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In a new article and white paper published in Public Utilities Fortnightly, E3’s managing partner, Dr. Ren Orans, and his co-authors argue that debates over utility business and regulatory models have sidestepped a more fundamental question: What do state legislators and regulators want the electricity utility of the future to do?
Do they want “fat” utilities that play a larger role in implementing public policy and delivering energy services to customers? Or “skinny” utilities that are more narrowly focused on the ownership and upkeep of the grid? And, are they willing to accept the tradeoffs between these two paradigms? The authors outline a framework to define the utility role in five areas: Network Access, Retail Choice, Ratemaking, DER Valuation, and implementing Policy Goals. Applying this approach provides a basis for policy makers to design incentive frameworks that match form and function, instead of trying to use some form of performance-based incentives to make a utility perform in a way inconsistent with its basic structure.
Dr. Ren Orans founded E3 in 1989. An economist and engineer, he has focused throughout his career on the most pressing challenges facing the electricity industry. Most recently his major focus has been on advising California’s regulators and stakeholders on the most effective ways to implement the state’s clean energy and greenhouse gas mitigation policies.
Ren began his career by demonstrating the potential of deploying distributed energy resources to defer infrastructure investments, saving costs and enabling the integration of renewables into the grid. During the restructuring era of the 1990s, he devised a rate-making mechanism that enabled Texas utilities to recover stranded costs while giving retail customers access to wholesale market prices. He also supported the opening of transmission markets by developing FERC-compliant tariffs for Canadian utilities and assisting the California ISO in developing tariffs and evaluation processes for transmission projects.
Ren is a longtime advisor to policy makers and executives in every corner of the electricity arena: government agencies, utilities, system operators, regulators, independent power producers, energy technology companies, public interest organizations, and investors. He has also published his work widely in top scholarly journals and served as an expert witness on numerous occasions.
Even after 25-plus years of analyzing the industry, Ren still finds the electricity sector fascinating. He’s particularly excited by the accelerating pace of change, which technological innovation and public policy are driving. He enjoys applying E3’s deep analytic models and years of experience to new challenges and new markets.
Education: PhD, civil engineering, Stanford University; BA, economics, University of California, Berkeley