Utility regulators have tough jobs. Regulators – also called Commissioners or Judges – are expected to evaluate utility plans to advance state policy goals, reliability, and affordability for all customers. Electricity prices rose 5.9% year-over-year as of May 2024, and competition for utility spending has never been higher.

Commissioners turn to the National Regulatory Association of Utility Commissioners (NARUC) for education and leadership. In July 2024, NARUC convened its  unique audience of utilities, policymakers, vendors, national labs, trade organizations, and other stakeholders in West Palm Beach to discuss trends and challenges faced by the energy industry.

I was excited to represent Landis+Gyr at the conference by sharing how our solutions are helping utilities and consumers manage energy better in our booth space. Throughout the conference, two themes were increasingly prevalent: load growth and resource adequacy. 

Snapshots of Team Green at the 2024 NARUC Summer Policy Summit

The Growing Load Growth Topic

Six sessions on the Summer NARUC Policy Summit agenda discussed load growth, including two of the three general sessions. This topic emerges as urgent in part due to recent electricity forecasts that anticipate 5-6% annual demand growth after a decade of flat growth. PJM’s recent demand growth update shows the dramatic change anticipated this year alone:

Source: PJM

This dramatic growth rate is largely attributed to new data centers associated with AI (which could consume 9% of U.S. electricity generation by 2030), but domestic manufacturing, electrification technologies such as electric vehicles, and economic development also require more energy. Coupled with numerous coal and gas retirements, these trends have created major resource adequacy concerns across the U.S. While substantial clean energy is under development, questions emerge about how to economically and equitably transport these electrons long-distance. FERC Chair Willie Phillips acknowledged that load growth is his number one concern, which is in part why FERC recently issued three highly anticipated orders on transmission reform to speed up the development of more than 2 GW of backlogged clean energy projects.

Source: White & Case and The Brattle Group

New Nuclear Gassitude

Decarbonization goals and climate change concerns challenge the load growth and coal/gas retirements equation. Some stakeholders see advanced nuclear as a solution, with representatives from Google detailing their plans to develop this technology. Several newly-proposed data centers will be co-located with small-modular nuclear reactors. Despite these plans, some panelists expressed concern about the expiration of nuclear tax credits in eight years, after which these plants will struggle to persist.

Briana Kobor, Head of Energy Market Innovation at Google, advocated for shifting “from the vision of clean energy to clean capacity,” because when Google models resources like natural gas and nuclear, they found a 40% reduction in cost and overall megawatts needed. Mike Nasi, a partner at an environment and energy law firm called Jackson Walker, also argued that a weather-dependent grid still needs backup power. Perhaps that is why NARUC planners scheduled multiple topics on the role of natural gas to support reliability and our “clean energy economy” “beyond the policy statements.” Additionally, NARUC’s new taskforce on Gas-Electric Alignment for Reliability (GEAR) met to continue conversations on how to integrate these energy systems effectively.

Distribution Solutions

Thoughtful resource planning is essential to meeting grid challenges, but regulators and panelists alike recognized the need to utilize the distribution system to support energy management. The panel titled “Grid Hardening or DERs? How to Pick Your Resilience Entrée” comically reflected two key pathways that blend hardware and software. There are numerous ways to utilize DERs, including load shifting, to support power restoration after an outage, but the financial models for these programs are still evolving. For example, virtual power plants and DER aggregation offer high potential, but real-time grid sensing and integration with local markets will be necessary to achieve the full value of these resources. Intelligence at the grid edge will become paramount to managing these assets, especially as wildfires and other threats challenge the grid. The stakes are high to implement resilience solutions, as outages can cause upwards of $1B in economic damages in a single day.

Rates to Get it Right

Proper price signals are essential to utilizing the full value of the distribution gird. Rate design was another key theme of the Summer Policy Summit, particularly to explore how to allocate costs associated with new grid projects (e.g. data centers and EV fleet upgrades). A new report was released at the conference from the Critical Consumers Issue Forum (CCIF, a collaboration between utilities, regulators, and consumer advocates) with several foundational rate design tools. The report recognized load growth as a driver for dynamic pricing to engage customers, use resources efficiently, and reduce future resources needed to meet demand cost effectively. Commissioners were urged to consider what technology is available to support innovative rates, including advanced metering infrastructure (AMI).

Despite the importance of rate design and consumer solutions, the average customer only thinks about their utility bill seven minutes a year. Customers “don’t care how rates work, they care about the bottom line on the bill,” reflected the Honorable Gary F. Clark, Commissioner, Florida Public Service Commission. Utilities and commissioners alike continue to debate the best way to balance affordability and innovation to meet the challenges of today’s energy system.

What’s next?

The NARUC Summer Policy Summit reflected many of the trends in the energy industry, exemplified via the “throwdown” session titled “Reliability, Affordability, Sustainability: What’s the best path to getting there?” While there is no one clear answer, and every state will plan its energy system differently, the conference incubated key discussions. Whether solutions come from the “shark tank” style innovation or complex rate design theory, we can expect that the next meeting in Anaheim, California in November will continue to explore the rapidly-evolving issues that impact our energy economy.