Addressing the Three Grand Challenges: State and Regional Perspectives

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The Honorable Jim Sullivan, President of the Alabama Public Service Commission, presided over the session. 

The Honorable Paul Hudson, Commissioner with the Texas Public Utility Commission, noted that it is necessary to confront the costs of addressing the Three Grand Challenges honestly.  In addition to costs associated with addressing the Three Grand Challenges, Texas is facing the challenges of increasing cost of constructing power plants and an aging infrastructure.  Texas has instituted energy efficiency, demand response, cleaner technology, nuclear power, and renewables initiatives to confront these issues.  Commissioner Hudson said it takes longer to build or access transmission than it does to actually construct a wind farm.  Commissioner Hudson concluded with a call for a national policy on carbon to create certainty.

The Honorable Carl Holmes, Chair of the Kansas House Committee on Energy and Utilities, discussed the primary issues facing Kansas' electricity delivery system.  The main problems in Kansas are the continuing controversy surrounding the construction of coal-fired plants and the slow pace of transmission construction.  Coal is a serious issue in Kansas and citizens are focused on energy policy. Representative Holmes also called for a national policy on carbon.

Paul Murphy, President and Chief Executive Officer, Independent Electricity System Operator of Ontario, countered the notion that action on climate change needs to start at the federal level.  There are several initiatives in Ontario related to climate change: 1.) All coal-generated power will be banned by 2014; 2.) Renewable energy resources will replace much of the coal-fired generation with the aid of a program to incent small renewable generators to enter the market with 20-year contracts at a fixed price; and 3.) There are currently 1.1 million smart meters in Ontario with a commitment to install 4 million more.  Ontario's current energy portfolio is 20 percent hydroelectric, 20 percent coal, 50 percent nuclear and the remainder is comprised of wind and natural gas.

Paula Carmody, Consumer Advocate for the Maryland Office of People's Counsel, discussed deregulation in Maryland and the higher cost customers have paid in recent years.  In Maryland, many actions on climate change are moving forward.  The Maryland Public Service Commission is taking action on energy efficiency programs, demand reduction programs, and revisions to the state Renewable Portfolio Standard.  Ms. Carmody commented that persuasive and clear consumer education programs are essential in instituting energy efficiency programs.

President Sullivan asked panelists how they balance price effects with the need to address the Three Grand Challenges.  Commissioner Hudson responded that decision-making processes must be balanced and based on the best data currently available.  Representative Holmes described a tax incentive system used in Kansas that engages property owners in energy efficiency programs as well as demand-side management at the residential and small business level.  Mr. Murphy cautioned that consumers will adapt to higher prices, but not large price shocks.  Ms. Carmody responded that there is a need for communication among consumers and stakeholders and that the benefits of programs need to be tailored to the individual consumer.

President Sullivan then asked panelists how they communicate to consumers the shift from a model of low-cost utility providers to a model of environmentally responsible utility providers.  The panelists agreed there is already significant consumer knowledge of the issue largely due to the national focus on energy policy.

An audience member asked Mr. Murphy what the costs were for the Ontario smart meter distribution program and if there was a cost savings.  Mr. Murphy explained that the smart meter program charges a start-up cost and a follow-up cost, if necessary.  The cost is approximately $2.50 per month, per consumer.  The smart meter program is a leadership demonstration so not all of the benefits have been realized—costs are realized first.