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NARUC president: No single direction for states on grid evolution

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NARUC president: No single direction for states on grid evolution

Consensus is likely impossible on the major issues facing regulatory bodies today; NARUC's role is to help educate fellow utility regulators.

The U.S. Environmental Protection Agency's new coal plant rule will be a hot topic at NARUC's upcoming Winter Policy Summit in Washington, D.C.

Many states are coming to grips with electrification of vehicles, grid evolution.

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Nick Wagner, president of NARUC and a member of the Iowa Utilities Board.

Source: NARUC

Nick Wagner is a member of the Iowa Utilities Board and in November was named president of the National Association of Regulatory Utility Commissioners. The group is hosting its annual Winter Policy Summit in Washington, D.C., Feb. 10-13, 2019.

Wagner wants to use his time to help educate state commissioners and staff, expand training opportunities for new commissioners and assist regulators transitioning to non-commissioner roles. S&P Global Market Intelligence recently spoke with Wagner about the crucial issues facing state utility regulators today, what role NARUC will play in reviewing the EPA's new coal plant rule and the association's new partnership with the National Association of State Energy Officials. The following is an edited transcript of the interview.

S&P Global Market Intelligence: Are there one or two issues you're seeing across the board that NARUC members are grappling with as the energy sector changes?

Nick Wagner: The big topic right now that a lot of states see coming is electrification, whether it's in the vehicle sector or just electrification in homes. That is a big topic. The other topic is how do we manage evolution to a much more renewable grid? The states are looking at how they need to be positioned and what they need to be doing to make sure that the grid stays reliable and resilient for the changing fleet.

Is there a common way the states are responding to these challenges? Or does that vary in terms of their market structures — whether they are vertically integrated or in a competitive market, or what state policies might say?

All of those things obviously come into play. I don't know in either of those topics if there's any single direction that states are moving. Each state moves in a direction that's right for them. Some states on electrification have taken a strong role in going forward to help drive some of that. There are other states that are more sitting back waiting to see what happens. Then you have some that are kind of in the middle, saying, "Okay, what do we need to have in place if this change does occur at a quick pace and are we prepared and are utilities prepared to deal with it?"

I think the same thing holds true for the grid discussion. You have some states that are being very proactive, such as Ohio, Illinois, Hawaii, California, looking at "What do we have to do with the grid to make this easier and better for utilities and customers?" and are sort of driving that discussion, versus other states. Part of it is where they are with respect to what their customers want and what their utilities are doing. Some states were just not seeing that same direction with the utilities, so the need isn't there for the states to address it as soon as maybe others.

Are there certain states you've seen taking a leadership role or driving the discussion?

Michigan has definitely been on the front edge of looking at electrification, which makes sense, given their history with the automobile industry. California is one. Those are the two off the top of my mind that stick out of really looking at it and being proactive.

The EPA recently released its proposed rule that would ease limits on new fossil fuel-fired power plants. Do you expect that NARUC will have to deal with that in the coming months?

Anytime you've got a policy that's that large or coming from the federal government that does impact all states in some way or another, it definitely garners discussion in our association. I would definitely expect that we'll have some conversation around that topic in the meeting coming up in February as well as different conferences and things that our states attended in the meantime.

When you have these discussions, is the goal to try to find some kind of consensus among states, or is that just not possible given different generation makeups or different needs of consumers in different parts of the country?

I wouldn't say that we necessarily look for consensus. One of the big roles for NARUC is that of education. A lot of the states, they want to have this conversation — not to gain a consensus, but to gain an understanding and educate themselves on how these types of things will impact their state as well as the decisions that they are making, how they impact other states and just how that is going to work together.

I don't know on a topic like this that a full consensus is possible because the states are so different and the makeup of generation and customer needs and wants are different. But we can definitely get to a point where our association members are as educated as they possibly can be on the topics.

In the natural gas, water and telecom sectors, what kind of evolution are you seeing there?

We're seeing changes across all of those sectors. With natural gas, as the U.S. has expanded its production, we're seeing different uses, different areas, different technologies emerge. One example from that perspective: in Iowa, we've got a distribution company that is actually utilizing liquefied natural gas to supplement gas service to customers that are either unserved currently by gas or underserved by natural gas. There are huge opportunities and the technology changes have made things much more possible today than they have been in the past.

Water is the same way. Looking at what do we do to reduce costs for smaller systems, how do those systems respond and develop with technology without pushing high costs onto customers?

Obviously, the telecom industry continues to change on a daily basis with the technology that is out there, looking at next-generation cellular 5G. While a lot of states don't regulate wireless or broadband, there are definitely things that come into our interest because they impact the other industries that we deal with. For example, the wireless and looking at the 5G that is coming out, that will have an impact as you're looking at usage of energy, water and so having an understanding of how that works and how that can help those industries and give benefit is important.

Is that kind of overlap with energy, water and telecom something you've seen more of, or has that always been a part of how these industries work and we are just paying more attention to it now?

It's a little of both. The technology is sort of driving some of that, too, because there are things you can do today utilizing technology. For example, if you're a water company and you've got low supplies of water, you want to be as judicious with your use of water and water treatment and as cost effective as you can. So you can use technology using energy more efficiently, looking at how to use technology to understand where you might have leaks or where you might have problems.

Evaluating the amount of data that we get now is a big piece of all of these sectors. I think that's a big upcoming area for growth.

Can you talk a bit about your partnership with the National Association of State Energy Officials?

That is our task force on system planning. That goes to states looking at how the distribution grid might need to change with regard to renewables and some of the other energy needs. We think it makes a lot of sense to partner with NASEO because a lot of their members are within the legislative side of things. Having that partnership will make it easier to implement the things that need to be implemented to make the changes to the grid and understanding the changes that are needed.

From that perspective, it's a partnership that is very effective and I'm looking forward to the results of that task force. One of the key pieces of that is putting together a toolkit that states can use as they look at system planning for their distribution system, not only for states that are doing it today, but having a roadmap for states who maybe aren't dealing with it today, but will get to it or have to deal with it down the road in future years. We want to make sure they've got a good tool that they can use to help them through that process.