1. Some Thoughts on Our Energy Future(s) ~In Pictures~ NW Energy Coalition NW Clean & Affordable Energy Conference Comments of Ron Binz Public Policy Consulting November 8, 2013  Seattle, WA

2. Public Policy Consulting www.rbinz.com

5. Pressures on the Utility Model New environmental regulations Investment requirements Flat load growth Shifting fuel economics Upward pressure on rates Distributed energy resources Falling cost of alternative resources

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15. WECC (2032): Potential Bypass Threats from Distributed Generation are Large WECC-wide Behind-the-Meter DG: 19 GW of solar PV + 7 GW of CHP Distributed PV based on “interconnection potential” (no back-flow through feeders), with adjustments to reflect relative economics among states CHP additions represent a fixed percentage (~40%) of technical potential in each state Percent of 2032 Peak Demand Source: E3 (2013).

20. NREL’s estimate of continued cost reductions for wind energy

21. Oregon Colorado New JerseyGermany Arizona Washington

29. Renewable Electricity Futures Study (REF) Exploration of High-Penetration Renewable Electricity Futures Available at NREL.gov

30. Baseline Case

31. REF ITI Case

32. How does the assumption of an HREF affect the business model?  Much higher levels of variable generation at the bulk power scale  Greater penetration of distributed energy resources at the distribution scale  Greater need for flexibility in the grid components, operations, and architecture  Much higher levels of energy efficiency (sufficient to eliminate load growth) (affects utility organization, operations) (affects utility revenues, services) (affects utility investment, operations) (affects utility role, services)

33. Thesis: Utilities must develop a set of new business models Thesis: Today’s regulation may not be up to the task –Rarely rewards utilities for desired behavior –Lack of incentives for firm efficiency clean energy investment energy efficiency innovation –Rate structures need revision –Focus on commodity sales –Balky, judicial process

34. Authors –Ron Binz –Richard Sedano –Denise Furey –Dan Mullen Available at www.ceres.org

37. The Final Word 111(d)

38. Thank You Ron Binz Public Policy Consulting rbinz@rbinz.com