Technical Assistance on Utility Business Models
States are setting new goals for the electricity sector, including grid modernization, resiliency, customer empowerment, and environmental improvement. LBNL provides technical assistance to state utility commissions and energy offices considering possible changes to regulations and policies to advance these public interests.
Consumer and third-party investments in energy efficiency and customer-sited generation support these goals. However, such distributed energy resources are contributing to stagnant, or even declining, retail electricity sales in some regions. Reduced retail sales—at a time when utilities are investing in infrastructure to meet increasing demands on the electric system—will likely affect their bottom line. Retail rates for most customers are designed to collect large portions of fixed costs in volumetric charges; when sales decline, revenues drop without equivalent reductions in costs, resulting in the potential for earnings erosion.
Many states are asking whether incremental approaches to address previous disruptions to the regulated utility business model (such as energy efficiency) are effective in the present context. Other states are considering more fundamental changes to regulating utilities and their role in the ownership, management, and operation of electric delivery systems.
LBNL provides analysis support to help regulators and stakeholders quantify the impacts of incremental changes to the utility’s business model in response to high penetrations of distributed energy resources, as well as information about design and implementation issues associated with both incremental and fundamental changes states may be considering.