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Utility Sector Disruptive Changes (In Eleven Pictures )

Utility Sector Disruptive Changes (In Eleven Pictures ). Remarks of Ron Binz Public Policy Consulting June 26, 2013  Ann Arbor. Public Policy Consulting. www.rbinz.com. US Electric IOUs Rating History 1970 – 2010. 4%. AA. A. AA. AA. 22%. A. AA. A. A. BBB. 46%. BBB. A.

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Utility Sector Disruptive Changes (In Eleven Pictures )

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  1. Utility Sector Disruptive Changes (In Eleven Pictures) Remarks of Ron Binz Public Policy Consulting June 26, 2013 Ann Arbor

  2. Public Policy Consulting www.rbinz.com

  3. US Electric IOUs Rating History1970 – 2010 4% AA A AA AA 22% A AA A A BBB 46% BBB A BBB BBB 27% BBB- 1% Source: Standard & Poor’s, Macquarie Capital

  4. Potential Bypass Threats from Distributed Generation are Large Percent of 2032 Peak Demand • WECC-wide Behind-the-Meter DG: 19 GW of solar PV + 7 GW of CHP • Distributed PV based on “interconnection potential” (no back-flow through feeders), with adjustments to reflect relative economics among states • CHP additions represent a fixed percentage (~40%) of technical potential in each state Source: E3 (2013).

  5. New Jersey Germany Colorado Michigan Arizona

  6. Renewable Electricity • Futures Study (REF) • Exploration of High-Penetration • Renewable Electricity Futures • Available at NREL.gov

  7. Baseline Case

  8. REF ITI Case

  9. How does the assumption of an HREF affect the business model? • Much higher levels of variable generation at the bulk power scale • Greater penetration of distributed energy resources at the distribution scale • Greater need for flexibility in the grid components, operations, and architecture • Much higher levels of energy efficiency (sufficient to eliminate load growth) (affects utility organization, operations) (affects utility revenues, services) (affects utility investment, operations) (affects utility role, services)

  10. Thesis: Utilities must develop aset of new business models • Thesis: Today’s regulation may not be up to the task • Rarely rewards utilities for desired behavior • Lack of incentives for • firm efficiency • clean energy investment • energy efficiency • innovation • Rate structures need revision • Focus on commodity sales • Balky, judicial process

  11. Authors • Ron Binz • Richard Sedano • Denise Furey • Dan Mullen • Available at www.ceres.org

  12. Thanks for the invitation I look forward to your questions.

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