Why You Should Know Your Public Utility Commission, and PowerLines

At the Yale Clean Energy Conference, the editorial team of YCEF caught up with Charles Hua, the Founder and Executive Director of PowerLines, a new non-profit organization that aims to modernize the utility regulatory system to accelerate affordable, reliable, and clean energy for American consumers.

Prior to founding PowerLines, Charles served as a Senior Policy Advisor at the U.S. Department of Energy, where he helped develop strategies around grid modernization and clean energy, and as a Policy Analyst at Rewiring America, where he worked to advance building electrification. He has also consulted for Fortune 500 companies, government labs, and international NGOs on climate and energy issues. In this Q&A, we asked Charles about how PowerLines is trying to build a new utility regulatory system that can better serve American consumers, grow the economy, and support communities – and what policies and processes are needed to make that vision a reality.

 

Was there a specific moment that you decided to start PowerLines? What got you interested in utility regulation, PUCs and power sector reform?

The very first time that I heard about a Public Utilities Commission was when I was sixteen. We were trying to get solar panels on our school’s roof, and we had to deal with our local utility, with our school districts, with the city, and with different community members. During that time, some of the partners that we worked with said, “Don’t trust the public service commission– they’re a rubber stamp for utilities.” I didn’t really know what that meant at the time, but that was my first exposure to PUCs.

Several years ago, around 2020, I was working with this woman named Jacqui Patterson. At the time, she was leading the Environmental and Climate Justice program of the NAACP, and we were working on this report looking at who the 200 Public Utility Commissioners were across the country. What influence did they have over the energy transition, particularly on climate change and environmental justice issues? What were their ties to the utility industry, to the fossil fuel industry? What were their backgrounds? That body of work, I think, really inspired PowerLines in many ways, because during that whole project, I kept on asking myself: how is it that PUCs are so important, and yet nobody seems to talk about them, even in the climate and energy space? In large part, that work served as the catalyst for starting PowerLines.

 

Did you have a lot of conversations leading up to PowerLines being formed, before you started thinking about it?

Yes. In fact, we estimate that we probably had over 500 conversations with a range of different entities – from PUCs themselves to utilities, to consumer advocates, to climate and environmental groups, to grassroots and community-based organizations, to state legislators, to clean energy companies, to companies purchasing energy, to cities, to regulatory experts, to legal scholars and academics. And that was an illustrative process to really understand the space. I came into those conversations with a sense of what we needed to do, but it was helpful to refine that approach and strategic theory of change, and the vision behind this organization. Lots of conversations.

 

What did you learn about utility regulatory reform during these conversations?

What we learned is that there are so many different silos in this problem. You have environmental groups, consumer advocates, large industrial customers and all the different stakeholders that I mentioned earlier –  the issue is that they don’t really work together. They don’t want to work together, they don’t know how to work together, they don’t like to work together.

We think it’s critical that all these different groups come together, particularly because the solution set moving forward is becoming increasingly narrow and well-defined. What I mean by that is that, increasingly, the things that are good for environmental impacts are increasingly aligned with things needed for consumer impacts. More and more, the things that are required for utilities to stay financially solvent – and have a social license to operate – are aligned with how government regulators and public officials can defend their roles as guardians of the public interest.

This narrow pathway is increasingly just this. Let’s make the most out of our existing infrastructure (e.g. energy efficiency, distributed energy resources, demand response, virtual power plants, grid-enhancing technologies). Let’s build new infrastructure – but do it in a way where we minimize the most expensive forms of new generation and transmission that is intra-state. And then on the distribution side, let’s figure out how we can manage distribution costs, which are the fastest growing portion of US electricity bills. Our solution set is becoming increasingly defined, because we can't take the traditional approach of only building big – we're going to run into affordability challenges.

 

Is there an organizational game plan on different state approaches, different ways of getting feedback, and how best to represent utilities as they undergo this complex state and national clean energy transition?

I’ll borrow a phrase from Jigar Shah around this: we need to change the culture around utilities. That’s way easier said than done, because these are long standing, centuries-old institutions that have had state-granted monopolies to operate. They’ve been able to influence the regulatory system to their advantage for years – literally since the invention of electricity. They need a culture shift because the solution set is becoming increasingly narrow, but also because if you look at the utility compensation formula and take that very narrow lens, the strategy is: let's just focus on large capital expenditures. That doesn't work anymore in a system where we can't pay for energy, which is already a challenge – one in three Americans can't pay for their energy.

 

AI and data centers are becoming these huge buzzwords, where folks are linking growth in long-term energy demand to an AI boom. Are you concerned about big tech companies and their interactions with utilities? In what ways could Big Tech be a good actor in our drive to reform PUCs and utilities? What should we ask of them?

We are in the most critical juncture, the most exciting moment, the most pivotal inflection point of the American electricity system. That's not an overstatement. It's because of a couple of factors that are converging. First is increased load growth and demand for electricity that we haven't seen in decades, driven by data centers and manufacturing for now. But in the long term, EV adoption, fleet electrification, building electrification, heat pumps, industrial electrification will also drive demand. It's federal policy tailwinds, like the Inflation Reduction Act. It’s state policy tailwinds like 100% clean electricity standards. It's technological change, like geothermal, which is really making its moment; advanced nuclear, as well as traditional nuclear; long duration energy storage. They're all making progress, right?

And if the demand for electricity can be leveraged, and big tech companies have an interest in supporting those technologies – because it gives them more baseload generation and gives them more stability – and if they're willing to pay a premium for those technologies and bring them on, there can be a good effect there. And then you already have the declining costs of renewables, particularly across utility-scale and distributed generation now.

Whether it's interconnection queues, or permitting reform, a lack of transmission build-out, or a lack of public engagement with PUCs, all the issues that we're seeing right now are frankly regulatory in nature – almost everything. These are not only technological issues. Sure, there are issues around supply chains and accessibility, or some of the components, but when it comes down to it, in our view, these are regulatory issues. By shining a spotlight on this, we firmly believe that we can construct a regulatory future that's modernized, that can service all those objectives.

 

It’s critical for PUCs to be able to align their policy objectives with evolving clean energy mandates, but they’re chronically understaffed. What does PowerLines see as the solution to that problem?

To paint a picture of that, I'll give you an example in North Carolina. So the North Carolina PUC – the North Carolina Utilities Commission (NCUC) – their annual budget is around $10 million. The investor-owned utility that they regulate, Duke, has annual operating revenues about USD $30 billion. That's not apples to apples, obviously. But just to give a sense of scale, that's almost 3000 times the NCUC’s budget.

What is critical is that even though PUCs are under-resourced, they have all the power to make decisions that are advancing the public interest. Most of the time, PUCs are under-resourced, and their budgets are low. They're understaffed. They have un-sexy jobs, so it's hard to recruit talent to work for a PUC – even those that care about energy and climate impact. And that's creating this real challenge where the demand for talent and smart folks at these regulatory bodies is only increasing as the system gets more complex. There's a fundamental mismatch there.

Another thing is the talent pipeline. So how do we get more law students, undergrad students, and early career professionals understanding that if they want to make climate impact, the best way to do that is to be at the heart of the energy transition, which is to serve in a Public Utilities Commission? How do we do that? One is, I think we need to make the job sexy. If we frame these jobs as the best way for folks to make a climate impact, I think that's going to attract more talent. A lot of people just haven't ever heard of PUCs – even people that are very involved in the space.

And I do think that increasing public awareness of this whole thing will just elevate the profile of PUCs, which will inherently draw more attention and resources to this space. If everybody knew who their Public Utility Commission was, and what they did – that it kept the lights on, that it kept energy bills as low as possible – I think people would understand the need to really make sure that these bodies are well-resourced to do their jobs effectively. But the lack of public engagement and input and pressure is creating a situation where they're not resourced well.

 

Can you give us a sense of what kinds of resources PUCs might need to make more strategic decisions about utility regulation – and how could we ensure that they receive those resources in time for a clean energy transition? What kinds of knowledge, resources etc. about rate cases and integrated resource plans could make a difference? How does Powerlines plan on producing that work?

In some sense, there's no shortage of resources for PUCs. Sometimes the issue is: which of these five white papers on this topic do they read? Sometimes the issue is how to create the right resources. It could be a three minute video. It could be a one page memo. It could be a podcast. The energy industry needs to think creatively about how we're approaching this. Every Public Utilities Commissioner is a human at the end of the day. They're not going to get everything out of a 60 page report, no matter how much time the authors of that 60 page report spent writing it. We do need to think about the format of the resource as much as the quantity of resources.

And sometimes, the question is how to prioritize – a lot of PUCs, including ones that want to do good things, are inundated. At PowerLines, we're going to really take a serious look to understand what the gaps are and figure out what resources that we can develop. These resources will be informed by the needs that we're hearing.

 

Can you say more about the legal analysis it would take to clear the path for performance-based regulation in utilities? Do we know what that needs to look like?

Traditionally, there has been a narrow focus on three things. One is affordability – keeping bills low. Two is reliability, making sure the lights turn on. Three is safety and making sure that the grid doesn't jeopardize safety of homes, or cause fires etc. Now we have other criteria that we care about: decarbonization, equity and environmental justice, climate resilience to natural disasters. Some would argue that under the public interest framework, all of that still applies, even if it's not explicitly written into statute, right? Because that is advancing the public interest, because you can define it in a very broad sense.

Now some PUCs are very skittish about that. In practice, even if they have the legal authority, even if they can go to court and defend themselves, they will say, you don't want to take that risk. So that's why, in some cases, it's helpful for state legislatures to pass legislation that spells out explicitly that the PUCs can or must do something. That gives them cover. So in a very broad sense, I would answer your question as like PUCs probably already have the authority to do most of this already. That’s going to look different in different states. In some states, with a really aggressive judiciary, that's going to be more challenging. That legal analysis doesn't exist.

 

Ratepayers tend to not trust PUCs and utilities with energy bills. What would it take to make the writing of a rate case and an integrated resource plan intelligible to the public, so that they know how to engage?

That’s something that we're actively trying to work on and figure out: how can we democratize information access? Down the road, one of the things that we're trying to build is a very interactive, public-facing tool that summarizes information about PUCs and utilities and key dockets to the public, because there doesn't really exist that centralized resource that anybody can access. And we do think that would lead to more consumer trust in all the decision makers involved and more consumer ability to influence that process.

 

Can you give us a sense of who might resist PowerLines’ approaches? Who are some people who might oppose the vision that you're bringing?

Well, I think change is uncomfortable for everybody. Literally every stakeholder that I mentioned is going to have some inherent level of discomfort with the notion of modernizing. I think they all want it. But just because you want something doesn't mean that you know it's going to be easy, right? We are ultimately serving the ratepayer, the customer, the American energy consumer. In practice, we're obviously working to benefit them, and we'll aim to reduce energy bills both in the short term and long term.

There’s an inherent level of resistance and discomfort in this problem that I think is healthy, because it means that we're having a serious, honest dialogue about what it's going to take. It’s not going to be an easy, overnight, rosy, automatic transition and pathway forward to modernizing utility regulation. It might be difficult, but it's necessary, and we're ultimately driven by that necessity to act.

PowerLines has really tried to be intentional about facilitating and fostering relationships across the space. In our view, not enough groups do that for a variety of reasons. Sometimes it's just “we never really thought to do it that way.” Or “we don't have the resources to do it – we want to, but we can't.” Or sometimes, they’re in a different stakeholder ecosystem. We are a new organization coming into this with such a vision-forward approach: we’re saying – let's paint a vision of what's possible here! We are going to try to build a coalition while we're doing that, to build some consensus around specific kind of outcomes. So far, that approach has allowed us to reach a very broad set of stakeholders.