Written by: Doug Scott Vice President, Strategic Initiatives, Great Plains Institute and former Chair & Commissioner, Illinois Commerce Commission
Minnesota’s e21 Initiative set out to look comprehensively at the state’s utility structure, and remains an important dialogue.
The diverse set of e21 stakeholders have reached another milestone, concluding Phase II of their work with the release of three white papers (http://www.betterenergy.org//e21-phaseII) addressing key issues in Minnesota’s energy future, and a phase II report, which is intended as an overview of the highlights of the white papers. Each white paper is designed to relate to and support the other papers.
In the first phase, e21 set forth two overarching goals, a number of guiding principles, and a high-level blueprint for evolving Minnesota’s regulatory framework and the utility business model. At a high level, two goals were to:
- Shift toward a business model that offers customers more options in how and where their energy is produced and how and where they use it; and
- Shift toward a regulatory system that compensates utilities for achieving an agreed-upon set of performance outcomes that the public and customers want.
The purpose of e21’s second phase has been to develop the next level of detail necessary to begin implementing consensus recommendations (http://www.betterenergy.org/e21-Phase1-Report) from phase 1. Toward that end, at the beginning of Phase II, e21 participants set out to:
- Inform the Minnesota Public Utility Commission’s grid modernization process and increase transparency in distribution planning;
- Formulate principles and identify best practices for transitioning a portion of utility revenue to a performance-based approach; and
- Evaluate the pros and cons of the current integrated resources planning process and potential improvements.
Thus, the Phase II reports address grid modernization, performance-based compensation, and integrated systems planning. The report provides key information and guidance for decision-makers that can be further developed as Minnesota addresses how the electric system and utility sector evolve.
The paper on performance-based regulation outlines the rationale for a gradual shift to performance-based utility compensation, a continuum of reform along which Minnesota could travel, principles for selecting performance outcomes and metrics, and nine potential performance outcomes with detailed explanations and sample metrics for each. The paper does not specifically recommend where Minnesota’s regulatory framework should end up, other than toward a performance-based system.
With respect to integrated systems planning, the report sets forth an explanation of the current regulatory process and traditional integrated resource planning process, and then describes thirteen potential modifications. The group believes that by encouraging greater upfront collaboration on the resource planning side, it will be easier to implement the changes proposed in the other white papers.
The grid modernization report proposes a set of objectives for modernizing the grid and the functions and technologies needed to achieve those objectives. It also lays out an overall approach to grid modernization and makes a series of recommendations, organized into three categories: distribution-level grid planning; customer services and engagement; and operation of the distribution grid. The e21 group wishes to complement and inform the grid modernization effort underway at the Minnesota Public Utility Commission.
E21’s co-directors, Rolf Nordstrom at the Great Plains Institute, and Mike Bull at the Center for Energy and Environment, are in the process of designing the next phase of e21. The goal is for Phase III to begin in early 2017, with a shift toward implementation and a repeatable process of “learning by doing” while maintaining e21’s role as a valuable platform for mutual learning and information-sharing among utilities, regulators, and other interested parties. This will further the e21 Initiative’s goal of helping Minnesota continue to lead in shaping an electric system for the 21st century.
And, while every state will not initiate an e21-type process, every state and utility is grappling with the issues that e21 is addressing. As a result, e21 can help inform other state’s deliberations, in the same way that states can also look to New York’s Reforming the Energy Vision, or to the other states that have comprehensively looked at the issues surrounding a more customer-centric utility system that embraces new technology and a cleaner energy platform.