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Ralph Cavanagh’s Blog

Changing How Utilities Do Business: A Timely Dialogue

Ralph Cavanagh

Posted September 11, 2013

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This blog entry was co-written with Elisabeth Brinton, Chief Customer Officer of the Sacramento Municipal Utility District. 

As technology changes and electricity sales growth slows, the electric industry is reviewing its traditional business practices and policies while striving to provide the same level of high quality and affordable service to customers. 

The Sacramento Municipal Utility District and the Natural Resources Defense Council have been discussing many of these issues, including how customers should be billed for the power they use to keep the lights on and cool their homes - and how to reward customers who help the environment by reducing that electricity use, without undermining the financial health of their hometown utility.  We released the following joint statement today: 

"The Natural Resources Defense Council (NRDC) and the Sacramento Municipal Utility District (SMUD) are pleased to be engaged in an ongoing dialogue on key mutual priorities, including the retail utility business model of the future and new customer rate design options. Both organizations are leaders in these areas and share a longstanding record of constructive mutual engagement on matters of common interest. As SMUD transitions to TOU (time of use) rates that reflect the constantly changing cost of electricity, NRDC's recent proposals are particularly timely. SMUD and NRDC share a commitment to balanced solutions that enable customer and environmental benefit, while ensuring grid reliability and utility stability."

To open that dialogue, NRDC has submitted a proposal to SMUD management, addressing rate design alternatives that are intended to meet SMUD's initial objectives while strengthening customers' incentives to install cost-effective energy efficiency and distributed generation (electricity from small localized sources such as solar panels). The proposal includes ways to harness SMUD's new "smart meters" to gauge the extent to which customers are using the transmission grid every month in order to apportion costs fairly, while avoiding a shift in pricing policy that would significantly reduce customers' rewards for saving electricity. 

A history of working together

NRDC and SMUD have a long history of working together on sustainable energy solutions, starting more than two decades ago when SMUD asked NRDC to review its energy efficiency opportunities as part of a successful campaign to become a statewide leader in finding cost-effective ways to get more work out of less energy.  We've also joined forces repeatedly in support of upgrades in California's efficiency standards for buildings and appliances.  There and here, our aim is to find solutions that will work  for everyone with a stake in Sacramento's electricity future.

We'll be back to report on progress as this constructive and important dialogue proceeds.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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