By Luther Turmelle, New Haven Register
As Connecticut lawmakers begin to consider a slew of energy-related bills, they spent time Monday listening to advice from New York State’s “energy czar” and other experts about how the relationship between the utility industry and government needs to be overhauled.
Richard Kauffman, New York State’s chairman of energy & finance, described regulated utilities as being “like birds in gilded cages,” but said their resistance to change is a product of the environment from which they originally came. Kauffman was the featured speaker at the forum “Utility 2.0 — the Utility of the Future,” which the General Assembly’s Energy and Technology Committee hosted at the Legislative Office Building.
“The current system comes from a time when the demand for energy was thought to be fixed,” he told the legislative panel.
Kauffman joined the administration of New York Gov. Andrew Cuomo in February 2013 with a directive to increase
Kauffman said his efforts to remake New York’s electric utility marketplace are focusing heavily on technology. To illustrate the point, he noted that New York State spent $16 billion on energy infrastructure improvements over the past 10 years and will spend nearly two time that — $30 billion — over the next 10 years.
But the cost of such heavy investment in technology should promote the increased use of data that can be used by the utilities themselves or by third-party providers to solve energy problems. Kaufmann said utilities need to be more entrepreneurial, much like the relationship that computer giant Apple has with the third party providers that produce IPhone applications.
“We’ll let the innovation of the market determine what problems can be solved,” he said.
The relationship between utilities, lawmakers and regulators also must change, Kauffman said. In order to promote innovation by utility companies, lawmakers and regulators need to find ways to provide incentives that encourage utilities to change their business models, he said.
That is an opinion shared by Janet Gail Besser, vice president of policy and government affairs with the New England Clean Energy Council. The Boston-based nonprofit promotes the use of renewable energy.
“The reason that utilities spend money the way they do isn’t because they are bad actors,” Besser said. “It’s because they are trying to work within a regulatory framework.”
To change that mindset, regulators need to look for ways to encourage new kinds of investment, particularly those that focus on distributed generation rather than focusing on the old school, centralized power plant model, she said.
Regulators need to encourage utilities to try new things in the form of small pilot programs, Besser said.
“They should not be penalized for trying to be innovative,” she said.
Amid discussion of increased utility infrastructure spending and use of technology, Abigail Anthony, director of the grid modernization initiative for the Acadia Center as well as the regional environmental group’s Rhode Island director, urged lawmakers not to lose sight of the consumer in the process.
“Our grid is not advanced if it does not protect consumers.” Anthony said. “It should be about creating healthier and better communities.”
She also urged lawmakers to move the state’s utility companies away from fixed-rate charges to customers because the practice discourages energy conservation among consumers. Connecticut utility regulators approved an increase in fixed rate charges for Eversource Energy customers at the end of last year.
Ken Bowes, vice president of engineering for Eversource Energy said the company “stands ready to work with Connecticut lawmakers” on modernizing the electric grid and the industry’s business model. But like Anthony, he said any such efforts need to keep customers front and center.
“I would suggest there is a Utility 3.0 on the way, which is about what customers want, not regulators or companies want,” Bowes said.
Tony Marone, senior vice president of customer and business services at New Haven-based UIL Holdings Corp., the corporate parent of The United Illuminating Co., which is the electrical distribution company serving customers in Bridgeport, New Haven and surrounding communities.
“I don’t see this as much of a revolution as I do a evolution,” Marone said. “It’s really more about looking at things in a way that is responsive to customer needs.”
Monday’s meeting came on the eve of a day-long set of hearings the Energy and Technology Committee will conduct at the Legislative Office Building.
Call Luther Turmelle at 203-680-9388.