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Regulators questioned if they can keep up with infrastructure, technology needs

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Regulators questioned if they can keep up with infrastructure, technology needs

New technologies are prompting energy companies and thepeople who regulate them to think about investments in infrastructure indifferent ways.

One question that has risen is whether "old school"rate designs can accommodate new needs, Iowa Utilities Board member LibbyJacobs said when leading off a panel discussion July 25 held in conjunctionwith the National Association of Regulatory Utility Commissioners summermeeting in Nashville, Tenn.

Panelists, all representing large North American energycompanies, said they are making, in the words of Robert Kenney, vice presidentfor California Public Utilities Commission regulatory relations at subsidiaryPacific Gas and Electric Co.,"bread-and-butter-type" investments in maintenance and safetyprojects.

But PG&E is also investing in things like distributedsolar and smart grid technologies to help California meet its emissionsreduction and renewable energy goals, said Kenney, who was chairman of theMissouri Public Service Commission prior to joining the utility.

Xcel EnergyInc. has been building new transmission lines as part of the UpperMidwest CapX 2020 project to provide grid access to new wind energy resourcesand replacing coal-fired generation resources with gas-fired units, said AakashChandarana, the company's regional vice president for rates and regulatoryaffairs.

On a smaller scale, Xcel Energy has been trying differentpilot projects to see what works. "Let's try to learn how different piecesof technologies can be deployed on our system," Chandarana said.

In trying out new technologies, utilities must persuadetheir customers and their regulators about needs and potential benefits.Chandarana said customers can understand both big-picture investments, such asnew power plants to further state climate goals, and new technologies such asdistributed solar because that will reach them more directly. He added thatcustomers need to be better educated on why the utility is making both kinds ofinvestments.

Kenney said a utility's first challenge is talking to andeducating its regulators. "I think it starts with good, robustcommunications and the willingness to listen and learn from each other,"he said. "We serve a common constituent."

The ability to work together is important when shifts inpolicy are to be implemented. PG&E decided in June that it would the operatinglicenses of its Diablo Canyonnuclear units when they expire in 2024 and 2025, citing the state's politicalclimate. The two-unit plant provides more than 2,200 MW of emissions-freeelectricity, and PG&E has pledged to replace that capacity with otheremissions-free resources, but Kenney asked whether regulators would support thecompany's investments.

Jacobs, citing recent public comments by FERC CommissionerTony Clark, and Arshia Javaherian, senior legal counsel at pipeline operatorEnbridge Inc., askedwhether regulators would be willing to support investments that would make theU.S. more energy independent, something political leaders from both U.S.parties have stated as a priority.