Empower a statewide consumer-owned utility; assign grid planning to a group that functions in the public interest, and regulate utilities rigorously.
Republished here by permission of the author. Appeared originally as an Op-Ed column in the Portland Press Herald on March 5, 2011
Recent news from frozen Texas, and here in Maine, chronicles the sorry state of our electric grid and how unprepared we are for the future. There’s no escaping it: we must invest massively and strategically in a transformed electric grid – resilient, dynamic and capable of flexible two-way flows. This is essential to a sustainable future featuring “beneficial electrification,” decarbonizing our energy system and everyday lives.
This hopeful vision, benefiting everyone, is based on clean, renewable electricity – and a lot more of it. Most power will be delivered where and when it is needed over the electric grid. The estimated grid investment for Maine alone is an unprecedented $10 billion-$15 billion over the next 30 years.
To realize the public’s interest in an expanded, high-performance, efficient grid calls for smart, far-sighted grid planning; investments financed with low-cost capital, and excellence in system operation and maintenance. There is no reason to expect these qualities from our existing investor-owned utilities, given their chronically poor and now worst-in-the-nation performance. Although energy systems and economics are complex, a basic, three-tier solution exists, if we have the wisdom and fortitude to embrace it.
- Replace our two investor-owned utilities with a statewide consumer-owned utility. A consumer-owned utility’s certain, basic advantages include control by Maine people, and access to low-cost, tax-exempt capital to finance the required grid investments. This would replace the foreign shareholders of Maine’s investor-owned utilities – whose capital is expensive, and that enjoy a virtually guaranteed high return on investment – with an elected board of Maine people running a not-for-profit consumer-owned utility.
The consumer-owned utility would purchase the investor-owned utilities’ assets and then finance future grid investments with tax-exempt debt, at less than half an investor-owned utility’s cost of capital. Over 30 years, this should save Maine ratepayers $5 billion-$10 billion in avoided debt service costs and shareholder dividends. One in four American electricity customers is served already by a consumer-owned utility, at lower cost, with higher reliability. In Maine, pending legislation would set this process in motion.
- Transfer responsibility for strategic grid planning from the utilities and assign it to an organization charged to function in the public interest. Currently, the utilities’ grid planning focuses almost exclusively on reliability and security. While these attributes are essential, they are too limited to get to the grid we need in the future. As one Central Maine Power executive said recently, “Our approach is by design reactionary.” Maine’s grid strategy must be future-oriented, with planning taking into account long-term climate and related public priorities, resulting in a dynamic, smart grid that effectively integrates diversified electricity generation and storage with flexible delivery systems.
A transformed Maine Public Utilities Commission seems ideally positioned to take on this responsibility. The PUC has a desirable degree of separation from politics and gubernatorial authority, but it needs an updated legislative mandate plus additional staff and budget resources to design an “over the horizon” grid system. The PUC would synchronize grid planning targets with grid investments, through regulatory approval of these investments, similar to several other states.
- Regulate utilities rigorously, from a position of knowledge and strength. Such an approach would be different from current PUC oversight practice in Maine. It requires enhanced PUC staff capacity and expertise, combined with well-defined metrics to evaluate all aspects of a utility’s activities. Currently PUC staff has limited knowledge and technical expertise compared to the regulated utilities, so staff often defers to the utilities’ experts and lawyers. Currently defined performance standards are weak, often cobbled together only when a problem arises. This needs to change to a system with clear metrics for every aspect of a utility’s operations. Several states’ utility regulators exercise greater and more prescriptive regulatory control. The Maine PUC should redouble the steps its new leadership is taking in this direction.
Maine needs to become dramatically more effective in designing, building and operating the grid of the future. Evidence is abundant that Maine cannot achieve this creative transformation solely through regulation of recalcitrant investor-owned utilities. Fundamental change is required, and, as design genius Buckminster Fuller reminded us, “You never change things by fighting existing reality. To change something, build a new model that makes the existing model obsolete.”