Annual formula rate is working to stabilize distribution ratemaking.
Ross C. Hemphill is currently an independent consultant with over thirty-seven years of experience on regulatory and energy policy issues. Most recently, he was vice president of regulatory policy and strategy for ComEd in Chicago. Val Jensen is senior vice president of customer operations for ComEd in Chicago. Prior to joining ComEd, he was a senior vice president for ICF International in San Francisco, and served with the U.S. Department of Energy in Washington and Chicago.
It is clear that the electric utility industry is in a state of transformation. It is also becoming increasingly clear that this does not signify the end of the electric grid.
Certainly it will cease to exist as we have historically known it over the past century. But this transformation is logically redefining the grid in a manner that increases its value to all participants in the industry.
This is an industry that is quickly moving from a monopoly system, based on one-way power flows from large central station generators, to a decentralized and increasingly competitive system featuring proactive consumers who can instantaneously, automatically, and without notice switch back and forth between being electricity loads and electricity sources. All this will require a highly reliable and resilient electricity grid to serve as the foundation (the backbone, if you will) of these emerging markets. Without it, these markets will not emerge and cannot exist.
Therefore, one necessary condition for a market transformation that ultimately benefits all is the continual upgrade and maintenance of the electric grid. This brings into question whether the current and traditional method of regulating public utilities best accommodates the anticipated changes in the electric distribution services industry.