Full Title: Technical Briefing: Cost Implications and Rate Impacts of Utility Decarbonization (San Diego Workshop)
Author(s): Jared Leader, Brittany Blair, Sonja Berdahl, and Madeline Crouse
Publisher(s): National Renewable Energy Laboratory and Smart Electric Power Alliance
Publication Date: August 9, 2024
Full Text: Download Resource
Description (excerpt):
In the U.S., over 3,000 utilities serve roughly 140 million customers in 50 states with different regulatory, political, and geographic landscapes. This U.S. Department of Energy (DOE) Voices of Experience – Decarbonization Strategies and Grid Planning workshop was held on May 1, 2024, in San Diego, California. It allowed the 26 participants representing 12 electric utilities to discuss their insights and challenges as they grapple with balancing climate goals with affordability and the often changing state and local policies that shape their strategies.
One of the challenges utilities face in meeting their clean energy goals is balancing the large investments in new technologies, customer programs, and necessary grid upgrades with the impact these investments will have on customer rates. The rate customers pay for electricity includes the various costs of generating and delivering power to the end user, plus other costs such as certain customer programs and a rate of return on grid investments. The policies that determine the rate design are largely determined by each state’s public utility commission for investor-owned utilities (IOUs), city councils and voters for municipal utilities, and boards of directors for cooperatives. Each state’s combination of political climate, electricity rates, policies, and resource availability determine how the utilities operating in each state approach decarbonization, the strategies that can be used, investments that can be made, and how the utilities can recoup the cost of those investments. Navigating changing—and sometimes conflicting—state and local policies and politics is becoming increasingly complex for utilities.