Technological Innovation, Electricity Market Competition Headline National Electricity Forum

A lively panel discussion dedicated to the question of whether a change in regulatory structure is needed to power a new clean energy economy helped kick off the National Electricity Forum, an annual confab co-sponsored by the U.S. Department of Energy and the National Association of Regulatory Utility Commissioners, an association representing state utility regulators. Regulators, environmentalists, policy influencers and other panelists roundly pointed to market competition as the answer.

To inspire innovation in the electricity industry and jumpstart a clean energy economy, “We need to start turning the conversation around to markets,” declared Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission (FERC).

Carl Pope, the Sierra Club’s executive director, decried the traditional monopoly utility structure as a system structured “against innovation.” He cited the cell phone as an example of the innovation wrought by competition in the telecommunications sector. “We have to take markets seriously,” Pope said.

Consumers want to be participants in the new clean energy economy by investing in solar energy and other clean energy technologies, Pope said. “People want to be part of the solution,” Pope said, emphasizing that markets “enable consumers” to do so.

FERC’s Wellinghoff, who has long cited open competitive electricity markets as beneficial to renewable energy and demand response programs that limit electricity demand and reward consumers, said that competition in electricity markets enables the innovation “we need to make our economy work.” He cited plug-in hybrid electric vehicles in the PJM Interconnection market that earn between $5 and $10 a day providing regulation services to PJM’s market and 12-state grid network.

“We have to bring more entrepreneurs into the markets. We have to open up these markets,” Wellinghoff said.

Garry Brown, chairman of the New York Public Service Commission, cited the value of dynamic pricing, a key feature of competitive electricity markets, and the onset of demand response as a growth industry as “a really exciting thing.”

When you have “entrepreneurs and consumers and strong markets reacting to price signals,” the result is “rapid diffusion of new technology,” said John Podesta, former Chief of Staff under President Clinton who now heads the D.C.-based think tank, Center for American Progress.

Market signals “drive change,” said Dan Bakal, director of electric power programs at CERES, an influential network of investors, environmental groups and other interests dedicated to promoting sustainable business practices. Bakal advocated a redefinition of affordable energy. “It’s less about rates and more about ability,” he said of the power of markets to induce innovation.