Electric companies are investing more than $100 billion each year to build smarter energy infrastructure and transition to cleaner generation sources.
Distributed energy offerings, like private and community solar, electric vehicles and energy storage, represent exciting new pathways for expanding customer choices. Electric companies should be able to offer more of these services directly to customers and to participate in competitive markets for these services.
Regulations in many states still prevent it, but some states have recognized the importance of allowing electric companies to participate in the market.
In 2014, the California Public Utilities Commission recognized that electric companies have a unique role to play in electric vehicle charging infrastructure across the state, and the commission overturned a rule that prohibited their participation in the market. As a result, California's three investor-owned electric companies are launching pilot programs to install a combined 12,500 charging stations throughout the state.
Another example is private solar photovoltaic cells in Arizona. The Arizona Corporation Commission has approved two private residential solar pilots: Arizona Public Service's two-stage project to offer private solar PV to residential customers and Tucson Electric Power's Residential Solar Program, serving approximately 500 to 600 customers of all types, regardless of credit score. The electric company-provided solar represents only a fraction of the private solar market in Arizona.
According to a report from the Institute for Electric Innovation, there are three factors critical to a successful competitive market for distributed energy resources and other energy services.
1. A regulatory structure that prioritizes technology innovation and customer needs is essential. This means that in order for electric companies to offer distributed energy resources and other energy services beyond electricity supply and energy grid services, the pricing of retail electricity supply and energy grid services must be cost-based and transparent.
2. A successful distributed energy resources market requires a level playing field. Implementing rules and regulations that apply equally to electric companies and third-party providers allowing both to participate fairly in the market will benefit customers. It's important that regulations focus on providing customers with access to services, ensuring a minimum level of performance, and establishing or reinforcing customer protections.
3. Competitive services should be paid for by the customers who benefit from them, and not bundled with non-competitive services. It is critical that regulations avoid creating a cost shift or subsidy from one customer to another.
The electric power industry has a critical role to play in shepherding and deploying the next generation of energy resources and services into the hands of all customers.
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