How can regulators and utilities work together to make the United States' often rigid electricity sector more flexible? During today's OnPoint, John Jimison, managing director at the Energy Future Coalition and a former senior counsel to the House Energy and Commerce Committee, discusses a new report, "America's Power Plan," that provides a blueprint for state and local lawmakers and business leaders to address the challenges facing the electric power system.
Monica Trauzzi: Hello, and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is John Jimison, managing director of the Energy Future Coalition and the former senior counsel to the House Energy and Commerce Committee. John, thank you for being here again.
John Jimison: It's a great pleasure. Thank you for having me.
Monica Trauzzi: John, a new report out today by the Energy Foundation focused on the transformation of the U.S. electricity sector. Over 100 leading energy analysts including Jon Wellinghoff, Andy Karsner, were tapped for their analysis. The big overarching question here is, how do you make a rigid, often inflexible system, more flexible? Is there a clear blueprint on how to get there?
John Jimison: Well, I think there are fairly clear directions in which we need to go, and the report that's being released today called America's Power Plan is actually a set of eight papers that were commissioned. I was honored to be asked to work on the transmission for one of those, because we've been working on transmission issues. But their papers on finance, on siting, on distributed energy generation, other distributed energy resources, on the changing business models and on the changing markets, and overview papers. And the attempt was to tap people who had really studied the pieces, have them develop that in a very reviewed and fact checked way, and then combine those pieces into an integrated report on policy direction that will allow the institutions and the laws and the regulations to match what's already happening on the market in the technology side in our country.
Monica Trauzzi: So there are many game-changing technologies that are available that in many instances we're seeing coming online. Are government and industry successfully harnessing those technologies to drive the conversation, the regulatory conversation, the economic conversation?
John Jimison: I think you could almost flip the question. Are the technologies waiting for government and industry to catch up? The solar costs have come down 80 percent over the last five years for solar PV. Lazar had issued a report less than a month ago saying that wind costs have come down 50 percent in the last four years. I mean, this is phenomenal, and the market isn't going to wait for government and regulators if they're not ready to have these technologies and all the distributed and smart technologies along with them come into the market. The focus of this report is, what should policy makers be doing to accommodate what's already happening.
Monica Trauzzi: So this may be kind of a tough question, but what's the first step? If there was one thing that you had to identify that needs to be done right now to get the ball rolling and get the conversation started, what is that?
John Jimison: I think the first step, and it probably comes out in most of the papers, is simply awareness of what's happening, awareness not just by policymakers and regulators, the industry is clearly aware of what's going on in their world, and they're addressing it as best they can. But we need to have a coordinated approach to it, and policymakers have to be involved, and the public itself has to be aware that the provision of electricity service as a critical function to our economy is going to be changing dramatically over coming decades, in technology, in environmental mandates, in economics, and in their own role and their own options. And the more they're aware, the better they can play in the restructuring of the policy that will have to happen.
Monica Trauzzi: So on the siting of new infrastructure, what do regulators need to change about the way that they're operating?
John Jimison: Well, the siting paper is one example, co-written by Carl Zichella and Jonathan Hokelynn. It makes a fundamental point that in siting facilities, we have not brought landowners into the process the way we need to, and as early as we need to. We have not essentially inventoried appropriate sites and appropriate corridors in advance, and led well in advance with siting decisions. And instead, we come along late and come along with the power of condemnation, and we alienate people instead of bringing them into the process.
Monica Trauzzi: Is this an attack paper though on regulators, or are you really trying to find some common ground?
John Jimison: It's clearly not an attack paper on regulators. Many of the people who participated and reviewed these papers are former regulators who recognize the critical role. We are still going to have a utility industry. It is still going to have to be regulated for its monopoly functions. Yes, a lot of functions will be more competitive and technology is going to change all the functions, but the regulators are still critical and the utilities are still critical and they all have to prosper for the country to prosper.
Monica Trauzzi: We were talking before the show that this is really a region to region issue. So how should those utility business models differ region to region?
John Jimison: It's a regional industry and we don't have a regional level of regulation. And we have state regulation and we have local regulation for municipal and essentially cooperative utilities that are self-regulating. And the business models will differ as a function of what each of those areas feels makes the best sense. I think the purpose of America's Power Plan is to make sure they're aware of what factors they need to be considering that are basically on their way in order to make the judgments as to what makes the best sense. And then, yes, they're going to have to be free to cut their own decisions and to do their own internal analysis of whether that size shoe fits their foot. But everybody's going to need new shoes.
Monica Trauzzi: What behaviors are we seeing from consumers that indicate that there's a broad level of support for moving forward in this direction?
John Jimison: Consumers, we're going to have lots of options they don't currently have, and they're going to have the ability to do something they have never been able to do in the electricity sector, and that is participate actively in price setting by regulating their own demand as well as their consumption to match what the costs are that they're facing. And distributed resources, distributed generation, both of those, sweeping the country. New technologies developing and accepted across the political spectrum. Some people because it's clean. Some people because it gives them an independence from a monopoly provider of a government regulated service. But in all cases, it's sweeping the country and people are going to have to accommodate that within an integrated central system for electricity that we will still have to have.
Monica Trauzzi: So a real world application of all this we could say is in New England where we just saw Entergy's closure of the Vermont Yankee Nuclear Facility. How do you think the closure of that facility will impact the future of infrastructure in New England?
John Jimison: Well, I don't claim to have a lot of expertise about the specifics of closing that facility, but clearly there's additional gas regulation that's coming via central system, in addition to local fuel cells, combined heat and power, efficiency, and particularly in New England, demand response, very active up there, so people are bidding their own willingness not to use electricity into the market for supplying electricity. Obviously that's going to have an effect on big units that supply electricity.
Monica Trauzzi: All right, an interesting report to take a look at. Thank you for coming on the show to talk about it.
John Jimison: My pleasure.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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