The modern utility faces a new reality: Customers’ demands are changing. They want more reliability, they want more resilient power, they want cleaner energy and they want access to smart technology to better understand their energy use – all while keeping bills affordable.
This new reality will require utilities and regulators to think and act creatively to meet these needs. That means reforming the way New Jersey utilities are regulated. Regulators must remove the current disincentives for utilities to:
- Promote energy efficiency and reduce at-home energy use, keeping bills stable and reducing air pollution;
- Provide fair, universal access to renewables and new energy-saving technologies; and
- Respond to changing customer demands.
It is critical that we begin moving forward in all these areas.
Energy efficiency is the single most important component that will drive the utility of the future. Energy efficiency delivers clean-energy benefits similar to solar or wind, at a fraction of the cost. Moreover, energy efficiency plays a vital role in reducing customer bills.
In the past, any energy savings enjoyed by customers cut into utilities’ revenues, creating a disincentive to invest in programs that reduce energy use.
More than two dozen states have adopted regulatory systems that ensure utilities can bring in enough revenue to keep energy grids running reliably and efficiently, no matter how much natural gas or electricity they sell.
Removing the disincentive for New Jersey utilities to encourage the spread of energy efficiency could unleash the power of the utility to lower bills.
Even with a comprehensive energy efficiency effort, our customers will still need electricity for light, warmth and comfort. The cleanest options available are low- and zero-emitting resources such as nuclear energy and renewables.
Overall, PSEG has invested more than $1 billion in solar energy. Grid-connected solar energy is the best way to minimize the cost of this all-important technology and, at the same time, allow the same customers who help support solar with incentives to enjoy its benefits, as well.
Again, we would like to do more. But even as we do more, it is critical that we do not take a huge step backward by allowing New Jersey’s nuclear plants to close, which would reduce reliability, dramatically increase emissions and cause bills to go up.
Universal Access to New Technology
The utility has long been required to make electric and gas service available to all customers, regardless of income level. This mandate of “universal access” can extend beyond gas and electric service.
A utility, with its network and strong customer relationships, can be the ultimate sales channel for new, clean energy products and services, such as “smart” thermostats or electric vehicle charging infrastructure, and working with local business partners to make installation of energy efficiency easy for the business or homeowner.
By playing this role, utilities can provide the “market pull” to help grow a new and important part of the New Jersey economy.
Reliability and Resiliency
At PSE&G, we are making our systems more reliable and resilient against extreme weather. We have done this by:
- Raising substations flooded by Sandy;
- Replacing gas mains – some close to 100 years old; and by
- Rewiring and upgrading our transmission system.
Streamlining the regulatory process to allow long-term planning of these critical programs – as opposed to a cumbersome new filing process every 18 months to two years – will allow more effective planning, lower costs and more consistent job-creation.
New Jersey needs a new regulatory framework that permits long-term infrastructure modernization programs and recognizes utilities’ unique position to bring about change, while providing a framework that removes utilities’ disincentive to sell less electricity, create energy efficiency programs or partner with new companies to offer energy-saving products that lower bills and provide cleaner air.
If we are able to do this, we can use less energy, the energy we use will be cleaner and more reliable and, through energy efficiency, bills can remain stable.
No small challenge. But if we get it right, we have the opportunity to create a model for our nation – and, without exaggeration, for others around the world.
Ralph Izzo, Chairman, President & CEO PSEG