗
DOE OSTI2023

Emerging Best Practices for Electric Utility Planning with Climate Variability: A Resource for Utilities and Regulators

This report is intended to support electric utilities and regulators as they work together to increase the climate resilience of the power system in the United States. It focuses on best practice methods and examples of conducting utility forecasting with climate change (Section 2) as well as three overlapping types of electric utility planning for climate change: resource planning (Section 3), asset planning (Section 4), and contingency planning (Section 5). This report also addresses data development and access (Section 6), emerging pathways for planning including decision-making under deep uncertainty and storylines approaches (Section 7), regulatory considerations (Section 8), and coordination and innovative funding and cost sharing approaches to planning for climate variability (Section 9).

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2025

Virtual Power Plant Profiles and Inventory

Increased adoption of distributed energy resources (DERs), growing quantities of renewable energy on the grid, and load growth from buildings, industry, and data centers are driving the need for increased demand flexibility and solutions to reliably and cost-effectively balance electricity supply and demand. In order to deploy DERs on a similar scale as conventional supply-side resources, utilities and state decision-makers are exploring a range of programmatic approaches and market designs, including Virtual Power Plants (VPP). Based on interviews with more than twenty subject matter experts on VPPs, the Insights into Scaling Virtual Power Plants report and appendix outlines actions that utilities and regulators can take to expand VPPs, organized around successful VPP designs, deployment, and operation. The companion report, Virtual Power Plant Profiles and Inventory describes three conceptual profiles that can be used as a starting point to facilitate clear discussions among regulators, utilities, solution providers, and stakeholders about various VPP strategies. It also includes details on more than 790 demand response programs and net energy metering solar plus battery programs, and 180 VPP programs. The Inventory is provided below as a separate file.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2023

A Snapshot of EV-Specific Rate Designs Among U.S. Investor-Owned Electric Utilities

EV-specific electric utility rates have a profound effect on the underlying economics motivating EV adoption. State utility regulators and electric utilities play a critical role in approving and designing rates, respectively. However, the nascence of the EV industry has resulted in regulators’ and utilities’ having very limited experience with EV-specific rate designs. This suggests there could be substantial benefit from efforts intended to provide a better understanding of how EV-specific rates are designed presently in the United States. To meet that need, Berkeley Lab researchers, with support from E9 Insight, developed a database of piloted, proposed, and offered rates among U.S. investor-owned utilities (IOUs) between 2012 and 2022. The database is comprised of 217 electric utility retail rates from IOUs in 38 states and the District of Columbia that either required proof of EV ownership or were otherwise designed for the purposes of reselling energy for use in EV charging (i.e., EV-specific rates). The analysis of the database identifies the EV-specific rate designs currently observed, infers a number of policy-driven objectives, and suggests a number of next steps for future research.

33 ADVANCED PROPULSION SYSTEMS↗
DOE OSTI2018

Evolving Grid Services, Products, and Market Opportunities for Regulated Electric Utilities

This report and policy brief focus on the more recent changes and evolutions in grid services, products, and market opportunities regulated electric utilities are offering to their customers, both traditional end-use electric customers as well as third-party party businesses. Drawing on a database of more than 50 recent examples, the most prevalent and significant evolutions are occurring in: residential retail rate design shifts toward voluntary and default time-of-use (TOU); changes to distributed generation (DG) compensation methodologies; utilization of customer and non-utility assets as non-wires alternatives (NWAs); and utility investments in electric vehicle (EV) infrastructure. Important and related themes emerge from this assessment of recent trends suggesting regulators and policymakers should formulate clear and consistent policy goals around the following two issues: 1. Opportunities increasing competition to serve the electricity needs of retail customers. Reforms that drive increases in NWAs and DG pit utility investments against customer investments and may erode the exclusivity of the utility franchise. In contrast, reforms to DG compensation, that may reduce the financial benefits of a customer’s investment, may maintain or strengthen the firmness of the utility franchise boundaries. 2.Opportunities driving greater innovation within and outside the electric industry. Electric utilities are innovating by developing novel NWA opportunities that can provide financial support for the broader adoption of DERs. There are also electric utility efforts to enable broader innovation in other industries, where utility investment in EV charging infrastructure could promote greater EV ownership and enable utility control of these resources to provide grid services.

24 POWER TRANSMISSION AND DISTRIBUTION↗
DOE OSTI2017

Next-Generation Performance-Based Regulation: Emphasizing Utility Performance to Unleash Power Sector Innovation

Performance-based regulation (PBR) enables regulators to reform hundred-year-old regulatory structures to unleash innovations within 21st century power systems. An old regulatory paradigm built to ensure safe and reliable electricity at reasonable prices from capital-intensive electricity monopolies is now adjusting to a new century of disruptive technological advances that change the way utilities make money and what value customers expect from their own electricity company. Advanced technologies are driving change in power sectors around the globe. Innovative technologies are transforming the way electricity is generated, delivered, and consumed. These emerging technology drivers include renewable generation, distributed energy resources such as distributed generation and energy storage, demand-side management measures such as demand-response, electric vehicles, and smart grid technologies and energy efficiency (EE). PBR enables regulators to recognize the value that electric utilities bring to customers by enabling these advanced technologies and integrating smart solutions into the utility grid and utility operations. These changes in the electric energy system and customer capacities means that there is an increasing interest in motivating regulated entities in other areas beyond traditional cost-of-service performance regulation. This report addresses best practices gleaned from more than two decades of PBR in practice, and analyzes how those best practices and lessons can be used to design innovative PBR programs. Readers looking for an introduction to PBR may want to focus on Chapters 1-5. Chapters 6 and 7 contain more detail for those interested in the intricate workings of PBR or particularly innovative PBR.

24 POWER TRANSMISSION AND DISTRIBUTION↗