Hannah Polikov is managing director at Advanced Energy Economy, a trade association for the clean energy sectors.

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In December, we published a list of the top 10 utility regulation trends of 2019. With 2020 now past the halfway point, we check in on the top public utility commission (PUC) actions and trends so far this year.

For the first time, we are including in our top 10 list a key trend in federal regulation of wholesale electricity markets, as it goes to the question of who is in charge of energy policy in a changing electricity landscape.

Below is an executive summary of the complete roundup, which has specific examples of state PUC action. (You can read AEE's full version here.)

1. COVID, COVID everywhere...

Back in March, when the public health lockdowns were just beginning, AEE wrote a COVID-inspired acrostic poem giving a quick overview of the way the virus was starting to rear its head in PUC dockets around the country. Five months on, from everyday life to everyday dockets, the COVID-19 pandemic has managed to infuse everything, making it impossible to talk about anything, from rate cases, to utility program budgets, to how to hold a hearing, without considering the impact from the pandemic.

Numerous state commissions have put disconnection moratoria into effect. Several states are using dockets to think about how to sustain economic development, including clean energy projects, amid the pandemic. For example, in April, the New York PSC solicited input from the clean-energy industry on the impacts being experienced as a result of the outbreak and ideas that should be considered to sustain critical workforces. In Hawaii, the PUC considered how clean-energy projects could meaningfully contribute to the state’s pandemic recovery.

Meanwhile, a growing number of states are opening dockets geared to explore the impact of COVID-19 on customers and utilities. Such dockets now exist in New York, Michigan, Texas and other states.

2. More utility business-model innovation

Several states continue to push forward with efforts to examine the evolving role of the utility and other market participants, and how the utility business model should evolve in parallel.

In particular, there are a number of ongoing proceedings on performance-based regulation, which seek to better align utility financial incentives with desired outcomes and state policy goals.

State interest in performance-based regulation is driven in part by a recognition that the prevailing cost-of-service utility business model, which has worked well for many years, is not as well suited to a future where customer and third-party investments in distributed energy resources need to be better integrated for maximum benefit to the system as a whole (see No. 7 below for more information on DERs).

3. Statewide data platforms emerge 

Two states are considering statewide data platforms to provide easier access to energy-use data for customers and market participants.

In 2019, New Hampshire’s General Court passed a bill directing the state’s Public Utilities Commission to establish a statewide “Multi-Use Energy Data Platform” to standardize gas and electric customer usage data. Intervenors filed initial scoping comments and use cases in the spring.

The New York Public Service Commission (PSC) initiated a proceeding on the strategic use of energy data that is considering two separate initiatives to consolidate data-access policies across existing programs and establish a single certification process. One is a Data Access Framework that is meant to consolidate data access policies across a number of existing programs and establish a single certification process. The second considers the development of a state-run and -administered data platform, dubbed the Integrated Energy Data Resource. The IEDR goes further than the platform proposed in New Hampshire by consolidating both customer usage data and utility system data in a single location.

4. Getting ready for electric vehicles

An increasing number of PUCs have been considering efforts to spur investments in, and deployment of, electric vehicle charging infrastructure. A number of them have recently moved forward with what are termed “make-ready” programs, which typically involve utilities offering incentives for third-party companies to install charging stations while the utility takes care of any necessary infrastructure up to the customer meter.

In July, the New York PSC issued an order establishing a $701 million statewide make-ready program, the largest program authorized by a commission outside of California. Then in August, the California Public Utilities Commission approved Southern California Edison’s $443 million program, the largest EV charging program authorized for a single utility. Maine and Virginia also approved EV make-ready programs for Central Maine Power and Dominion Energy Virginia, respectively.

5. Self-scheduling of coal plants under the microscope

Over the past few years, the practice of “self-scheduling” coal plants has garnered increased attention, especially in the Midcontinent Independent System Operator and Southwest Power Pool markets.

This practice can be used as a reliability mechanism to ensure that there is enough generation available to meet energy needs in periods of high demand or as a mechanism for resources like energy storage to manage their unique operations (e.g., state of charge). However, in states where vertically integrated utilities are able to receive full cost recovery through bundled retail rates and fuel cost adjustments, many utilities have taken advantage of self-scheduling rules to run their uneconomic coal units and then charge ratepayers for the difference between the clearing price in the energy market and the actual cost of running the plant.

In Missouri, the Public Service Commission has ordered all utilities to provide information on utility self-scheduling. In July, the Minnesota Commission gave approval to an Xcel plan for coal plants to sit idle for six months of the year, only used to meet summer and winter demand peaks. In May, the Indiana Utility Regulatory Commission decided not to review the self-scheduling practices of Indianapolis Power & Light but later did agree to review Duke Energy’s practices. The Indiana Utility Regulatory Commission has scheduled a hearing on this issue for September 21, with final action expected by the end of the year.

6. "Bright line" dividing state and federal jurisdictions gets blurred 

The division of regulatory authority between the federal government and the states spelled out in the Federal Power Act, once described by the Supreme Court as “a bright line, easily ascertained,” was anything but during the first half of 2020.

In a December 2019 decision, the Federal Energy Regulatory Commission ordered regional grid operator PJM to impose bid floors, through a Minimum Offer Price Rule, on state-supported resources like renewables participating in renewable portfolio standard programs, nuclear plants receiving revenue under zero-emission credit programs, and even demand-response and energy-efficiency resources participating in retail demand-side management programs.

This could raise the costs of these state programs, setting up a direct conflict between FERC’s regulation of the wholesale markets and state energy and environmental laws. Among the options being explored is pulling out of regional capacity markets altogether, with states taking the lead in managing resource adequacy (see No. 10 below).

FERC’s Order No. 841, which ensured that energy storage resources could fully participate in wholesale markets, also got pushback on jurisdictional grounds. States and utilities looking for the right to “opt out” took FERC to court, but in July the United States Court of Appeals for the D.C. Circuit rejected their arguments.

Just days later, FERC stuck up for state authority, albeit on narrow grounds, when the commissioners unanimously dismissed a petition filed by the New England Ratepayers Association that asked the agency to declare excess energy production from distributed energy resources participating in state net metering programs to be a wholesale sale subject to exclusive FERC authority.

7. Regulators grapple with DERs and distribution system planning

In prior reviews of trends in 2018 and 2019, we identified much regulatory activity related to distributed energy resources and changes in distribution system planning (DSP) needed to facilitate those DERs. In 2020, that trend continues.

Connecticut’s Department of Energy and Environmental Protection and Public Utilities Regulatory Authority have initiated an investigation to review topics related to the implementation of the state's 2019 Framework for an Equitable Modern Grid. The Hawaii Public Utilities Commission is investigating technical, economic, and policy issues associated with DERs as they pertain to utilities HECO, HELCO, and MECO. Other ongoing proceedings to address the implementation of DERs are active in California, Arkansas and New York.

Closely related to DERs are efforts to modernize distribution system planning. In November, the Public Utilities Commission of Colorado opened an information-gathering proceeding on DSP and non-wire alternatives. Other states currently involved in DSP include Michigan, Minnesota, Colorado, New York and California.

8. More than a quarter of states go for 100%

From the Eastern Seaboard to the West Coast, the trend toward 100 percent clean or renewable energy has only accelerated in 2020.

Fourteen states, plus Puerto Rico and the District of Columbia, have 100 percent clean or renewable energy targets as of 2020, with others, such as Illinois, signaling they will soon follow suit. Utilities from Idaho and Oregon to Minnesota and Wisconsin have likewise made commitments to 100 percent clean energy. Regulators in states including Hawaii, California and Washington continue to implement robust clean-energy goals, but we’ve also seen action in states not previously associated with clean energy, including Virginia with the passage of the Virginia Clean Economy Act in March. 

9. The storage story, from batteries to hydrogen

The declines in the costs of batteries and hydrogen are fueling an increasing interest in these storage technologies to provide enhanced resilience and reliability to the grid.

Policymakers are hitting regulators throughout the U.S. with new capacity targets for storage in 2020. Virginia, Maryland, South Carolina and New Hampshire are among the states with open proceedings on battery storage.

Beyond batteries, hydrogen energy storage has increasingly been attracting regulators and utility companies as a potential pathway to achieve decarbonization targets. Electrolysis costs are declining, which in turn is driving European companies to take the lead in blending hydrogen with natural gas for power generation or using hydrogen carriers for seasonal storage.

Hydrogen can be used to address “duck-curve” issues with large amounts of solar or wind energy on the grid. Some states, including California, are exploring setting standards for hydrogen in gas pipelines, and others are exploring alternatives to gas pathways that include hydrogen.

10. States seek input on resource adequacy  

Mounting state-federal jurisdictional tension (see No. 6 above) has led some states to question whether resource adequacy — the responsibility for ensuring sufficient resources will be available to meet demand in a future year — should be returned entirely to state control. Specifically, in regions that currently ensure resource adequacy via centralized capacity markets (PJM, ISO-NE and New York), several state PUCs have begun proceedings to look into reforming or even exiting these markets.

With the expansion of the Minimum Offer Price Rule, referred to in New York as "buyer-side mitigation," states are faced with the choice of paying to over-procure capacity or walking away from their clean energy policies. This has left many states in search of a third way.

Contributing to this compilation were Ryan Katofsky, Danny Waggoner, Matt Stanberry, Dylan Reed, Sarah Steinberg, Jeff Dennis, Suzanne Bertin, Harry Godfrey, Lisa Frantzis, Caitlin Marquis, and Erica Glenn.