Three Key Takeaways from NARUC’S 2023 Annual Meeting

Every November, the National Association of Regulated Utility Commissioners (NARUC) convenes its Annual Meeting and Education Conference, where the “who’s who” of the regulatory world get together to discuss the most pressing challenges facing the nation’s regulated industries. For Leap’s team of energy regulatory experts, this is one of the most exciting events of the year, so a couple of weeks ago I flew out to Palm Springs to check out the action. I wasn’t disappointed - this year’s Annual Meeting featured TED-style presentations, talks by high-profile speakers from the Biden Administration and even a high-octane debate on the value of electricity markets. It was an energy nerd’s dream.

It was also, as it turned out, a valuable proof point for Leap’s business model. 

NARUC’s annual meeting addresses more than just electricity (gas, water and telecom are also represented), but when the discussion was focused on the electric sector, it was clear that regulators were thinking through many of the same ideas that underpin Leap’s technology and business. The importance of using distributed energy resources (DERs) for demand flexibility - whether to improve reliability or reduce system costs - was affirmed by speaker after speaker across the event’s three days. Below are my top three takeaways from the event, and what they indicate for the future of demand response (DR). 

1. Regulators are increasingly concerned about reliability, and demand response is a key part of the solution.

With the preponderance of extreme weather events that have occurred over the past few years, there’s a resurgence of regulatory attention on the reliability of the grid. A panel moderated by Michigan Commissioner Katherine Peretick acknowledged that, whereas ten years ago the conversation at NARUC was focused on the decarbonization and digitalization of the grid, today the question of reliability was coming back to the forefront. This issue crept into discussions on all manner of topics, from restructuring Resource Adequacy markets to enhancing coordination between electricity and gas networks.

DR was held up as a valuable solution during these discussions. When a panel that included the CEOs of PJM, MISO and NERC were asked about DR’s role in ensuring grid reliability, the panelists unanimously identified it as a crucial piece of the puzzle. They pointed to the success that PJM and ERCOT have had in integrating DR into their energy mixes, and even called out electricity customers’ robust response to California’s text-based request to reduce load during the state’s major heat wave in 2022. They also spoke to the importance for electricity grid operators to have visibility into the load reductions these resources can provide - exactly the type of visibility that Leap’s platform creates. 

2. The number of technologies that can provide demand flexibility are going to increase significantly. 

The opportunity for DR to play a role in reliability will only increase in the future. One speaker cited a forecast by Wood Mackenzie that more than 262 GW of additional DERs and demand flexibility would be deployed from 2023 to 2027. This number blew my mind, so I tracked it down to double-check that they had cited the right figure. Not only was it correct, but it’s roughly the same amount of utility-scale energy resources that Wood Mackenzie expects will be added over that same time period. This growth will be driven by a mix of factors, including increasing customer concerns about reliability, new federal incentives and new monetary value that these devices can provide customers through DR programs like Leap’s.

3. The risks of not harnessing demand flexibility are substantial. 

One final takeaway is that enabling demand flexibility with newly-deployed DERs is not a “nice to have” - it’s critical if the country is to achieve its ambitious decarbonization goals. In one workshop focused on transport electrification, a representative from Southern California Edison (SCE) shared the results of that utility’s recent analysis on expected electric vehicle (EV) growth in its service territory, noting that they expected system costs would be 15-20 times higher if EV charging wasn’t managed.

This was echoed by a representative from California’s Public Advocate's Office, whose own analysis showed that simple adjustments to EV charging times - such as moving charging away from 9pm, when many EVs start charging to take advantage of low-priced periods on Time-of-Use rates - would save state customers roughly $34 billion in costs by 2035. 

The challenges facing the electricity grid are sobering, and there’s no one-size-fits-all solution - even the simple term “demand flexibility” encompasses a vast range of technologies, programs and grid management techniques. However, I took heart in hearing that the types of services Leap provides are not only being considered by regulators, but are actively welcomed as tools to reduce costs and improve grid reliability.

There’s still a lot of work ahead, but by the time NARUC returns to Southern California for its annual meeting next year, I expect there will already be quite a few additional examples that regulators can point to showing how DR is helping to make their jobs easier.