SEPA’s 51st State Industry Thought Leaders Debate the Role of the Utility Monopoly

Disruption within the electric power sector has led to a changing, and sometimes unclear, role for U.S. utilities. This uncertainty has resulted in delayed investment in critical infrastructure for a 21st-century grid.

WASHINGTON, D.C. -- Nineteen authors weighed in on the role of the natural utility monopoly in thirteen papers - now publically available - as part of the third phase of the Smart Electric Power Alliance's (SEPA) 51st State Initiative.

Disruption within the electric power sector has led to a changing, and sometimes unclear, role for U.S. utilities. This uncertainty has resulted in delayed investment in critical infrastructure for a 21st-century grid.

To provide more clarity on this issue, industry thought leaders, executives, researchers and innovators from large investor-owned utilities and trade associations, technology developers, research labs and nonprofits submitted diverse plans aimed at addressing:
• In the face of rapid, technological change, does utilities' longstanding "natural monopoly" on power distribution provide the economic and social value as originally intended? What parts should or should not be maintained?
• As new distributed technologies are integrated onto the grid, where and on what levels should utilities be allowed to compete? Should utilities be allowed to own specific distributed devices, such as smart meters, inverters or electric vehicle charging infrastructure?
• With evolving business and regulatory models, who will be the electric power provider of last resort, and what will that mean on a distributed grid?

Despite varying differences in approach - ranging from describing the role of the future utility to providing a framework for considering how to answer this question - many agreed that the role of the utility should include integrated planning and that the Cost of Service model is inadequate. Many also saw a performance based regulation (PBR) as a pathway forward.
There was a wide spectrum for those that did characterize the ideal "51st State" role of the utility. Numerous authors suggested the electric utility become more narrow, focusing as some form of a Distribution System Operator. Others advocated expanding the utility role to take an active approach in developing, owning, and aggregating distributed energy resources (DERs).
"Uncertainty around the role of the utility is a major barrier to business model evolution and slows the deployment of new technology that can deliver customer value," said Tanuj Deora, SEPA's chief content officer, "SEPA applauds the hard work and thinking of all our authors for their contributions to reducing that uncertainty."

SEPA will be hosting a Twitter chat on Friday, December 15 at 1:00 p.m. - 2:00 p.m. EST with several authors about their ideas around the natural utility monopoly. All are welcome to join using the hashtag #SEPAchat

Download the complete submissions package and the Summary of Submissions now. For a list of authors and each individual submission, see below.

• Splitting Distribution from Transmission to Create 21st Century Distribution System Operator Utilities with a Hybrid Infrastructure-Service Business Model, Doug Karpa, Clean Coalition
• A View from the 51st State of Radinau, Paul Zummo, American Public Power Association( APPA)
• SEPA's 51st State Initiative - A Whitepaper Discussion, Howard Smith, Southern Company
• Defining the future Role and Core Functions of the Monopoly Utility, Jim Mazurek, Justin Davidson and Tyler Lancaster, Accenture
• Determining the Scope of the Electric Distribution Utility of the Future, Carl Pechman, PhD
• New Utility Roles for Electricity Distribution Markets, Rocky Mountain Institute
• Role of Utilities in the Transforming Energy Economy of the 51st State, David Hill, Vermont Energy Investment Corporation (VEIC)
• Solutions to the Utility Information Problem, Michael O'Boyle, Energy Innovation
• Stewardship, Innovation and the Role of the Electric Utility in the 21st Century, Bob Fesmire, with contributions from Gary Rackliffe and Asaf Nagler, ABB
• The Future Role of the Electric Utility: Energy and Capacity Optimization, Larry Dickerman, Landis+Gyr
• The Next Phase of the 51st State: Utility Operating Environment and Business Models in the Energy Cloud, David O'Brien, Mackinnon Lawrence and Red Walker, Navigant
• The Role of the Consumer-Centric Utility, Jan Ahlen, National Rural Electric Cooperative Association (NRECA)
• The Role of the Utility, Jeff Weiss, Distributed Sun

About the 51st State:
Since its inception in 2014, SEPA's 51st State Initiative has provided an open platform for envisioning the future of the energy system. More critically, the initiative is focused on developing practical tools and sharing information that can help industry stakeholders — utilities, regulators, technology firms and consumers — work together to find the collaborative solutions for energy transformation that will benefit all. In 2016, the Keystone Policy Center honored the 51st State with its Leadership in Energy Award.

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