VP, Customer Energy Solutions,
Pacific Gas & Electric
As one of the Nation's largest providers of energy efficiency programs, and with the largest concentration of rooftop solar PV installations, PG&E is very focused on the "distribution edge". As California's energy and transportation systems decarbonize and with continued technological innovation, distribution edge resources -- efficiency, demand response, distributed generation like solar PV – will no doubt play a larger role. At the same time, the ongoing need for a robust grid -- the transmission, distribution and system management functions needed to support these resources and assure a reliable supply to all customers at the lowest possible cost -- becomes even more essential.
Through technology pilots and its participation in eLab and other multi-party efforts, PG&E is seeking to work with stakeholders to help develop the next- generation regulatory and commercial structures that will allow the increasing integration of distributed resources while assuring that the grid is physically and financially robust.
Across the U.S., current regulatory and rate design procedures tend to create disincentives to increasing quantities of distributed resources; many States have not decoupled sales from earnings and still penalize utility energy efficiency and large scale distributed resource programs. In California, where revenue decoupling was instituted decades ago and where public policy is generally aimed at strategies that drive electricity sales volumes ever lower, we believe there is a need for next-generation policies, "decoupling 2.0" if you will, to more fully harmonize utility ratemaking – and rate design -- with distribution edge resources at scale. Volumetric only rate design approaches developed during an earlier era may not be a good fit for this emerging world, as they create long-term cost responsibility tensions among groups of customers. Additionally, there is sound justification to evaluate shared savings approaches that would motivate utilities to aggressively mine the value that might be available from various distribution edge technologies.
The good news is that there is a growing recognition that changes are necessary in order to promote the long-term sustainable growth in distribution edge resources in conjunction with a system of fairness, where adopters are receiving value for what they provide, and paying for what they use. While the changes won’t be easy for either side of the distribution edge, and they will certainly not occur overnight, efforts such as e-lab are helping to lay the foundation for the inevitable evolution.
Steve Malnight is Vice President, Customer Energy Solutions, for Pacific Gas and Electric Company. He is responsible for the company’s expanding portfolio of demand-side customer solution offerings, which encompass energy efficiency, demand response, time-variable electric pricing options, automated energy management, electric vehicles and on-site customer generation. Malnight joined PG&E Corporation in 2002 as an associate in the company’s MBA Leadership Program, working at the National Energy Group subsidiary in market analysis before moving to the risk management organization. He has held roles at Pacific Gas and Electric Company as director of customer strategy and senior director of finance, at which time he led the company’s budgeting and planning functions. In 2007, he became special assistant to the chairman at PG&E Corporation. In May 2009, Malnight was named vice president, renewable energy, and in July 2010, he assumed his current role leading PG&E’s customer energy solutions organization.