The Future of Electricity Regulation: Top 3 Takeaways from the Canadian Electricity Association’s Annual Forum

By Ted Ferguson, Chief Sustainability Officer – The Delphi Group, GLOBE Series, EXCEL, CBSR and Leading Change Canada | Managing Director, CBSR

As companies, governments and communities place greater importance on environmental and social sustainability issues – particularly on the road to net-zero — the electricity sector finds itself squarely in focus.

This past summer, the Canadian Electricity Association (CEA) hosted its annual Regulatory Forum, in collaboration with Canada’s Energy and Utility Regulators (CAMPUT) and Natural Resources Canada (NRCan). It was attended by a record number of energy industry stakeholders, including consumer advocates, energy regulators, environmental organizations, government officials, indigenous groups and industry leaders.

The theme for the event was Electricity Regulation & the Four Disruptors – Decarbonization, Decentralization, Digitalization and Democratization. The dialogue focused on how electricity regulation can be modernized under the pressure of profound disruption.

3 Key Takeaways

1. More conversations are needed to advance the agenda – and now. It behooves all levels of government to use one of the greatest (and lowest-cost) tools available to them to prioritize and advance this critical conversation: the power to convene.There are many fora that could be utilized, such as the annual Energy and Mines Ministers’ Conference and other conferences, as well as small-group discussions.
2. A coordinated approach to the major disruptors could fuel broader decarbonization If policymakers, regulators and utilities can align on the four disruptors (4Ds) affecting the sector — Decarbonization, Decentralization, Digitalization and Democratization — a cross-sectoral low-carbon transformation can be achieved in Canada.
   

   Defining the disruptors Decarbonization: Eliminating carbon emissions from the electricity sector and its value chain. Decentralization: Energy generation, distribution and transmission being driven from more nodes and locations in different directions. Digitalization: Digital technologies enabling the advancement of the other three disruptors. Democratization: Greater control over energy use, sources, costs, and delivery by people everywhere.

3. Collaboration is the key to unlocking innovation and democratizing energy access A collaborative approach has the potential to:
   • • • Enable not only utilities but also their customers and governments to reach net-zero goals, primarily by connecting the dots between different solutions to climate change and energy users.
       • Spur innovation in clean technology by creating more demand, which will also drive the clean economy more broadly.
       • Significantly update traditional cost models for utilities in ways that keep rates as low as possible and ensure that all Canadians have access to reliable and affordable energy. Catalyze digitization at utilities to improve service, flexibility and rate models, while also meeting tech-savvy customers where they are at as innovation progresses at a rapid pace throughout the economy.
       • Create a dynamic where customer involvement in the energy ecosystem is encouraged and seen as a positive new development in the landscape of democratizing energy access and benefits.

How Can We Create an Aligned Approach to Transformation Within Canada’s Diverse Energy Landscape?

Evidence from other jurisdictions suggests that the 4Ds are embraced in electricity systems when at least one of two factors are present: (1) high electricity prices, and/or (2) strong alignment on policies among regulators, government and utilities. Given Canada’s historically low rates for electricity, we are destined to choose the path of policy alignment to succeed.

There are many policy platforms for alignment between the federal and provincial governments on the 4Ds. Canada’s electricity sector would benefit from proactive partnerships between policymakers to help ensure that significant innovation in the electricity sector takes place.

While each province has unique energy sector dynamics, they are not sufficiently different to undermine collaboration on shared policy interests that include smart grids, cleantech, net zero, the electrification of transport, green hydrogen, indigenous community clean power, and renewable energy. Provinces are also focused on electricity costs, jobs, and reliability. The interconnectivity of issues in the energy sector means that costs and reliability can be integrated in these dialogues in a way that strengthens the call for innovation. Different rates structures, and asset management strategies are important pieces to this dialogue.

Utilities need to find a way to view the necessary change as an opportunity. The electrification of vehicles, and so many other related technologies, present the opportunity of a lifetime for the sector. New innovations such as ‘nonwire’ solutions, energy storage, leveraging big data and sensor technology, can create the pathway for the 4Ds to be successful. For the transformation to be successful, utilities must be an enabler and not a barrier. If utilities embrace the 4Ds, the positive impacts will reach way beyond their own sector and drive progress for society and the economy.

What is Enough Collaboration on the 4Ds to Prepare for the Future?

There is no magic formula for the right amount of collaboration. However, we know more collaboration and coordination are needed now to get us on the right track. If the key players can embrace the reality of the dramatically changing landscape, and approach the challenge with a collective will to work together for a positive outcome, then much could be accomplished. Intentional investments in programs and policies need to be made. Each energy utility leader needs to ask him or herself, where else can I be collaborating, innovating, and modernizing our approach to change in the sector in order to create a more sustainable future for all?

You can find a recording of the session here.

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Continue the conversation about the future of electricity regulation and the 4 D’s on Oct. 26th at GLOBE Series’ Destination Net Zero: Energy and Transportation Days session, Can the Four “D’s” of Electricity Disruption Get Us to Net Zero? Learn more and register today for this free virtual event.