New England's utilities must adapt to the new power age

October 7, 2014

In a recent report, the New England Clean Energy Council (NECEC) examined the challenges facing the region's power utilities. Access to new technology has made it possible to expand the performance and functionality of the power grid. Customers and government officials have simultaneously increased pressure for power utilities to increase the reliability of the grid. The NECEC concluded that the region must work toward regulatory changes if it hopes to keep up with increasing demands for efficient, resilient performance.

New England's challenges
There are several challenges facing New England's aging power infrastructure. One of the largest issues, says Smart Grid News, is new demands on the grid spurred on by consumers' investments in renewables, smart buildings and electric cars. In some areas, the demand for electricity is flat or in decline. Declining revenues, along with new performance demands for a more resilient system, creates a scenario the NECEC describes as an "almost untenable challenge for the region's traditionally regulated distribution utilities."

NECEC solutions
The New England Clean Energy Council argues that the only way for the region's power utilities to stay relevant and competitive is to adapt to the times. Utilities can avoid the costly hassle of playing catch-up and stay relevant to the needs of modern electricity rate payers by updating their business models in the present.

One of the NECEC's key recommendations is for New England's regulators and utilities to support a shift to an outcomes-based regulatory framework. This system would create the incentives for utilities to function as cost efficiently as possible. Regulation that rewards utilities for creating extra value for consumers would help to support the industry's move toward modernization. The NECEC urges regulators to create more fair, efficient rates for utilities to recover their costs.

Ideally, utilities would provide price signals to customers throughout the day that reflect the current demand for electricity and ultimately the true cost for power. As a result, rate payers will naturally be encouraged to become more efficient users of electricity, either storing inexpensive energy or shifting consumption which helps lower demand. By making all these steps a priority, New England power companies would have the tools necessary to stave off a death spiral and instead be at the forefront of a new energy age.