Dive Brief:

• Joining a slate of others examining grid modernization and new utility business models, Rhode Island officials yesterday issued a report laying out a pathway that includes shifting to a pay-for-performance model, developing new value streams tied to the grid, compensation for locational value and development of a plan to allow third parties access to customer data.
• In March, Gov. Gina Raimondo directed the Division of Public Utilities and Carriers, Office of Energy Resources and the PUC to collaborate on a new regulatory framework.
• Overall goals include reducing system costs while giving customers additional energy choices and information, while also building a more flexible grid that incorporates clean energy.

Dive Insight:

Rhode Island is just kicking off a grid modernization effort, and the Phase One report concludes that the falling cost of renewables and development of new technologies has given the state "the opportunity to permanently change how the electric system serves its residents and businesses."

The proposal looks similar to ongoing initiatives in states such as Hawaii and California, but the scope— including a reevaluation of grid-based business models — may put it more in line with New York's Reforming the Energy Vision initiative, widely seen as one of the more holistic grid endeavors in the country.

"The rapid advancement of information management, communications, power distribution, and consumer products have shown the potential to transform our electrical grid," Rhode Island officials conclude in the report. but they add, "that potential can be unleashed only by reforming regulatory frameworks that today inhibit the utility from pursuing new technologies and limit the ability of third-party businesses from selling their innovative technologies and services to customers."

Among the goals, Rhode Island wants electric customers to have access to commercial products capable of lowering their energy bills and giving them more control, while also developing 1,000 MW of clean energy by 2020.

Recommendations include creation of a multi-year rate plan and budget with a revenue cap, "to incent cost savings," and "develop new value-streams from the distribution grid to generate third-party revenue and
reduce the burden on ratepayer."

According to the Phase One report, utilities should submit a multi-year rate plan with a revenue cap that will "better align the utility’s financial incentives with economic efficiency and sound investments."

The plan also calls for rate designs which increase system efficiency, and concludes utilities should design electricity rates to encourage electric vehicle users to charge their cars outside of peak demand time and make their batteries available to the grid in order to maximize system benefits.