By Caitlin Marquis
From the December 2018 Issue
In a year with lots of political news, do you know what’s changed in energy policy and how it affects the facilities you manage and their energy costs? If you answered no, you’re not alone. Legislative and regulatory changes at the federal, state, and even local level can affect the price you pay for electricity and the options to green your supply—which, for many companies, is an increasingly important priority. But keeping track of these changes, let alone trying to shape them to your company’s benefit, isn’t easy.
In just the past year or two, we’ve seen the federal government introduce and then walk back an effort to provide financial support to existing, often uncompetitive, coal and nuclear facilities, which would have weakened the market for renewable energy development; utilities reduce electricity rates as a result of the corporate tax cut; Congress extend tax credits for wind and solar; the Administration introduce a tariff on imported solar cells and modules; California expand its “direct access” program, which allows non-residential customers to shop for electricity from non-utility providers; and several states—including Michigan, Missouri, North Carolina, and Virginia—introduce or consider renewable energy programs for large customers.
Those are just the highlights. Imagine trying to track these issues and many more in real time. Even more important—and more complex—than tracking the changes is assessing the risk or opportunity of a pending issue for your organization, and making a difference in the outcome.
At the Advanced Energy Buyers Group, a policy-focused coalition of companies with a shared interest in powering their operations with clean, affordable energy, we’ve learned a thing or two about how leading businesses stay on top of energy policy and protect their needs and interests. Here are some key takeaways:
- Internal coordination reduces friction and increases effectiveness in policy. Policy moves in fits and spurts, often requiring swift decisions and fast action. Aligning the internal teams that are possibly impacted by energy policy—facilities, procurement, sustainability, government affairs—upfront not only gives everyone a better line of sight into potential future threats and opportunities, it also enables deeper and more effective engagement when an issue emerges.
- You don’t have to do it all yourself. Energy policy is complex. Unless it’s a core competency of your business, it’s probably not a great use of resources to build up a team of energy experts in-house to track and analyze policy developments. But, good news: There are plenty of experts who can help to navigate the policy maze.
- There is strength in numbers. There’s a reason why coalitions exist, and it’s a good one. Working with aligned companies amplifies the message your business wants to get across, while also requiring less political capital than individual engagement. This is a key reason that companies came together to form the Advanced Energy Buyers Group. They knew that working with their peers would yield better results overall, even if there remained some niche issues to tackle alone. (Editor’s Note: Read this author’s October 2017 article for background of the Advanced Energy Buyers Group.)
- Policy change can happen when companies get engaged. The most important lesson learned in the first year of the Advanced Energy Buyers Group is that engaging on policy can yield results. Look back at the list of policy changes previously noted. All of those are issues that the Buyers Group and/or its members engaged on during 2018 through meetings, letters, regulatory filings, and more. We didn’t always get exactly what we wanted, but we did secure some key wins.
For example, in California we fought for expansion of direct access for all nonresidential customers, and landed at a partial expansion, with a mandate for the state to consider future openings of that market. And those solar tariffs were imposed at a rate much lower than initially requested, minimizing the impact on companies looking to install rooftop solar or purchase solar energy for their operations. The lesson here is clear: If you don’t tell policymakers what you want, they can’t help you get there. So, tell them!
Looking ahead to 2019 with these lessons in mind, what should you watch for? At the state level, the trend of utilities introducing options for customers to purchase renewable energy is likely to continue, as long as companies remain engaged in asking for these offerings. Also look for some newly elected governors across the country to make clean energy a priority for their administrations, and expect continued discussion of grid modernization and utility business model reform, as well as strengthened interest in beneficial electrification, electric vehicles, and even blockchain. At the federal level, a Democratic House will likely provide oversight on the Administration’s attempts to preserve aging, uncompetitive power plants—and a bipartisan group of legislators may also look for progress on improving infrastructure that could benefit the grid and consumers alike.
Marquis is manager of federal and state policy at national business group Advanced Energy Economy. To support and engage in policy work to improve these programs and other market options, learn more about AEE’s Advanced Energy Buyers Group at this link.
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