Aii Expert Panel Matching Tech Progress with Regulatory Flexibility

Don’t miss the latest Aii expert panel discussion entitled “Matching Technological Breakthroughs with Regulatory Innovation.” Read the transcript below or watch and listen.

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Benjamin Dierker
Welcome everyone. My name is Benjamin Dierker with the Alliance for Innovation and Infrastructure, and we’re just really excited to bring a panel discussion here with some great folks in the energy and climate and regulatory and utility space, kind of a good intersection here. And we’re gonna have a great moderation by Dr. Chris Hill. So Chris, I’ll turn it over to you and I’m really looking forward to seeing where this conversation goes.

Chris Hill
Thanks, Ben and hello and welcome. I’m Chris Hill, the alliance for Innovation and infrastructure. Aii is Advisory Council chair and CEO of KC Hill Consulting. I’ll be your moderator today on our discussion of matching technological breakthroughs with regulatory innovation. This panel is a production of the Alliance for Innovation Infrastructure, a nonpartisan, nonprofit think tank dedicated to identifying pragmatic solutions to infrastructure challenges. Aii brings together leaders across sectors to foster data-driven policy innovation, dialogue to modernize and strengthen America’s critical infrastructure systems.

Today’s conversation is inspired by Aii’s recent policy brief titled achieving American Energy Infrastructure and Economic Wins Simultaneously. This brief outlines how policy innovation particularly in the regulatory space must keep pace with rapidly rapid advances in energy technology. It highlights opportunities to align economic growth with energy resilience, urging better collaboration between public and private sectors to scale breakthrough solutions faster, smarter and more equitably.

That’s exactly why we’re here today and what we’re going to be exploring, I’m honored to be joined by 4 leaders at the intersection of innovation and regulations. First, Chris Kroeker, NW Naturals director of decarbonization, bringing deep insights into how local utilities are integrating emerging technologies while navigating regulatory frameworks. Kiera Zitelman, the National Association of Regulatory Utility Commissioners technical director representing the voice of state level regulators across the country. Michael Jung, Modern hydrogen’s director of government affairs and public policy, a company pushing the envelope on clean hydrogen and decarbonization technology, and Steve Schueneman Puget Sound Energy’s hydrogen development manager who brings both technical and strategic perspectives on how large-scale utilities can pilot, adapt and deploy innovation.

In this conversation, we’ll hear how each of these experts is approaching the challenge of matching breakthrough ideas with enabling policy. And why doing so is not just possible but urgent. I’ll begin by giving each panelist a moment to introduce themselves, their organization, and share their perspective on why conversations like this and on this topic are so essential. So with that said, ladies first Kira, would you mind opening us up with some brief remarks about yourself, your organization, and your perspective on our topic at hand?

Kiera Zitelman
Of course. Thanks very much, Chris, and thank you to the Alliance for inviting me to speak on this webinar. So my name is Kira Zitelman. I’m a technical director at NARUC Center for Partnerships and Innovation. NARUC is the trade association for state level public utility regulators. We represent state Public Service Commission’s Public Utility Commission’s across all 50 States and US territories and the District of Columbia. Public utility commissions are created through state constitutions or state statutes to provide or to oversee the provision of safe, reliable, affordable and non-discriminatory service for regulated utilities.

So, on matching technology, technological breakthroughs with regulatory innovation, I think you know we often hear about regulators being talked about as not matching the speed of technological innovation. And I think it is important to understand the role of state utility regulators and what motivates them, what their priorities are and, for technology developers or utilities or other stakeholders who are looking to bring these to market, just understanding how to talk to the regulatory community and how to envision benefits for utility customers with the commercialization of some of these technologies, I think is very important. So, hoping to expand on that during this webinar and interested in hearing from the other panelists on their thoughts as well.

Chris Hill
Thanks Kiera. Michael.

Michael Jung
Hi Mike Jung with Modern Hydrogen based in Portland OR and modern hydrogen is a technology startup based out of Seattle, WA Modern has figured out how to split methane into its constituent molecules. Solid carbon and clean hydrogen. This is a technology that we refer to as methane pyrolysis or distributed natural gas pyrolysis or maybe decarbonized natural gas pyrolysis. The technology is not fundamentally new in the sense that, we’ve known for a long time that high heat eventually breaks almost anything down into its constituent parts. But the real innovation that Modern is brought to the table is figuring out how to do this at a small distributed scale that makes it possible to implement this at the edge of the existing infrastructure, which lets us use all of the assets that we’ve already got in the ground today and the workforce that knows how to operate it safely and reliably and affordably, and do it in a way that’s consistent with some of the environmental objectives that are emerging and also putting us in a position to have new materials to build the infrastructure that is long overdue.

Chris Hill
Chris.

Chris Kroeker
Hey everyone, Chris Kroeker, decarbonization director at Northwest Natural. We’re a small gas utility, relatively speaking, in the in the Pacific Northwest, headquartered in Oregon, Portland OR. We do serve a little bit of the Southwest Washington as well. We have about 800,000 meters and serve about two and a half million customers and we’ve been around since well before. Oregon was a state. So over 166 years. We’ve been innovating all along the way, so moving from manufactured gas to moving to natural gas and now innovating, what’s flowing through our pipes in the form of hydrogen and renewable natural gas and carbon capture. So we are highly motivated to decarbonize and to that end we have some really interesting regulations here in Oregon that require us to decarbonize at a very rapid pace. And it’s kind of flipping the paradigm where utilities have been expected to be very slow and methodical and as risk free as possible with these very aggressive decarbonization targets, we need to be in a little bit more of a mindset where we’re taking on more risk to look at some new technologies that really could decrease costs for our customers sooner rather than later. And that’s where the tension comes in with us in environment and that’s what hopefully we dig into a little bit more today. So thanks.

Chris Hill
Thanks, Chris. Steven.

 

Steven Schueneman
Yeah. Hi, Steve and Puget Sound energy. I think a lot of what I’m going to talk about following Chris will probably echo what he says. As Washington’s oldest and largest integrated utility were based just at east of Seattle on Bellevue, WA. We serve about 900,000 gas customers, about 1.2 million electric customers and have a generation capacity of around 5500 megawatts. What’s driving our interest and really leaning into the emerging technology? Space is. A rule that was passed by those the Washington State Legislature in 2018, known as the Clean Energy Transformation Act and that law is driving us some really aggressive decarbonization targets in our electric portfolio. We’ve got to be off of coal by the end of this year if that’s about 20% of our generating portfolio 2030 and then off of fossil fuel entirely for the generation space by 2045. In round numbers that basically means we’ve got to triple the energy output of the company in about the next 20 years.

So it’s taken us about over 100 years to get to this size and then to triple it in the next, you know, 20 years is a steep, really steep ask. What we’re seeing is, you know, how do we navigate sort of the intersection and some of the complex between our mandates, which are a low cost portfolio and how we leverage and take advantage of some of the most rapid and vibrant investments in clean energy technology that the country is seen in in maybe a generation. So you know, we’re finding that you know, how do we lean in that? How do we take advantage of that? It doesn’t necessarily fit with both the legislative and the regulatory model that we’ve been operating under for a very long time. So how do we scale? How do we adopt? How do we engage? These are undue questions and under regulators are essential to a lot of this.

Chris Hill
Thank you, Steven, and thank you everyone for your opening remarks. I enjoyed hearing more about your experiences, your perspectives. Now let’s jump into kind of the core of today’s conversation. So we’ll walk through three primary themes that reflect both the challenges and opportunities outlined in Aii’s policy brief. We’ll start off talking about the technologies and and all of your perspective on those technologies. Then we’ll get into the regulations. And then finally collaboration.

So for each topic, I’ll invite each of you to respond with about two minutes of remarks. But feel free to keep it conversational and reference each other’s comments if you’d like. But we’re going to start off with unlocking breakthrough technology. So a couple guiding questions for this particular topic are what are some recent or upcoming technology advancements that you’re working on or most excited about to meet some of these challenges or some of these requirements that are coming down the pipe? What stands in the way of deployment and what could be done to help when you answer these questions, just keep in mind that we’re gonna be diving into the regulatory innovation and barriers and collaboration next. So try to not go into those areas a little bit too much. But with that said, let’s start off with Michael unlocking breakthrough technologies.

 

Michael Jung
You know the word technology gets thrown around a lot and I think a lot of people interpret it in different ways. The opening thought that comes to mind, Chris, here is that a lot of times we talk about supply side technologies, the widget that makes things, but I think it’s really important in this particular moment to recognize that there are demand side technologies that are really changing the landscape and changing the boundaries of the challenges that we have to meet.

In particular, artificial intelligence, the rise of data centers is a major driver for energy demand, happening at the same time that we are reaching very close to the limits of the existing energy infrastructure that we have. It’s always difficult and maybe even more so today than ever, to build new transmission, new pipelines, new energy infrastructure. To do that quickly has always been a challenge. But as our energy demand has gone from being, you know, one and maybe 2 percent a year of growth for the last couple of decades to suddenly jumping an order of magnitude, maybe even more above that, because data centers and artificial intelligence are driving that as well as the electrification of transportation and of buildings and of industry.

The rules have changed and when the rules change, you can’t play the same game. The game that we’ve always played has been at a fairly steady pace. Suddenly, we’re gonna go from jogging to sprinting and it’s not even clear which direction we need to sprint. So the first thought there is that, you know, technology on the demand side is really rewriting the rules for what we need to accomplish and how quickly we need to deliver on it.

 

Chris Hill
Absolutely. I appreciate that perspective on the demand side and bringing that into the conversation because in addition to the requirements that we’ve set on ourselves in various states or at various levels of government, there is a naturally market-driving demand that’s also creating a lot of urgency for us.

Chris, would you mind adding some remarks on how to unlock breakthrough technologies?

 

Chris Kroeker
Sure. We’re looking at everything and anything that can get us to a decarbonized gas grid. So we’re looking at renewable natural gas, different ways of getting it, synthetic methane to decrease costs and increase supplies. We’re looking at hydrogen production, so turquoise hydrogen, blue hydrogen, things like that.

But I guess we’re paying particular attention to carbon capture and sequestration. As we look at the risk and cost associated with that, the cost side looks really good for our customers and the ability to scale that. The problem that we’re looking at is just where do you put the CO2, and we have some opportunities here in Northwest Oregon with some really favorable geology to put in basically hundreds of years of CO2, which could really, you know, change everything.

The economics for everything that we do, it’s kind of the barriers that we’re experiencing and kind of unlocking that is, as we as a utility don’t have a risk profile that’s supported to go poking holes in the ground and seeing where we could put this stuff. It’s really not something that we as a utility have been traditionally incentivized to do, and so we’re kind of relying on others to go develop these resources to unlock them for us.

You know, and it’s really tough to get private industry to get in there, and it’s really almost tougher to get the state behind these kinds of very large-scale projects. So that’s what’s kind of buzzing at our shop right now.

 

Chris Hill
Sounds like you guys are looking at a bunch of technologies kind of assessing where the greatest value to your customers could potentially be, whether it’s hydrogen, carbon capture sequestration which makes sense.

Steve, can you add to that from your perspective?

 

Steven Schueneman

Yeah, sure. Like I said earlier, this is maybe the most exciting time to be in the energy industry just because of the pace and depth and breadth of innovation and development across all sectors. In the generation space, wind and solar have reached maturity at this point. They’re running into some real challenges around siting and transmission access.

So what are some of those generation technologies that are non-carbon emitting, that can be deployed in a reasonable time frame, and that help drive resource adequacy solutions, not just energy solutions? Think small modular nuclear reactors, enhanced geothermal. Over the horizon, fusion is getting a lot of interest and for very good reason. As the Holy Grail, it is a potentially very sophisticated way of doing distributed energy.

Very hopeful that that industry can grow. Of those three, enhanced geothermal is one of the most interesting, mostly because it is relatively low risk. It is really about integrating two existing technologies today: hydraulic fracturing and drilling out of the oil and gas base, and then a closed-loop steam turbine. Those are things that we’ve done for a very long time, and there’s considerable heat up and down the Western United States where we serve.

So, looking at that and really supporting development, broadcasting what our needs are to those developers and saying, here’s the problem that we have, help meet this in the middle. The natural gas system poses a unique set of problems as well. But how we’ve looked at that for the longest time is as a liability in terms of carbon emissions. And by working with groups like Modern Hydrogen, we’re flipping that equation on its head, saying, can a technology solution turn a liability into an asset?

Solid carbon is in everything that we use, and we make that a net positive for our customers. Look at the strengths of the gas system. It is incredibly resilient. It’s incredibly durable. It can be one of the clean energy solutions of the future.

Part of the challenge and what we face in really dealing with the public-facing environment is that it’s a transition. But oftentimes that gets translated into a switch. This is going to be slow. It’s going to be incremental. It’s going to be adoption of new solutions in many different sectors. This isn’t just like we get to 2045 and then switch our portfolio. It is going to be incremental in lots of different phases.

Chris Hill
Appreciate that Steve. And I like the concept of just maximizing the return on our assets and our investments in our pipeline, our existing pipeline systems and making sure we leverage not just the financial investment, but the environmental impact associated with the previous construction of those pipelines. Just maximizing it as a whole is extremely valuable and Keira, I’d love to hear your thoughts on that as well and your thoughts on just technology that you’re excited about in your space and what you’ve seen out there?

Kiera Zitelman
Sure. So I like the way that Michael approached his question was talking about both supply and demand side innovations. I think there’s really exciting developments happening across the utility sector. On the supply side, there’s been a lot of interest in regulators and utilities in advanced nuclear and that’s an area where we have some funding from the US Department of Energy to do educational events and training resources for state utility regulators are trying to help them understand. What are small modular reactors? What are micro reactors? How? What services can they provide? What are the costs and how can those be appropriately allocated among utility customers, industrial customers and other users of advanced nuclear generation?

Another exciting area that we’ve been monitoring for several years is the use of artificial intelligence in the utility sector, both by state regulators and by utilities. Some of the ways that it’s being used currently are trying to speed up interconnection queues. There have been applications to identify 811 excavation tickets that are more likely to result in damage to natural gas pipelines or other underground infrastructure, so picking out what those kind of problem tickets are and being able to go out and do proactive damage prevention.

And then among commissions, there’s been some use of AI to just to research what other states are doing. So that’s always helpful. We try to provide to NARUC membership as well. I think on the demand side there’s been a lot of innovation in aligning incentives for distributed energy resources to provide benefits not only to the customer that’s owning the der, but also to the system more broadly like, in Vermont and Massachusetts have both implemented programs to incentivize energy storage systems that can be controlled on and called upon. Utilities during peak demand times and reduce stress across the system.

I think it’s important for these technology developers and utilities when they’re rolling out these technologies to just be aware of the importance of educating customers on the benefits and appropriate operation of some of these technologies. Obviously the regulator is an important stakeholder here. So communicating to the regulator about the benefits of some of these technologies, and then I think actually kind of the rapid pace of technological advancement sort of works against itself in a way regulators might be wary about being locked into a technology that might be obsolete in a couple of years or might come down in price and they might be stuck at whatever the current price is.

So I think that kind of underscores the importance of taking steps using pilot programs, and just learning from initial deployments. The technology to improve that offering in the future.

 

Chris Hill
Appreciate that. That perspective, I mean, so often us as our project developers are thinking about, you know, their time, their budget, their schedule and of course stakeholder engagement. But putting that regulator hat on and looking at it from that perspective can really kind of smooth project development and technology innovation and implementation. So thank you all for your comments on unlocking the breakthrough technologies. I’ll move on to just regulatory innovation and barriers, so similar to the past topic, here’s some guiding questions. Where have you seen regulations, support, technology and innovation? Where has it been? Where have regulations slow technology innovation and implementation down and how could that evolve to be more supportive or does it need to be more supportive? So I’ll start with Steven this time.

 

Steven Schueneman
Yeah, I appreciate that. That’s a fascinating topic to wade into because it does influence and guide so many of our decisions. I think one of the challenges is just the mismatch between how you get a utility closer to the initial set of deployments on some emerging technology. Right now, almost everything in our world is guilt or geared towards commercially available proven technologies. But that’s inherently not what emerging technology is. And so I think the question that we face as customers as businesses as regulators is how do we manage and mitigate the risk if someone has to figure out and meet really in the middle in this process and think like what are the business mechanisms what are the regulatory compacts that we can collectively agree are safe, prudent, you know and managed in such a way that reduce risk for everyone while giving developers the certainty that they need. To be able to really go get the investment to deploy, ultimately you know utilities just by their nature are probably the ultimate buyers of the stuff. But if we’re gonna sit on the sidelines and be excluded from moving on, those very first of a kind units, how do those in that emerging technology developers even get off the ground? That’s the conundrum that we face is how do you buy down the risk?

Oh, from an enabled mechanism. One example that is pretty interesting is what’s going on in Nevada with Google, Fervo and NV energy. Google is disproportionately paying a higher rate to Fervo, and NV Energy is serving as the deliverer and bounty authority. I think that is really a great innovative step on how regulatory design and a clean transition tariff can be one solution towards bringing emerging technology to scale it. It may not be the only one, but certainly like a lot of the characteristics that have been approved on in that state.

 

Chris Hill
Thank you, Steve. I appreciate those comments. Kiera, can you add to that?

 

Kiera Zitelman
Sure. So I think. Again, kind of building on my answers to the first set of questions. Demand response. Virtual power plants. Just kind of the ability to use distributed energy resources to provide broader system stability and reliability. I think there’s been a lot of interest among state regulators there, particularly as we’ve seen more extreme weather events and outages happening across the country.

In Vermont, the utility there has a Commission approved program. For residential storage incentives, again where the utility can control those during peak times and participate in the ISO New England market, that program was launched in 2020 and due to high customer demand and wait lists to participate, they expanded it a couple of years ago. So I think that’s a great example of successful regulation supporting technology innovation.

I think another area on the natural gas side is residential methane detectors. This is something that NARUC members have been interested in for a couple of years now. The New York Public Service Commission approved a pilot program with Con Ed to install residential natural gas detectors where they can detect a natural gas leak before a human could actually smell it. They can automatically notify the utility, notify emergency services that there is a gas leak and then ideally there can be a response before damage is incurred. There was an initial pilot roll out of that technology in I think in in Brooklyn in Con Ed service territory and then it was later expanded after some positive feedback from that pilot program. So I think where things have kind of slowed down or where regulation has sort of stood in the way of innovation I think is more around understanding the incentives that utilities face when deploying emerging technologies.

So one example is AI and cloud software is generally treated as an operational expense and so utilities might be slower to invest versus capital expenditures where they can earn a rate of return and that might lead to some inefficiencies. So we’ve seen some commissions taking a look at that and figuring out, you know, how can they modify their regulations and incentives for their regulated utilities so that they’re investing in solutions that are beneficial to customers technologically proven, commercially available, etc.

So I think there’s also, you know, kind of a second mover, first mover problem with the regulated utility sector. Going back to advanced nuclear, we see a lot of utilities kind of positioning themselves as second movers. They want to see that something is proven before they go and invest ratepayer money in it, which you know is definitely a sentiment shared among public utility regulators, but it does require someone to be a first mover. So I think sort of coming up with maybe collisions that can help to scale. Emerging technologies and spread risk across multiple jurisdictions. So that no one group of customers is really at risk, can be a good way to navigate those issues.

 

Chris Hill
Absolutely. And it’s interesting, both you and Steve are really, you know, honing in on the risk and the uncertainty in order to get these technologies off the ground. So it’s very interesting to hear that common theme and I love hearing the various application of innovative technologies not just from a decarbonization perspective, but from a safety perspective and a reliability perspective and a utilization so. I really appreciate the breadth of this conversation. Michael, can you add to the conversation around regulatory innovation and barriers?

Michael Jung
A couple of great points have been raised. Chris, you’ll appreciate this in Portland OR where both Chris and I live, there’s a thing called the Portland Traffic Jam, which is cars arriving at an intersection and just basically gesturing to each other. No, you go first. No, you go first and traffic comes to a halt.

I’ve seen that happen time and time again when it comes to new technology in the energy space. Where you know that each jurisdiction wants someone else to go first. You know the saying in the West sometimes is you can tell the Pioneers apart because they’re the ones with the arrows in their backs.

So you know there is a disincentive, an active and significant one to being a first mover. And we desperately need to figure out, you know, ways to, you know, we talked about risk, but there’s also reward. They’re eyed together and they’re, you know, they’re the flip sides of the same coin. If we can share and risk, that means we can also all benefit in the reward and the rewards are substantial. Finding ways to have abundant and affordable energy without wrecking the environment that we all share is a pretty big upside. And I I just want to, you know, flag that the innovation that two innovations that I would like to see one is that, having each state not require a technology to be proven in its own boundaries before recognizing it as legitimate and proven would be a great step forward. I’ve seen so many times where one state says well, I know what happened over there, but that we can’t consider that in our docket because it didn’t happen here because the laws of physics are different in my state than in another state, something out.

And Kiera, your point about, you know, maybe there’s coalitions or consortiums both from a technology point of view, maybe from utility perspective, but also between regulatory jurisdictions where we can say that if you know if it happened in this in this group, then we’re all gonna recognize it as being, you know, legitimate and real. The 2^nd that I would Offer Up is better coordination between the gas side of what we do and the electric side of what we do. At the end of the day, they’re both energy sources and I think you know a customer who wants heat or needs heat to get through cold winter, it doesn’t really matter to that end use customer If it comes from an electron, or if it comes from a molecule. It’s the energy service that is the benefit of heat and the way we treat that today in the regulatory world and utility world. There’s just these kind of walls too often between the gas side of things and the electric side of things we talk about integrated resource planning.

On my Christmas wish list is a truly integrated resource course planning paradigm where we can say what’s better, the electron here or the molecule. Here the pipeline here or the wire there, can we make these way more fungible so that we can truly get to a least cost least risk, highest reward kind of scenario when it comes to energy services as opposed to just, you know, the electron or the molecule that we all too often treat separately today?

Chris Hill
Very good, very good points, Michael. When it comes to just assessing technologies, would you Recommend maybe all states adopting the technology readiness levels that the federal government has, the TRLs, or do you see a different model for doing that?

 

Michael Jung
That’s an interesting question, Chris. TRLs have been a great step forward. I think they first came about from NASA back in the day, I think. They’re also an imperfect tool because it doesn’t really reflect commercialization readiness yet. It’s it’s purely a technology paradigm and so it doesn’t, you know, factor in bankability or regulatory treatment or you know, policy favorability. And so I think it’s a great starting point. I think there’s also room for improvement for how we would use that as a tool.

What I would also like to float is, utilities have you know things like apri where they work together and collaborate. I don’t know of, you know, regulatory analogs to that where you know in different states. You know there there’s different kind of regional state collaborations, but I don’t know from like a technology first of a kind deployment perspective if there are analogs between what EPI does in terms of technology, testing and piloting, I fear I’ve seen it happen that we can pilot ourselves to death and we can pilot technologies to death.

New technology only has so much runway and pilots are, you know, occupy a very valuable real estate on that runway. So I would love to see, you know, some sort of consortium come together in the regulatory world where you can pilot once and then get take off. Across a bunch of different places at the same time.

 

Chris Hill
Makes sense, and let’s dive into that a little bit more in the next topic around partnerships and and progress. But before we do, Chris, I would love to hear your perspective on regulatory innovation and barriers.

Chris Kroeker
Yeah, I think a lot of them has been said and I echo a lot of you know what Steve was mentioning and one thing that we see on the risk is just what hasn’t been identified from a regulators is the risk of not doing something. So, here in Oregon, we have some extremely aggressive decarbonization regulations. We have to decarbonize 50% by 2035 and 90% by 2050. That’s an enormous amount of decarbonization. And so if we don’t have all the resources available to us to decarbonize, we could be decarbonizing at a much higher expense than we need to.

So if the only thing available to us is, say, renewable natural gas and we need to decarbonize it, let’s say 3 billion cubic feet per of gas per year every year for the next 27 years. That’s going to be a cost here, but if we could go at go after, let’s say, carbon capture or turquoise, hydrogen or methane pyrolysis at half the cost, but we can’t access that because we weren’t able to spend money on pilots or getting assurances of rate recovery on deploying it.

It’s going to be a huge hit to our customers and so there really isn’t an acknowledgement that that utilities really need to be ahead in this space to develop these technologies that really no one else has a huge interest in developing at the scales. We do and we need to take some risk. And be able to do that and look forward to getting recovery or expecting recovery on taking risks it’s not you know the business as usual in the past where we just made slow incremental changes. These are massively transformational changes that we have to make as utilities and if and if we don’t take risks, we are going to be spending a lot more money than we need to.

 

Chris Hill
Very, very important topic. The risk of doing nothing or the risk of not doing or adopting certain technologies or innovations is very powerful. I will start the next topic off with Kiera and this topic is fostering partnerships and progress. So a couple guiding questions are you know, how do we better align stakeholders to help match technology breakthroughs with regulatory innovation. What makes partnerships across sectors actually work? And I would love if you could integrate kind of a response to what Michael was saying earlier into your remarks to kick us off on this topic.

 

Kiera Zitelman
Yeah, certainly. So in response to Michael’s question about sort of who is the epri for state regulators, I mean, NARUC does try to do that. We don’t have quite the budget and the size of organizations like EPRI and on the gas side, GTI Energy. We actually just took a group of about 40 state energy offices and public utility commissioners down to Charlotte to tour epri’s offices and learn about. Some of their work on the nuclear fleet, which is very impressive.

But anyway, we only have SAP of about 25, but we do try to do that kind of socialization and learning across commissions. So one of the activities that I really enjoy putting together are Peter sharing calls where we invite some regulators or regulatory staffers to share how they’re approaching a certain issue and identify challenges that they’re running into, seek advice from regulators in other states, and document lessons learned so that each state understands that you know the states are great laboratories of innovation, but we obviously can learn from approaches. We don’t have to start from scratch with every new technology or new issue.

So I think the national labs have also been a really important partner to NARUC and some of the States, several of the labs have funding opportunities to do technical assistance for state commissions and kind of do that, sort of hard technical consulting that neighbor as an organization can’t really provide. But our part of our role and I think part of our benefit to our Members is being able to connect them with experts in the federal government and with available programs that state regulators can take advantage of to help accomplish their goals.

In terms of kind of aligning stakeholders, I think just understanding the priorities of a Commission. You know, in general, commissions are concerned with safety, affordability and reliability of utility services. Increasingly, many commissions are looking at climate goals and, you know, kind of how to implement the Clean Energy Goals that policymakers come up with. Several commissions also look at economic development and sort of job creation and the use of in-state resources within their state. So I’d say to utilities and technology developers just to look at what motivates commissions and what can they actually consider in their decision making. What can go on the record to help them decide whether or not to adopt A new technology?

I think also looking at how to appropriately share the costs and benefits of technologies, making sure that those are aligned, that’s something that we see a lot with microgrids, which I really gotten the chance to talk to yet. But I think there’s a lot of exciting work happening there in the Department of Energy. You just released some funding for to support community microgrids across the country. So I think with the role of commissions and kind of overseeing micro grids that that have a utility owned component is really looking at how to pay for those and how to come up with ratemaking tools that can spread the cost of those micro grids among the customers who can actually benefit from it in in the case of an outage. So I’d you know, I’d say those two, I think you know with AI is policy brief.

I know I talked about multi benefit approaches but really understanding what benefits a project is delivering to utility customers, I think it’s going to be the main question of interest for state utility regulators.

 

Chris Hill
Thank you, Kiera. Appreciate those comments. Steve, do you want to add to that? What do you think is fostering good partnerships and progress in this space, both on from a technology and regulatory innovation perspective?

 

Steven Schueneman

Sure, there’s been some pockets of continuous innovation within the utility industry, but they’re really isolated around one specific end use, you know, think energy efficiency that that’s been around for quite a while now and demand side response weatherization, those are programs that you know involve some level of technology, it’s premature at this point, but how those were scaled and implemented probably 20-30 years ago, I think it forms, you know, what we’re doing today. We’re seeing those lessons really embedded in into customer energy.

Innovation side with solar and battery beyond the meter, virtual power plants and then grid modernization would be another one where you know certain you could put micro grids in in that category. What’s shown up recently is really a gap in that you know, customers don’t really understand the one their own energy needs. They take for granted that you turn on the switch and the light comes on or you turn the knob and your burner comes on.

But upstream of that, you know, they may have a little more influence in thinking about how they want to be served. What are their clean aspirational goals? And they don’t know what their options are, and because of the pace of innovation, the pace of technology and then the business model itself is pretty opaque unless you live it every day, so incorporating customer expectations, what are their wishes really working with them in a collaborative way?

Thinking about energy in terms of orchestration, not just serving load. that, I think is the missing component. I think that will help regulators as well understand what is motivating the utility. Hey, we’re hearing this from our customers. It’s not necessarily yesterday’s way of serving energy. It’s actually something different. How are we figuring this out together so that the regulatory model can evolve as customer choice evolves as well? ‘Cause really at the end of the day, that’s what we exist to do. We serve low. We serve our customers. And if their expectations and their behaviors are changing, how are we changing with it? Especially from a regulatory framework.

 

Chris Hill
Really seems like with the high rate of change, there needs to be more conversations and dialogue to make sure we understand what, what’s motivating people. What their needs are, where the technology is, it seems like more frequent regular communication is could only be a benefit. Chris, do you want to add to the remarks so far?

 

Chris Kroeker
Yeah. So just aligning stakeholders with technology breakthroughs and regulatory innovation, I think a great example of this is, is in Minnesota. They have a natural gas innovation fund. And what this has done is basically it’s created, stakeholders from all different walks of life can come together and figure out what kind of innovation the utility should be working on, what makes sense, and then it gives the whole ecosystem assurance of rate recovery and all moving in one direction. And I think that was a really innovative way of doing things there and it reduces a lot of different barriers.

Another thing I comment on is just the role of the our regulators at the Commission level and bringing all the parties to the table for figuring out decarbonization and energy management and just echoing what Michael said before. We really need regional energy planning and recognizing the values of different parts of the energy system, the capacity that the natural gas system provides versus the benefits that the electric system provides and getting the two parties together or different utilities together and giving them mutual incentives to decrease overall cost for everyone right now we’re very, very siloed in our utility landscape.

We don’t really think about how the electric utility, electric utilities tariffs or rates and they don’t think about ours. But we think I think anyways the regulator should force the situation for us to come together and really maximize the benefits of each other’s systems and come up with innovative rate making and policies in that space. That would be something that’s truly new for the Pacific Northwest.

Chris Hill
Thank you, Chris. Michael, do you want to expand on that a little bit?

Michael Jung
Steve, I think you mentioned energy efficiency as a paradigm that has, you know, delivered a great deal. I think it is one of the more meaningful sort of innovations, regulatory innovations, at least in my generation in my time in my career and I think a lot about how can we learn from what we’ve been able to accomplish through energy efficiency. Especially because at this moment, energy efficiency may no longer be 100% aligned with decarbonization. This is a time where we might need to encourage use of more electricity as we go into electric vehicle as transportation resource, as it’s just a quick example like inclining block rates for electricity, discourage people from using more electricity, even if it means it’s offset by less gasoline and less carbon ultimately energy efficiency in the form of decoupled rates.

You know it, it reduces the volumetric charge and it’s yes, it gives you a signal to use less gas, but if we’re going to be doing methane pyrolysis as our company does to decarbonize natural gas, then they’re no longer one for using less gas, doesn’t mean less carbon.

We could actually use more gas and still have 0 carbon and so the alignment you know is not perfect, but I do think that there are things that we can learn from what we’ve been able to accomplish with the energy efficiency programs and times and systems that we’ve developed, which have been an incredible resource for, you know, reaching alignment between stakeholders, mobilizing capital for investment and a whole lot of good.

 

Chris Hill
Thank you, Michael. I think it’s interesting to think about the trade-offs and to challenge our current or past paradigms on how we think about energy efficiency or other metrics that we measured, success, whether it’s producing hydrogen for natural gas or sequestering CO2 in the subsurface, it takes energy and I think that’s a very powerful and meaningful point that we need to make. Because we have to kind of step back and look at the problems that we’re trying to solve more holistically and realize there’s a little bit more complexity and assessing the trade-offs between those various aspects.

All right, so diving into we cover our three topics. I really appreciate the conversations that we, the conversation we had thus far and the remarks provided. So if there’s something that you heard that sparked raised a question, I just want to give you all as panelists an opportunity to ask each other questions without me monopolizing the floor.

So I’m going to open it up to the panelists to ask each other’s questions. If there’s anything you’re curious about, you’d like to follow up on, you have clarifications. You want to hear or just healthy challenges, now is the time to do that. Yeah. So, who would like to start or has any questions that they’d like to ask another panelist?

Michael Jung
Kiera, I’ve got one for you, if you don’t mind performance-based rate making. You know, we’ve had some experiments that are underway. Do you think that plays a role? Does it have whole promise in terms of addressing, you know, the climate and carbon and energy reliability, security challenges that I think we’re all trying to solve for?

 

Kiera Zitelman
Yeah, absolutely. We have a performance-based regulation State working group where we’ve been again sharing lessons learned across States and looking at different state approaches. There’s been a lot of interest in that. The DOE Office of Electricity has been funding that work, so I think there’s going to be continuing interest in performance-based regulation and again, lining incentives for customers and utilities for broader system benefits.

I think one of the challenges with performance-based regulation is coming up with appropriate metrics like for reliability. We have safety, safety, KD metrics, but we’ve seen increasingly those don’t really capture the full story about reliability and performance. They don’t really look at impacts on customers when there is a power outage. And so there’s some work that the national labs and some utilities have done to try to get or to try to develop. Better metrics for reliability and resilience, and we’ve seen some commissions looking at those.

So I think that’s kind of coming up with the right metric that can actually be quantified and where you can track performance year over year, I think is really one of the key challenges with performance-based regulation. But yeah, absolutely. I think it does have an important role to play in this space.

 

Chris Hill
Thank you. Oh, is there Kiera? Did you have a question?

 

Kiera Zitelman
Well, I wanted to kind of pick up I think Chris mentioned gas electric coordination in in one of his answers and I kind of wanted to pick up on that and see if the other panelists had had thoughts on that topic. It’s certainly something that’s come up for regulators. We have a guest electric alignment for reliability task force led by our current network President Tricia Pridemore from Georgia. There was a North American Energy Standards Board, gas electric Carbonization forum a couple of years ago that’s some former. FERC commissioners, led that, many state regulators and utilities and some of the major trade organizations participated in that, I think, led to some really fruitful conversations. But I’m curious if that’s a topic that that others have encountered at their organizations and kind of what role you think technological innovation plays in gas electric coordination?

 

Steven Schueneman
Yeah, I can take this one ’cause. We are in the middle of this as a result of a bill that passed. It was a couple years ago now. House Bill 1589 came out of the Washington State Legislature that shifted the foundations of how the utility plans energy. Up until that bill, we did have two separate planning activities under the Integrated Resource Plan framework where as a gas portfolio and an electric portfolio, we are transitioning to an integrated system plan to ISP, so that Is in development.

Right now, first draft ISP I believe is due in 2027. So that is incorporating, you know non-pipes and non-wires alternatives. Other alternative technology solutions that the challenge around technology is, is there still is the element of risk, both technological and financial, and adoption. In ISP framework, we’d like to be able to incorporate it, but there’s still an element of timing on when is a commercially available.

How reliable is it going to be? It’s difficult to make a plan that you’re not 100% certain you can deliver on, but from an energy planning framework you know credit to our state for leaning into this and I’m very excited to see where this is going. But you know, at a regional level and Chris is right, we sort of talk about it. But really this is just integrated system planning at the utility level, it’s not regional coordination between the transport customers, the federal bond bill system., and the individual utilities. We still have a lot of ground to do there.

So ideally what we’re doing, May yet form some of those next iterations of utility design. I would say that there is also an interesting disconnect in maybe it’s probably hyperlocal, but it’s how the regulatory environment looks at regulated utilities versus publicly owned utilities and coordinating those low forecasts. They’re different models. All state regulators do not have oversight and purview over the state utilities, the Public Utilities, but they’re pretty big as well. They’re a very big player, especially with having a federal, you know, hydro system underpinning so much of our electric infrastructure up here, so continuing to grow on that and build on that I think is sort of the next step in what we’re looking for.

 

Michael Jung
Steve, can I ask you a question? And if you don’t know, that’s fine too. Does the integrated system planning, every conversation I’ve heard about gas, electric coordination and planning focuses really, or is born out of a reliability and energy availability kind of concern. Does the integrated system plan that that you guys are starting to put together, does that also include a not just a cost and reliability angle, but also a carbon optimization perspective?

 

Steven Schueneman
To a degree. Ultimately, if you’re building a plan around carbon optimization, you need to be able to price it. And that’s what Climate Commitment Act in Washington does. It just put a price on carbon. So when deploying electric asset, we do from a generation stack. We do include that CCA cost as well as a solar cost of greenhouse gas. So I think that informs the generation side and in some cases that may drive you towards hey, a pipe solution, maybe a little bit better. So is that something that would be more of interest?

You probably connect offline on or I can bring in those experts to talk about that as well. Sounds like another conversation, Chris.

 

Chris Hill
Kind of get into the end of the wire. Is there any last or closing remarks that our panelists would like to end with?

 

Michael Jung
I’m gonna throw a Hail Mary, which is I know it’s already a challenge or something that we need to do to coordinate gas and electric better, but I also do believe that our energy system does not exist in a bubble and what we do at modern Hydrogen, you know, we we’re producing clean hydrogen by removing carbon from methane. That carbon also has value as an assault additive. It can help build infrastructure and so you know, my Holy Grail, sort of a wish list would be finding ways that we can have conversations across sectors, across industries that allow us to make the most of energy resources, not just for energy, but also in other parts of our economy. You know, jobs are jobs, infrastructure is infrastructure, and if we can use our energy resources in ways that help us on all fronts, not just on the energy front then I think will be well served as a country.

 

Chris Hill
Absolutely. Thanks for that, Michael. And that Aii or the Alliance for Innovation Infrastructure completely agrees with you. That’s why the organization takes a holistic systems approach to how we think about and look at infrastructure, and so the fact that we’re driving towards moralistic planning across all energy sources and in terms of decarbonization, and that’s where this conversation is go has gone is very, very fitting.

Anybody else have any closing remarks before?

 

Kiera Zitelman
Yeah. Just on Michael’s point on the importance of planning. That’s absolutely something that we’re looking at NARUC. We have a task force of about 20 state commissions looking at planning processes for natural gas utilities, recognizing that in most states the requirements are less kind of drawn out than for electric utilities. So just giving the Commission more visibility and so the way that utilities make decisions I think is very important and. I just put in a plug. I know this is not. I know Steven. And Chris probably know their commissions very well, but just to get to know your state utility regulators and what motivates them, I think it’s important for a lot of stakeholders.

Chris Hill
And Kiera, this is an opportunity. I think I saw on LinkedIn there’s some kind of job fair that NARUC is doing. Do you want to put a plug in for that?

 

Kiera Zitelman
Yeah, absolutely. We are holding a virtual job fair to try to connect talent to commissions at you know across all fields and all stages of careers. So that is coming up on June 18th. You can go to our website or our Twitter or LinkedIn to find more info on that. But yep, anyone is welcome. Anyone interested in in getting more talent into public utility commissions.

 

Chris Hill
I think a large part of it is getting people the right people and creating a pipeline for the workforce.

 

Michael Jung
Amen to that.

 

Chris Hill
And so I love that that you all are doing that and happy to give you the opportunity to do a little plug there for it. But I just want to thank the panelists. You guys are absolutely wonderful, not just in speaking here today, but your leadership and what you’re doing for your customers, for the environment is, is greatly appreciated.

The Alliance for Innovation and Infrastructure truly appreciates your participation in this panel, and we hope to have similar panels in the future. But once again, thank you all for coming to this panel discussion on matching technology breakthroughs with regulatory innovation. And with that, we will close the panel. Thank you all.

 

Steven Schueneman
Thank you.

 

Michael Jung
Thank you.

 

Kiera Zitelman
Thank you.

 

Chris Kroeker
Thank you.

Chris Hill
You all have a wonderful day.

 

This transcript was generated by Microsoft Teams and lightly edited for clarity. Please excuse any incidental spelling or grammatical errors and refer to the full video.