Securing Wisconsin’s Energy Future – A Wisconsin’s Green Fire Policy Analysis
Gary Radloff, WI Green Fire, February 11, 2020
February 11, 2020
A paradigm shift is happening in the energy industry worldwide. New ways of managing how and where energy is distributed, and how energy waste is reduced, have become prominent opportunities in the world of energy.
Evidence of these changes are all around us. Readily available devices allow energy users at home and at work to understand when the demand for energy is highest over the course of a day, and to program devices such as water heaters and furnaces to manage and shift energy demand to lower-cost and lower-demand times of day.
Wisconsin’s failure to keep pace with technology through better policies and needed investments is costing energy users more, and leaving us with dirtier, less efficient energy, and with an electric grid that is unnecessarily wasteful and vulnerable to disruption. However, Wisconsin is well-positioned to take effective steps to prepare for a more sustainable energy future.
This paper addresses developments in energy distribution and management that help shape opportunities to improve our energy system, and recommends policy for the Wisconsin Public Service Commission (PSC) and state to move toward implementing the opportunities highlighted here.
Despite these changes and the opportunities now available to modernize and improve, Wisconsin remains largely stranded with a 20th century energy system in a 21st century economy.
Opportunities Exist Now
The convergence of new energy technologies has never been as rapid, or as important, as it is today. In the last five years our global energy systems have been undergoing a fast-paced evolution, creating beneficial impacts for energy users.
Modernizing our electrical grid will reduce energy waste, increase energy efficiency, and reduce the vulnerability of our energy system to disruption. These benefits will occur in part through developing local energy systems and implementing new, smaller-scale distribution systems.
While consumers can take important individual actions to better manage energy use, managing large scale change requires effective public policy and well-directed investments. Only systemic changes will allow the energy industry and energy customers to shift their roles and responsibilities to favor clean, efficient, resilient, and less expensive energy resources. The economic and political will must be in place for such shifts. Fortunately, recent research and successful policy changes in neighboring states have given us models to reference.
Our greatest opportunity is to focus future investments in modernizing our system to enhance energy efficiency, reduce greenhouse gas emissions, and improve system reliability and resiliency. These changes will provide more benefits to energy users and a growing class of smaller-scale energy producers.
The report contains the following recommended policy actions:
- Integrated Distribution Planning: The Public Service Commission (PSC) should require planning in which demand-side and distribution-level investments are compared side-by-side with traditional bulk-system resources so the state can optimize a smart, integrated energy system.
- Set clear policy goals: PSC and state statutes should articulate state goals such as affordability, resiliency, environmental performance, and enhanced data transparency for the ratepayer/customer.
- Set data metrics tied to policy goals: PSC should measure success in annual and multi-year metrics tied to identified goals and make sure utility compensation includes proof of meeting policy goals and metrics.
- Incorporate broad stakeholder involvement: Set realistic targets and use cost-benefit analysis and other modeling tools, making sure broad stakeholder involvement is used in the evaluation process.
- Advanced Distribution Planning: Require detailed studies of where Distributed Energy Resources (DER) can be used as alternatives to more transmission, large scale-generation, and new sub-stations. Examine how DER products and services can help the state meet its greenhouse gas reductions goals and potentially save energy users money. Study these strategies in different combinations to better understand alternatives.
- Community Choice Aggregation: This empowers local communities to determine their energy future by giving them legal authority to choose the type of energy power they use and the energy system that they can control. Letting local communities make these decisions increases the likelihood of addressing environmental racism and environmental justice.
- Establish a citizen regulatory reform study group: Public interest in utility projects and their impacts is steadily increasing. There is growing need to increase public participation in PSC decision-making.
- Performance-based ratemaking: Establish rewards for energy efficiency, affordability, greenhouse gas emission reductions, and resiliency. Note that an Advanced Distribution Planning process would help establish statewide goals for energy efficiency, Distributed Energy Resources and greenhouse gas reduction to inform effective performance-based rates.
Wisconsin policy makers should consider whether our actions are delivering a future energy system that can ensure adequate reliability, maximum energy conservation, efficient use of resources and maximum customer benefits.
Gary Radloff is co-chair of Wisconsin’s Green Fire’s Energy Policy Work Group. He is the principal of the Radloff Group, a policy research and consulting firm. Previously he was the Director of Midwest Energy Policy Analysis for the Wisconsin Energy Institute at the University of Wisconsin – Madison.
In addition to Gary’s lead authorship, several Wisconsin’s Green Fire members contributed to the ideas and content of this report.