Transcript New Energy service Delivery Models: implications for the

New Energy Service Delivery
Models: Implications for the
Regulatory System
Mike Cleland
CAMPUT, Kingston
June 23, 2015
Outline
• The changing energy landscape
• The players and their roles
• Changing technology –potentials and
pressures
• Driving change – options for governments
2
Part 1
The Changing Energy landscape
3
Energy in the community
4
Energy services – energy in our lives
5
Pressures on the system
• Economic – slow growing economy, need for infrastructure
renewal, competitive pressures
• Environmental – climate, air quality, water, land and habitat
• Societal - trust, siting, cost, tax aversion, equity concerns
• Technology – impacts of social media, IT, storage,
renewables, cost of gas
6
Part 2
The players and their roles
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The Players
• Demanding results
– Customers, neighbours, citizens and voters
– Public policy makers
• Delivering results
– Competitive suppliers
– Utilities
• The referees
– Regulators
8
Customers – the value proposition
Then
– Energy boring
– Service analogous to a
commodity – product
differentiation not
possible, suppliers
compete on price and
supply security
– Priorities: safety reliability,
non-intrusiveness, cost
– Risk aversion, high implicit
discount rates, very high
info acquisition and
transaction costs
Now
• Still boring
• Limited potential to
differentiate?
• Priorities similar - plus
environmental results
• How much new appetite for
risk, long paybacks, time spent
on energy choices?
9
Neighbours – the back yard owners
Then
• Passive communities
• High deference, trust in
authority
• Local communities kept
informed (maybe)
• Infrastructure got built
Now
• Evidence that resistance to
facility siting will grow
• Authorities – including
regulators – not trusted
• Local communities wanting
more say, more control
• Big infrastructure harder
and harder to site – esp
linear infrastructure
10
Citizens and voters
Then
• Customers plus neighbours
plus citizens = voters
• Who quietly absorbed tax
increases (but often reacted
to price increases)
• Who were passive about
intrusions in their
communities
• And relatively indifferent to
engagement outside the
ballot box.
Now
• Still true
• Who say no to tax increases
as well as energy price
increases
• Who say no to intrusions in
their communities
• Who will have to be
constructively engaged
outside electoral processes.
11
The private, regulatory and policy spaces
12
Part 3
Changing technology –potentials
and pressures
13
Changing technology – potentials and
pressures
• Energy efficiency
• Distributed stationary energy
• Mobility
14
Energy intensity (E/GDP) falling
0.40
0.35
0.30
0.25
Canada
United States
0.20
Australia
0.15
Norway
0.10
United Kingdom
0.05
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
-
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Efficiency – the energy workhorse
16
Distributed stationary energy: technology
scan
Potential Scale
Market Readiness
Environmental &
Social Acceptability
Contribution to
System Integrity
Renewable
Power
Renewable
thermal and
waste
District
energy and
CHP
Storage
17
Clean mobility: technology scan
Potential Scale
Market Readiness
Environmental &
Social Acceptability
Contribution to
System Integrity
Natural Gas
Biofuels
Hybrids
Plug-in
Hybrids
Battery
Electrics
Fuel Cell
Electrics
18
Part 4
Driving change – options for
governments
19
Policy instruments: options for governments
•
•
•
•
•
•
•
Private markets
Prices – real costs of energy including carbon
Minimum standards eg EE on energy using equipment
Mandates such as RPS
Subsidies such as FIT’s, DSM programs
Infrastructure investment
Technology investment
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Reminder – the players
• The customer – narrow, local and short (with apologies
to Thomas Hobbes)
• The (utility) investor: risk averse, patient, narrow in
outlook
• The (competitive supplier) investor: impatient,
mistrustful of utilities, narrow in outlook
• Public policy needs: often at odds with the others on
geographic scope, breadth, time horizon
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And economic regulators?
• Core mission is to stand in place of markets where natural
monopoly prevails
• Fair and reasonable rates for consumers/fair return on
investment for investors
• Emphasis on transparency, fair cost allocation and avoidance
of cross-subsidy, avoidance of rate shock
• But........
• Touched by or potentially shaping or delivering virtually all
of the available policy instruments
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Conclusion
• Societal forces create pressures (economic, environmental,
social)
• And opportunities (technological change and business
innovation)
• Public policy makers will try to meet more global, broader
and longer term objectives – because they will be forced to.
• What is the role of economic regulators in meeting these
objectives?
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