Incumbency vs. Diversity, Monopoly vs. Merits:
Who Should Provide the New Distribution Platforms?

After a century of choicelessness, of buying a uniform product from a single supplier, electricity consumers now have ways to lower their costs, raise their comfort and reduce their environmental impact.  New companies are offering thermostat controls, time-of-use pricing, and renewable energy packages.  Solar panels allow consumers to self-supply; storage and neighborhood-level microgrids are not far off.  Aggregators of demand response are competing to pay consumers for using less, out of savings gleaned from displacing higher-cost generation.  (Demand response hit a snag when the D.C. Circuit struck FERC's Order 745 in May, but last month's essay described ways to save the idea.)  Today's technologies can democratize demand, allowing consumers to custom-design their own services, while diversifying supply, as consumers pick providers based on merit.

The bump on this technological path is our current market structure.  The poles-and-wires distribution system remains controlled by traditional utilities, protected by state law from displacement by new entrants.  While they vary in their openness to the new technologies, they are united in their resistance to new competitors.  Citing "existential threats" and "death spirals," one camp resists innovation as a way to preserve the status quo; the other embraces innovation as a way to expand their government-protected roles.  Because no monopoly willingly cedes control, no utility is hoping regulators answer the distribution system's most pressing new question:  How do we find and attract the best players?

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Testimony, Papers, and Presentations

Microgrids can enhance security and local control for discrete locations on the larger interconnected electric grid. The relationships and mutual responsibilities of the microgrid and the external grid need to be carefully defined, however. Here is a framework for doing just that.
In this proceeding before the Mississippi Public Service Commission, Entergy proposes to sell its transmission facilities to ITC at a gain. The transaction is a “spin-merge” transaction in which Entergy shareholders will end up owning 51% of ITC, along with their shares of Entergy.
Non-transmission alternatives will not receive the consideration they deserve – and consumers will lose the reliability and cost-saving benefits NTAs may offer – unless FERC makes clear that transmission providers have an affirmative obligation to consider them.
In this expert report in Maryland’s $150 million arbitration with cigarette manufacturers, Hempling discusses principles of effective regulation and statutory design.
States can influence renewable energy prices—but they could use some help from FERC.

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I highly recommend Scott Hempling. I have known him since 2003, since he was a consultant for the Hawaii Public Utilities Commission on various important and cutting-edge policy regulatory matters in Hawaii, through his time as the Executive Director at the National Regulatory Research Institute. His expertise, knowledge, and experience in all regulatory and energy matters is unmatched, and he would be a highly valuable resource and asset in any such endeavor.
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