Phase I – Visions

Bold, new visions for the future of smart grids.

In Phase I of the smart grid initiative, we asked you to describe ideal market structures from the ground up. What we received was creativity and innovation in the form of original, thought-provoking, unencumbered ideas on the hypothetical, new 51st State Phase I began as a blank slate in terms of regulatory regimes, market structures and utility business models. Ranging from incremental to transformative, read the concept paper summaries or jump right into the promising smart energy futures below.

Visions
Submitted by: Pace Energy and Climate Center / NC Clean Energy Technology Center
The Sharing Utility: Enabling & Rewarding Utility Performance, Service & Value in a Distri...

The Sharing Utility: Enabling & Rewarding Utility Performance, Service & Value in a Distri...

Submitted by: Pace Energy and Climate Center / NC Clean Energy Technology Center

Noting the rise of disruptive “sharing” economy companies — such as Uber — that are based on a decentralized, distributed framework, the authors envision a future 51st state of Midlandia, where innovation and cost reductions in DER technology drive a “bottom up” energy economy. In this scenario, utilities would develop a local, integrated resource planning process, allowing them to manage electric load using DERs provided by third parties. Following a series of escalating challenges capped by a future Superstorm “Cindy,” key stakeholders establish a set of five principles that include (1) putting a price on carbon, (2) abandoning cost-plus regulation for functionally unbundled services and a minimal monopoly function, (3) incorporating full life-cycle costs into every resource decision, (4) setting an array of electricity prices based on marginal costs, and (5) providing open access on the grid to all services and technologies, including DERs.

Visions
Submitted by: various

51st State Phase I – All Visions for the Future as Zip

Submitted by: various

SEPA’s 51st State Inititiative (sepa51.org) provides a collaborative dialogue across the power sector to discuss the future of the electric industry. The initiative’s focus during the first phase was to identify a variety of potential end games without being encumbered by existing paradigms. Participants from across the energy industry at large were challenged to articulate their own vision for the future, operating under a scenario where they had a new 51st State that was a blank slate in terms of regulatory regimes, market structures and utility business models. This is the collection of the 13 ‘concept papers’ from a variety of perspectives, including former FERC Chairman Jon Wellinghoff, American Public Power Association, National Rural Electric Cooperative Association, Pace Energy & Climate Center, Wisconsin Energy Institute, among other esteemed individuals and organizations.

Visions
Submitted by: Energy Innovation / America's Power Plan
An Adaptive Approach to Promote System Optimization

An Adaptive Approach to Promote System Optimization

Submitted by: Energy Innovation / America's Power Plan

Starting with three universal goals – affordability, reliability and environmental performance – this paper updates the well-known Bonbright regulatory principles of rate design. These updates are aimed at creating a market structure that encourages system optimization while remaining agnostic about whether the structure is purely market driven or remains vertically integrated. Underlying this approach is an assumption that technological advances and consumer demand for new services and DERs will challenge the prudence of traditional cost-of-service and rate design paradigms. Policymakers will play a central role in building transparency and adaptability into the regulatory framework.

Visions
Submitted by: Stoel Rives LLP / Clean Power Finance
The 51st State of Welhuton: Market Structures for a Smarter, More Efficient Grid

The 51st State of Welhuton: Market Structures for a Smarter, More Efficient Grid

Submitted by: Stoel Rives LLP / Clean Power Finance

The central feature of this submission describing the state of Welhuton is a “transactive energy” framework that relies on market mechanisms for the transmission and distribution grids, with independent system operators at both levels optimizing grid operation. The other key development is the deployment of customer “energy boxes” that efficiently manage and coordinate both end-use consumption and production. The transition to a complete transactive framework includes an initial stage where the energy box is developed from enabling technologies, followed by an intermediate state in which an alternative utility model includes a growing role for an independent distribution system operator. In the final state, autonomous grid operations would rely completely on market forces that internalize all system costs.

Visions
Submitted by: Graceful Systems LLC
A Blueprint for Electricity/Energy Services in Fertile Ground – the 51st State

A Blueprint for Electricity/Energy Services in Fertile Ground – the 51st State

Submitted by: Graceful Systems LLC

The framework for the 51st State, Fertile Ground, is defined by three key values: resilience, sustainability and equity, which are implemented via five key ideas. First, central authority and responsibility to manage energy infrastructure will be exercised by a “community,” defined as “a group of people, organizations and institutions under some participatory, local form of governance. Second, within this community, the limits of monopoly utility service will be defined as narrowly and tightly as possible, while, third, ensuring the safety of and access to that monopoly service. Fourth, energy service contracts will become the central transaction between energy users and providers, and, finally, energy policies will be driven by observable outcomes that provide a basis for continual growth and benefits for all stakeholders.

Visions
Submitted by: Strategic Utility Management LLC
2040 SEPA Fact Finding Mission to the 51st State

2040 SEPA Fact Finding Mission to the 51st State

Submitted by: Strategic Utility Management LLC

This paper presents a story within a story, as members of a fact finding mission to the 51st State in the year 2040 review a 2015 report in which a goal of 80-percent renewable energy is set, based primarily on political rather than technological changes. The fundamental strategies include (1) effective price signals using mandatory time-of-use and straight fixed variable rate designs, (2) private networks, including contractual arrangements and microgrids, and (3) an “externality tax” incorporating all environmental costs.

Visions
Submitted by: University of Wisconsin-Madison
Dynamic Distribution System

Dynamic Distribution System

Submitted by: University of Wisconsin-Madison

In this paper, a team of academics envisions an evolution in energy market design that combines the traditional bulk power system with a more dynamic distribution system operator. This operator or DSO will provide both balancing functions and a clearinghouse for thousands of plug-and-play DERs that enables self-optimizing, self-adapting and selforganizing energy transactions between buyers and all sellers. This new system emphasizes resilience and autonomy based on technological advances, transparency of prices and third party generation options such as microgrids.

Visions
Submitted by: Institute for Local Self-Reliance
Energy Democracy in the 51st State

Energy Democracy in the 51st State

Submitted by: Institute for Local Self-Reliance

The Institute for Local Self-Reliance submission details a series of transitions for utilities. The first evolution will be toward a “Utility 2.0” model, incorporating principles of reduced energy consumption and carbon emissions on the one hand and increased grid efficiency and flexibility on the other. At this stage, a neutral DSO would provide local planning, typified by real world regulatory reforms ongoing in New York, and to a lesser extent by activities in Hawaii, Maine, Vermont and the Netherlands. Further evolution will continue in a “Utility 3.0” model, resulting in an “energy democracy” with local control and equitable access to the grid. At this point, grid control will be shifted to an independent electricity network manager that coordinates a system that is widely decentralized and predominantly powered by a renewable energy-driven system. ILSR believes the entire evolution is achievable by 2050, based on technological integration of millions of small generators and smart devices in an open access marketplace.

Visions
Submitted by: National Rural Electric Cooperative Association
The 51st State: A Cooperative Path to a Sustainable Future

The 51st State: A Cooperative Path to a Sustainable Future

Submitted by: National Rural Electric Cooperative Association

The National Rural Electric Cooperative Association (NRECA) makes a case for allowing electric cooperatives to maintain their traditional “regulatory compact” by continuing to optimize a mix of resources to benefit their member-owners (customers). The paper includes four examples of cooperatives that are successfully pursuing distributed energy and utility solar projects. NRECA believes that an appropriate 51st state market structure would make all DERs available to interested consumers without promoting one technology over another, while providing transparency on the costs and subsidies associated with all power technologies. Guiding principles include reliability, efficient operations, financial stability of the utility and its existing facilities, fairness in pricing and cost allocation, and safety

Visions
Submitted by: American Public Power Association
APPA 51st State Proposal

APPA 51st State Proposal

Submitted by: American Public Power Association

The American Public Power Association’s paper argues that the existing industry structure should be retained, including utility responsibility as the distribution system operator (DSO). But slight modifications may be needed to facilitate development of distributed energy resources, utility-scale renewables, and efficiency. That means explicitly identifying and valuing environmental attributes, avoiding subsidies for specific resources, and implementing community preferences for flexibility in rate design. The paper identifies several examples of public power utilities already making incremental changes toward cleaner, more efficient and flexible grid structures.

Visions
Submitted by: Arizona Public Service
SEPA’s 51st State – Education Discussion on the Future of Solar Generation

SEPA’s 51st State – Education Discussion on the Future of Solar Generation

Submitted by: Arizona Public Service

Arizona Public Service starts from the view that vertically integrated utilities will continue to play a central, essential role on behalf of consumers to leverage distributed energy resources and grid-scale renewables, including community solar. Going forward, APS envisions a diverse generation portfolio that includes centralized resources, as well as the complex, reliable distribution system that will be needed as demand increases from electronic devices and electric vehicles (EVs). The utility also expects that regulators will continue to ensure that future rate design and cost allocation for energy investments will be equitable across all consumers.

Visions
Submitted by: James A. White
The First 100% Solar Electric State

The First 100% Solar Electric State

Submitted by: James A. White

This paper explores the possibility of a state powered entirely by off-grid photovoltaic (PV) solar systems. The electric system would be a combination of solar PV producers — both distributed and grid-scale — participating consumers across all rate classes, and “energy banks” comprised of various energy storage facilities and technologies. Transmitters — the poles and wires owned by utilities — would connect regions within and outside the 51st state. The paper assumes that advanced meters will facilitate energy trades among consumers.

Visions
Submitted by: Ankit Saraf and Michael Jochum
The Decentralized Grid

The Decentralized Grid

Submitted by: Ankit Saraf and Michael Jochum

The resilient and efficient grid of the future will include (1) information sharing by grid-connected technologies, (2) a central controller using automatic, smart algorithms to govern grid operations, and (3) smart home operating systems to coordinate power consumption across devices and among available DERs. The 51st state would also adopt an open-market structure where DERs and centralized power stations compete fairly, driven not by central planning but purely by market forces and a “central controller” or utility. Prices based on market forces and value — both temporal and locational — would allow consumers to adjust their energy use. Regulators would enforce rules regarding transparency, prevent market manipulation and guarantee electricity access to low-income customers.

Visions
Submitted by: Baker Street Publishing and TeMIx, Inc.
Transactive Energy: A Sustainable Business and Regulatory Model for Electricity

Transactive Energy: A Sustainable Business and Regulatory Model for Electricity

Submitted by: Baker Street Publishing and TeMIx, Inc.

This paper describes two grids. A grid of “things” will include renewable energy, storage and other DERs. The grid of “people” will include Energy Service Parties, such as producers, consumers and storage owners, and of Transport Service Parties, specifically transmission and distribution operators. The two grids would be connected by intermediaries, including exchanges, marketers and retailers. A “transactive energy” business model would support two products — energy and transport — and allow all parties to autonomously engage both in forward transactions to coordinate investments and in spot transactions to coordinate operating decisions.


Phase I Innovation Review Panel

Ron Binz

Principal, Public Policy Consulting

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Board: Director

Ron Binz is a Principal at Public Policy Consulting, specializing in energy and telecommunications economics and policy issues. On June 27, 2013, President Obama nominated Ron to become Chairman of the Federal Energy Regulatory Commission, but following a confirmation hearing in a U.S. Senate committee, he asked the president to withdraw his name from further consideration. He was appointed by Colorado Governor Bill Ritter to the Colorado Public Utilities Commission in January 2007 and served until April 2011. As Chairman, Ron led the Colorado PUC in implementing the many policy changes championed by the Governor and the Legislature to bring forward Colorado’s “New Energy Economy.”

Ron was an active member of the National Association of Regulatory Utility Commissioners, serving as Chair of NARUC’s Task Force on Climate Policy and as a member of both the Energy Resources and Environment Committee and the International Affairs Committee. From 1984 to 1995, Ron directed the Colorado Office of Consumer Counsel, the state’s utility consumer advocate. His office represented residential, small business and agricultural utility consumers before the Colorado Public Utilities Commission, federal regulatory agencies and the courts. While Consumer Counsel, Ron served as President of the National Association of State Utility Consumer Advocates (NASUCA).

Ron received a bachelor’s degree in philosophy from St. Louis University and a master’s degree in mathematics from the University of Colorado.

Nancy E. Pfund

Founder and Managing Partner, DBL Investors

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Nancy E. Pfund is Founder and Managing Partner of DBL Investors, a venture capital firm whose goal is to combine top-tier financial returns with meaningful social, economic and environmental returns in the regions and sectors in which it invests. Ms. Pfund currently sponsors or sits on the board of directors of several companies, including; SolarCity and BrightSource Energy, and, prior to their public offerings, Tesla Motors and Pandora Media. Prior to founding DBL, Ms. Pfund was a Managing Director in Venture Capital at JPMorgan. Previously, Ms. Pfund worked at Intel Corporation, the State of California, Stanford University and the Sierra Club. Ms. Pfund was featured #17 in the FORTUNE World’s Top 25 Eco-Innovators; is Chair of the Advisory Council of the Bill Lane Center for the American West at Stanford University; a member of the Advisory Board of the UC Davis Center for Energy Efficiency; Lecturer in Management at the Stanford Graduate School of Business; a board member of the California STEM Learning Network (CSLNet); a C3E Ambassador to the U.S. Clean Energy Education and Empowerment Program, led by the U.S. Department of Energy; and is a founding officer and director of ABC2, a foundation aimed at accelerating a cure for brain cancer. In 1988, President Bush appointed Ms. Pfund as a charter member of the National Advisory Council for Environmental Policy and Technology. In 1999, Ms. Pfund was appointed by President Clinton to serve on the Congressional Web-Based Education Commission. Ms. Pfund received her BA and MA in anthropology from Stanford University, and her MBA from the Yale School of Management.

Jim Rogers

Former Chairman and Chief Executive Officer, Duke Energy

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Board: Director

Jim Rogers was the chairman of the board at Duke Energy until his retirement on December 31, 2013. He also served as Duke Energy’s President and CEO from April 2006 until July 2013. Jim became President and CEO of Duke Energy following the merger between Duke Energy and Cinergy in 2006. Before the merger, he served as Cinergy’s chairman and CEO for more than 11 years. Prior to the formation of Cinergy, he joined PSI Energy in 1988 as the company’s Chairman, President and CEO.

During his 25 years as a CEO in the utility industry, Jim engineered a series of acquisitions and mergers creating the largest electric utility in the U.S., as measured by market capitalization. Also, he delivered an average annual shareholder return of more than 12 percent by focusing on sustainable growth during his tenures as CEO. He also owned and/or operated assets in 17 countries in Africa, South Asia, Europe, Central and Latin America. Under Jim’s leadership, Duke Energy was recognized as a leader in sustainability. In 2010 and 2011, the company was named to the elite Dow Jones Sustainability World Index; it has been a part of the Dow Jones Sustainability Index for North America for the past nine years.

In 2013, Jim was awarded the Edison Electric Institute’s Distinguished Leadership Award by his industry peers in recognition of his 25 years of service and exemplary contributions to the electric utility industry. The Alliance to Save Energy honored Jim with its Lifetime Achievement Award.

Prior to becoming a CEO, Jim served as deputy general counsel for litigation and enforcement for the Federal Energy Regulatory Commission (FERC); executive vice president of interstate pipelines for the Enron Gas Pipeline Group; and as a partner in the Washington, D.C., law office of Akin Gump Strauss Hauer & Feld. Jim has also served as assistant to the chief trial counsel at FERC; as a law clerk for the Supreme Court of Kentucky; and as assistant attorney general for the Commonwealth of Kentucky, where he advocated for the state’s consumers in gas, electric and telephone rate cases. Jim was also a reporter for the Lexington (Kentucky) Herald-Leader for three years.

In the course of his career, Jim has served on the boards of directors of eight Fortune 500 companies, and is currently a director of Cigna Corp. and Applied Materials Inc. In 2010 and 2011, he was named by the National Association of Corporate Directors’ Directorship magazine to its annual Directorship 100, recognizing the most influential people in corporate governance. Jim also serves on the boards of the Aspen Institute, Brookings Institute, Duke University’s Nicholas Institute for Environmental Policy Solutions, The Nature Conservancy and Asia Society. He also serves on a number of advisory boards including Bloomberg’s Clean Energy Finance Group. Jim is also a lifetime member of the Council on Foreign Relations. Jim has been recognized as an outspoken and accessible voice for business, earning the reputation as a “CEO Statesman.” In 2009, Newsweek named him one of “The 50 Most Powerful People in the World.” He has testified more than 20 times before U.S. Congressional Committees, and addressed international forums including the United Nations General Assembly, the World Economic Forum and the Clinton Global Initiative.

Jim has advocated investing in energy efficiency, modernizing the electric infrastructure, and pursuing advanced technologies and nuclear energy to grow the economy and transition to a low-carbon future. He serves as vice chairman of the World Business Council for Sustainable Development and is a member of the global board of directors of The Nature Conservancy. Jim was also a founding member of the U.S. Climate Action Partnership, a collaboration of leading businesses and environmental groups that came together to call on the federal government to enact legislation to reduce greenhouse gas emissions.

In the U.S., he was chairman of the Edison Electric Institute (EEI) when it changed its position to support federal climate change legislation in 2007. He served on the executive committee of EEI. He was also the founding chairman of the Institute for Electric Efficiency, former co-chair and current board member of the Alliance to Save Energy and past co-chair of the National Action Plan for Energy Efficiency. He was a former member of the Boards of the Institute of Nuclear Power Operations and the World Association of Nuclear Operators. Jim has been honored with various awards and recognition. In 2014, he was inducted into the North Carolina Business Hall of Fame. He is the 2013 recipient of the United States Energy Association Award. He was named the most influential person in the power generation industry by Power Engineering magazine and the energy industry’s CEO of the Year by Platts. He was also named to the STEMconnector® List of 100 CEO Leaders in STEM (Science, Technology, Engineering and Math). In 2011, he was presented with the Ernst & Young Entrepreneur of the Year® Lifetime Achievement Award and the Charlotte Regional Partnership Jerry Award. The Charlotte Business Journal also named Jim its Business Person of the Year for 2011.

In 2011, Jim received the Asia Society of Washington’s International Business Leadership Award and the Committee of 100’s Business Excellence Award for his efforts to improve business relations between the U.S. and China that benefit customers, the environment and improve dialogue between the two nations. He was also recognized by the U.S.-China Policy Foundation with their Global Executive Leadership Award. Later the same year, the Asia Society elected Jim to serve a four-year term on the organization’s board of trustees. Jim is an active community leader and has received a number of honors and awards for his service including the Boy Scouts of America Distinguished Honoree from the Mecklenburg County Council, the Ellis Island Medal of Honor from the National Ethnic Coalition of Organizations (NECO), the 2006 Human Relations Award from the American Jewish Committee, Cincinnati Chapter, the 2005 Ronald McDonald House Lifetime Achievement Award, the 2005 Keystone Center Leadership in Industry Award, the 2004 National Conference for the Community and Justice (NCCJ) Distinguished Service Citation, the 1998 Hebrew Union College Cincinnati Associates Tribute Honoree and the 1996 Energy Daily Corporate Leadership Award.

Jim earned Bachelor of Business Administration and Juris Doctor degrees from the University of Kentucky, where he was a member of the Kentucky Law Journal and Beta Gamma Sigma National Honor Society.

Sue Tierney

Senior Advisor, Analysis Group

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Sue Tierney is Senior Advisor at Analysis Group in Boston. She is an expert on energy policy and economics, specializing in the electric and gas industries. She has consulted to companies, governments, nonprofits, and other organizations on energy markets, and economic and environmental regulation and strategy. She previously spent over a dozen years in state and federal government – as Assistant Secretary for Policy at the U.S. Department of Energy; and as cabinet officer for environmental affairs, public utility commissioner, and chair of the Massachusetts Water Resources Authority in Massachusetts. She currently chairs the External Advisory Board of the National Renewable Energy Laboratory, chairs the ClimateWorks Foundation Board, and is a director of World Resources Institute, the Alliance to Save Energy, Resources for the Future, and the Energy Foundation. She recently co-chaired the NAESB Gas-Electric Harmonization Committee, was a member of the Bipartisan Policy Center’s Energy Project, was a member of the National Academy of Sciences panel on shale gas risk, and was co-lead convening author of the energy chapter of the National Climate Assessment. She served on the U.S. Secretary of Energy Advisory Board (and its Shale Gas Subcommittee). She has published widely, and frequently speaks at industry conferences and lectures at universities. She earned her Ph.D. and M.A. degrees in regional planning at Cornell University in New York, and her B.A. at Scripps College in California.

Jigar Shah

Entrepreneur and Visionary

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Jigar Shah is an entrepreneur and visionary committed to leveraging the next economy by deploying existing technologies that solve the challenging issues of our time. He is author of the book: Creating Climate Wealth: Unlocking the Impact Economy. He is CEO of Jigar Shah Consulting and a board member of the Carbon War Room, the global organization founded by Sir Richard Branson and Virgin United to help entrepreneurs address climate change. He served as the Carbon War Room’s first CEO from 2009-2012. Shah’s first foray into realizing his vision of climate wealth was the founding of SunEdison in 2003; which remains one of the world’s leading solar services companies. At SunEdison, Shah simplified solar as a service by implementing the power purchase agreement (PPA) business model. The SunEdison business model enabled massive, scalable deployment of existing solar technology that turned solar into a multi-billion dollar industry worldwide. Prior to SunEdison, Shah worked within strategy at BP Solar, and before that was a contractor for the Department of Energy on vehicles and fuel cell programs. He sits on the boards of the SolarNexus, KMR Infrastructure, Viasole and Greenpeace USA. Shah holds a B.S. in Mechanical Engineering from the University of Illinois, Champaign- Urbana, and an M.B.A. from The University of Maryland.