This post is the first in a three-part series that helps local governments understand why working with utility regulators matters, what they can achieve, and how to set themselves up for success. Read part two here and part three here.
Cities, counties, and states across the U.S. are pledging to recommit to the Paris Agreement and to achieve 100% clean energy. These goals give new depth and significance to the relationships that cities have with the energy utilities that provide power within their boundaries. In working with local governments across the country through the City Energy Project and the Urban Sustainability Directors Network, IMT has seen a groundswell of cities wanting to learn more about the workings of energy utilities and how they are regulated.
Why It Matters for Cities to Work with Utility Regulators
So, why should cities be involved in state utility regulation in the first place? What’s the city’s role, and how can they prepare themselves to achieve their goals?
First, a bit of background. Over seventy percent of electric customers in the U.S. are served by investor-owned utilities. These utilities are regulated by state agencies called public utility commissions (PUCs), where appointed or elected commissioners make decisions about what rates utilities can charge and what programs and services they can offer.
In some states, participating at PUCs can be as important as a city’s direct work to build a partnership with its utility, and it can even help pave the way for those collaborations. Often state legislators may set the high-level requirements, but PUCs will craft the rules and practices for how utilities implement them.
This means that if a city wants 100% renewable energy, it usually needs to work with the utility and utility regulators to ensure that long-term power supply planning accommodates that. If a city wants to assess carbon emissions, it usually needs work with the utility and utility regulators to create practices or rules that allow the release of data about community energy usage. If a city wants to encourage development of net-zero neighborhoods with efficiency, solar, and storage, it usually needs to work with the utility and utility regulators to identify how that fits into the local distribution infrastructure.
Local governments increasingly recognize the necessity of engaging with utilities and their regulators to help realize community goals, whether those goals are to reduce carbon emissions, improve resilience, or catalyze a clean energy workforce. Milwaukee, for example, created resources for the public on how to engage with utility regulators to increase renewable energy.
Be the City’s Voice
Cities increasingly are on the ground providing outreach and programs in areas that can matter to utility regulators. From managing energy efficiency programs to recovering from natural disasters, cities also advocate for diverse constituents who are concerned about equity and affordability. This means cities can provide PUCs with both practical experience and visionary policy recommendations. Several cities already provide recommendations to their utility regulators:
- In the wake of Superstorm Sandy, New York City worked extensively with stakeholders at the New York Public Service Commission to ensure that its utilities rebuilt their infrastructure in ways that incorporate climate concerns. The resulting order was the first in the nation under which an electric utility formally integrated climate science into its long-term planning.
- A coalition of Colorado local governments recommended changes to the Colorado Public Utilities Commission’s data privacy rules, allowing building owners to receive whole-building data for benchmarking and transparency policies. The cities and counties themselves also receive Community Energy Reports, which provide data about energy usage and solar & efficiency program participation that supports climate action planning.
- Earlier this year, Washington, DC recommended that its utility continue to explore non-wires alternatives like efficiency, solar, and storage, instead of building a new substation and other infrastructure. The District’s recommendations are still under consideration, but if adopted as part of a larger grid modernization process, could lead to pilot project to test distributed energy resource procurement in lieu of construction.
Many cities also make recommendations around street lighting, electric vehicle charging, and other areas that allow them to reduce the costs of municipal operations. But cities’ interests in the process can be diverse. By participating at PUCs, cities can help to set robust, forward-thinking goals for utilities and support those goals as they are carried out.
In the next post, I describe how Montgomery County, Maryland, has built on a successful partnership with its utilities while continuing to engage at the state level to realize local goals.
Do you work for a local government that wants to build a regulatory strategy or take its engagement at PUCs to the next level in pursuit of local and state goals? IMT is here to help. Contact me at firstname.lastname@example.org.