December 2016
The Alberta Utilities Commission reached a decision December 16th on the outlines of next-generation performance-based ratemaking ("PBR") plans for Alberta's gas and electric power distributors. Distributors will once again operate under multiyear rate plans with rates (or revenue) escalated by rate indexes with an inflation - X formula. The X factor slows escalation and was a central issue in this proceeding. The Commission chose an X factor of 0.30% that was similar to the 0.43% estimate of the productivity growth of U.S. power distributors provided by Pacific Economics Group ("PEG") Research President Mark Newton Lowry.
November 2016
Mark Newton Lowry and David Hovde of PEG filed testimony in November for the Ontario Energy Board on the design of an incentive regulation mechanism for Ontario Power Generation. PEG proposed a multiyear rate plan featuring a price cap index with an inflation - X formula. His recommended 0.59% X factor is based on a study of the productivity trend of North American hydroelectric power generators. Methods for measuring productivity growth have been a central issue in the proceeding.
November 2016
Dr. Blaine Gilles, a Senior Advisor at PEG Research, recently completed a multi-million dollar funding raise for Conversion Energy Systems, Inc. ("CES"). CES has developed a propriety system for processing hazardous wastes using a gasification process which allows recovery of recyclable metal and glass and produces significant heat energy. Dr. Gilles formulated the firm's launch strategy, developed its financial model and represented the firm before investors.
November 2016
Mark Newton Lowry made a presentation November 17th to the Vermont Future of Electric Utility Regulation Workshop. The workshop was held at the offices of Green Mountain Power in Colchester, Vermont. Dr. Lowry discussed his recent research on performance-based regulation for Lawrence Berkeley National Laboratory.
August 2016
PEG Research filed testimony in a Minnesota proceeding on behalf of Fresh Energy. The testimony, prepared by PEG economist Kaja Rebane and company President Mark Newton Lowry, reported on a study of the incentives provided by Minnesota regulation for Otter Tail Power to embrace demand-side management and other distributed energy resources. The study found problems with the company's current incentive structure that are particularly large in the areas of rate design, peak load management, and distributed generation and storage ("DGS"). The authors recommend reforms to Otter Tail's regulatory system that include revenue decoupling and an expanded scope for performance incentive mechanisms to encourage efficient peak load management and DGS.
May 2016
PEG Research won a competitive bid to advise the Ontario Energy Board in a proceeding to develop a performance-based ratemaking ("PBR") plan for the hydroelectric operations of Ontario Power Generation. OPG is one of the largest hydroelectric power producers in North America. The project will include productivity and econometric cost research using data from OPG and a sample of US hydroelectric power generators. The project will be led by PEG President Mark Newton Lowry.
April 2016
Dr. Mark Newton Lowry, President of PEG Research, spoke at the Annual Financial Forum of the Society of Utility and Regulatory Financial Analysts on forward test years
. He has been active in the forward test year field since writing a white paper on this alternative regulation tool for the Edison Electric Institute. A copy of this paper can be accessed here.
March 2016
Dr. Lowry testified for the Natural Resources Defense Counsel in Harrisburg PA at an en banc hearing of Pennsylvania's Public Utility Commission. The hearing was convened to consider alternative ratemaking methodologies, such as revenue decoupling
, that strengthen incentives for energy utilities to pursue aggressive conservation and efficiency initiatives. Dr. Lowry provided strong support for revenue decoupling as part of a package of regulatory reforms to encourage utility embrace of demand-side management programs. The recommended reform package also includes multiyear rate plans and demand-side management performance incentive mechanisms. A copy of his written evidence in the proceeding can be accessed here.
Dr. Lowry was invited by the Wisconsin Public Service Commission to make a presentation on performance-based regulation
at the Wisconsin Retreat on Utility Business Models of the Future. The retreat is organized by the National Governor's Association and was held March 29th in Madison. Other speakers at the event included nationally recognized experts Peter Kind and Ken Costello.
Larry Kaufmann was invited by Naturgas, the Colombian natural gas association, to speak at its 19th Annual Convention. He participated in an international panel on international regulatory issues, and his presentation addressed two issues: the challenges in efficiency measurement, and building trust in regulatory institutions.
Larry Kaufmann has published an article titled "Natural Gas Market Reforms in Mexico" in the latest issue of Geopolitics of Energy
. The article reviews natural gas reforms in Mexico's natural gas sector over the last 20 years and analyzes which reforms have been successful and which have not. The article also shows why the natural gas reform experience is relevant to the sweeping changes in Mexico's oil and gas industries that have taken place in recent years. Dr. Kaufmann is a Senior Advisor to Pacific Economics Group Research and in 2015 became a Fellow at the Canadian Energy Research Institute, which publishes Geopolitics of Energy
.
February 2016
Dr. Lowry made his second presentation to Minnesota's e21 Initiative February 26th in Minneapolis. This nationally prominent "utility of the future" initiative, now in Phase II, is considering alternative kinds of performance-based compensation for Minnesota electric utilities. The initiative is spearheaded by the Great Plains Institute. Dr. Lowry spoke on Performance-Based Regulation in a High Distributed Energy Resources Future.
January 2016
Mark Newton Lowry has been involved in the past year in the preparation of five reports that consider regulation of the electric "utility of the future". This work has included a role as consulting economist to the Powering Tomorrow Initiative, which was funded by the Energy Foundation and a diverse stakeholder group that included some of the nation's largest electric utilities and third party energy companies. Phase 2 of the Initiative considered alternative industry structures and appropriate regulatory systems for embracing higher levels of distributed energy resources. Powering Tomorrow has now released its Phase 2 final report entitled New Utility Industry Structures and Regulatory Packages in An Era of Increasing Energy Decentralization
. A copy of the report is available here.
Also in January, Lawrence Berkeley National Laboratory published a paper Dr. Lowry coauthored entitled Performance-Based Regulation in a High Distributed Energy Resources Future
. A copy can be obtained here. This paper explains disincentives electric utilities experience under traditional rate regulation to embrace efficient levels of demand-side management, distributed generation, and other kinds of DERs. Two well-established approaches to strengthening incentives to embrace DERs are considered: multiyear rate plans ("MRPs") and targeted performance incentive mechanisms ("PIMs"). The authors find that the strongest incentives to embrace DERs are provided by a "four-legged stool" supported by MRPs, revenue decoupling, the tracking of DER-related expenses, and PIMs that provide rewards for efficient DERs. The scope of PIMs should be extended beyond their traditional focus on conservation to encourage peak load management and distributed generation and storage. A variety of other strategies are detailed that can apply to utilities in various special situations. A webinar to discuss results of the project was held January 27th. The webinar and associated slides can still be accessed on the LBNL website here.
