When Mark Ferron left the California Public Utilities Commission hastily in January to focus on his battle with prostate cancer, he wrote a letter to his fellow commissioners calling on them to be "bold" in their commitment to distributed generation.
Since leaving his position, which he held since 2011, Ferron has been focusing on spending more time with family and improving his health. But energy markets are still a chief concern for him, and he's constantly thinking about how to make California's renewable energy transition as smooth and far-reaching as possible.
Ferron will be joining GTM for our Grid Edge Live conference on June 24-25 in San Diego, where he'll take part in our opening fireside chat. That discussion, led by Shayle Kann, VP of GTM Research, will detail the challenges states face in helping -- and often forcing -- utilities to embrace distributed generation.
We recently spoke with Ferron about his experience at the CPUC, and asked him about his thoughts behind the letter he wrote upon retiring.
Greentech Media: What would you say your philosophy was when you went to the commission in 2011? Did you think about regulation through an environmental lens? Through a purely economic lens?
Mark Ferron: I think I've gone through a bit of a personal transformation. I remember having an early conversation with the governor [Jerry Brown] where he said, "Do you think we should push for a 40 percent renewable energy target?" I said, "Governor, we can do whatever you want, as long as you're prepared to pay for it." I was concerned about the cost implications.
Over the last couple of years, as we've seen the cost of solar PV and wind come crashing down, and other technologies following that same path, I'm much more convinced from an economic standpoint that it's beneficial to heavily promote DG [distributed generation] and renewables.
GTM: When you left the commission, you wrote a letter calling on the commission to be bolder in its decision-making. What did you mean by that?
MF: Being a commissioner is the best job I've ever had. It's a terrific organization, and it's very exciting to be in a position with high impact. But calling on my fellow commissioners to be bold was really about a realization that in my time as a commissioner -- which was relatively short -- you're almost trained to be a compromiser.
All of this creates this dynamic where, as a commissioner, you're looking for compromise or finding common ground between different parties. You have to be careful about falling into the fallacy of the middle ground -- that somehow the truth has to be a compromise between opposing positions. That isn't always the case.
So, I guess what I was saying to my colleagues is they should look to what they know to be right and take a position based on that, rather than [making] an attempt to kowtow to everything from a variety of different parties. That's often an inferior way of doing things.
GTM: Do you mean that in the context of distributed generation? You did say that you thought that utilities would like to strangle rooftop solar. Do you think they really feel that way?
MF: I don't believe that the utilities in California are opponents of renewables. In fact, I believe that the utilities here have been allies in promoting the RPS in the past. And I think they can be allies in the future. But that's provided they feel that their position in the energy value chain is not being threatened.
I think there are obviously lots of technical headaches associated with high penetrations of renewables, and I think utilities can be brought onside to help in the issue, really.
I do believe that there is an inherent opposition to distributed generation, however. That's not necessarily because of the issue of customer equity or cross-subsidization. It's really because self-generation disrupts the fundamental relationship between utilities and their customers and introduces competition, which utilities absolutely loathe.
GTM: When it comes to this equity issue that the utilities are arguing, there does seem to be a need to find the middle ground on the costs of maintaining infrastructure. There are inherent fixed costs that utilities need to deal with. How do you think about that issue?
MF: I do agree that there is cross-subsidization. The question to me is whether utilities are going to keep asking for support to build out more centralized generation. The thing which concerns me most of all is that we'll potentially over-invest in the central model. I agree with your premise, which is that DG is eventually going to be a very important part of the picture. But we may wind up paying for both sets of infrastructure.
So, yes, there are fixed investments. A lot of those have been amortized. But let's ensure the new investments are designed to promote the future architecture.
GTM: How prepared are regulators to help ensure these investments are done correctly?
MF: I think the regulators have a very key role. As I said, I think there was natural opposition to DG from the utilities. It makes complete sense from their standpoint. And I think in that area, we have been advancing a little bit slowly in figuring out how to address this.
As we've seen, like with net metering and storage, there are all sorts of ways for utilities to drag their feet and slow down this process. We really have to think about how we create incentives for them to embrace this transition beyond what we've already done. I think regulators need to create the right kind of incentives for the marketplace to move in the right direction. They are a powerful force.
GTM: So based on what you've seen as a regulator, how do you see the structure of the electricity system changing in the coming years? How do you define the changes happening at the grid edge?
Mark: I think these are really exciting times, and I'm extremely optimistic about the future. I think this combination of communication technology and IT-enabled sensors and actuator technology, plus big data computing, is going to completely revolutionize the industry. I think we're going to see as big a change over the next decade in California as we've seen for a hundred years.
The real issue is who the winners and the losers in the state will be. I think there will always be a fundamental role for all utilities as owners and maintainers of the distribution grid, in particular. But we need to find a way to ensure that investment occurs in a way that is in line with the future architecture.
There's an appreciation that there are big opportunities in this area. I think part of my job was to encourage that, and do it in a way that is in sync with our long-term goals.
Mark Ferron will be part of our fireside chat at GTM's Grid Edge Live conference on June 24-25 in San Diego. Come hear Ferron, Opower CEO Dan Yates and utility expert Paul De Martini discuss the business and regulatory challenges at the grid edge alongside hundreds of experts and business leaders in the energy sector.