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Power Industry Upheavals Seen as Mirroring Telecom Changes

March 24, 2016 By Molly White in

The upheavals seen in the electric utility industry in some ways parallel the wave of transformation that has taken place in the telecom industry, Susan Kennedy, founder and CEO of Advanced Microgrid Solutions, told an audience of power sector officials on March 17 in Washington.

She made her remarks at Powering the People: Key Trends Driving Change, a conference held in Washington and sponsored by the Edison Foundation Institute for Electric Innovation.

Kennedy was part of a panel discussion that also included Bob Rowe, president and CEO of investor-owned utility Northwestern Energy, and was moderated by Bill Loveless, energy columnist for USA Today.

Kennedy previously served as a commissioner on the California Public Utilities Commission, where she said she was known for introducing the deregulation structure for phone service.

“I believe very strongly that there’s a point in time when the regulator has to step back and let the market work and if there was ever an industry it’s the telecommunications industry,” Kennedy said.

She thinks the similarities between what has happened in the telecom industry and the power sector “are that new technologies provide a severe disruption to the regulated monopoly in the electric industry in the same way it did in the telecommunications industry.”

Kennedy said that the “power of the consumer to dictate what kind of energy they buy, when they use it, how they become ‘prosumers’ where they can actually monetize their resources back to the grid, I think that’s a very similar disruption based on technology advances that happened in the telecommunications industry.”

Rowe noted that in the telecom industry, “the basic infrastructure that we take for granted actually became more valuable than ever before, driven by consumer demand. But one of the great challenges — and it still is a challenge — is ensuring adequate levels of investment in capacity and redundancy in that backbone infrastructure.” The telecom infrastructure has fundamentally transformed, the Northwestern Energy CEO added.

“Interestingly, the network providers are essentially still the same network providers,” he said, adding that those providers “haven’t gone through an awful lot of consolidation. Arguably, the bigger part of the disruption has been in the vendor community” in the telecom sector.

Part of the discussion at the Edison Foundation event, Rowe noted, was focused on “what you would call the applications side — what are the things customers want to do over” the electric utility industry’s network that the power sector can enable “and then you heard a lot about the need for investment in that underlying infrastructure, so in some ways that’s the opposite of the traditional telecoms story.”

Kennedy said that the federal government through the Telecommunications Act of 1996 “could not envision what a competitive telecommunications industry looked like and so they set in place a framework for managed competition.”

So what happened in the digital and cellular arenas is that competition “grew in ways that they never anticipated and you ended up with a wildly competitive, completely disruptive telecommunications industry,” she said.

“I think the same thing is happening in the electric industry, in that regulators cannot envision what a competitive market looks like where a consumer has so much control over their resources,” the Advanced Microgrid Solutions CEO said.

Advanced Microgrid Solutions, a three-year-old company based in San Francisco, designs, finances, installs and manages energy storage projects for owners of commercial, industrial and government buildings.

Kennedy discussed energy storage and AMS projects in a recent exclusive interview with the American Public Power Association.

By Paul Ciampoli
News Director, Public Power Daily