critical issues facing public power · trends, not specific policy pronouncements, as they develop...

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Critical Issues Facing Public Power

Sue Kelly President & CEO

American Public Power Association

Texas Public Power Association July 2017 Annual Meeting

San Antonio, TX


American Public Power Association • The national service organization (a/k/a

trade association) representing the U.S.’s 2,000 electric utilities that are owned by units of state and local government

• Public power utilities serve over 49 million people in 49 states (15% of customers)

• Work with state associations such as TPPA on issue advocacy, education and training, products and services—TPPA is a great partner!


Association Members

• 1,400 member public power utilities, ranging from very large to very small

• Median size: 1,977 meters • Public power utilities are vital to their

communities, not only providing power, but supporting key community priorities, reflecting community values, supporting local economies


Association Leadership and Staff • Board sets policy direction:

• Chair: Wally Haase (Navajo Tribal Utility Authority, Fort

Defiance, AZ)

• Chair-Elect: Coleman Smoak (Piedmont Municipal Power

Agency, Greer, SC)

• Vice-Chair: Bill Gaines, Tacoma Power (WA)

• Treasurer: Paul McElroy, (JEA, Jacksonville FL)

• Board includes Jackie Sargent, Phil Williams—Ron Bowman

just completed his service

• 65 staffers do everything from lobbying to education to coordinating mutual aid after storms—located in Crystal City, VA


Trump Administration, Year One • Outcome of the 2016 election was a

surprise to many (in both parties) • Despite deregulatory bent of the new

Administration and slow pace of appointments, there is legislative activity

• We are working in partnership with our members and state associations such as TPPA to represent your interests

• Appreciate TPPA’s strong participation in the February Legislative Rally!


Defending Tax-Exempt Bonds in Tax Reform Debate • Tax-exempt bonds are the primary tool public

power utilities use to finance infrastructure • No tax exemption means increased borrowing

costs and increased electric rates for all • We’re working with public power groups and

broad coalitions like Municipal Bonds for America to get our message across to Congress and the Administration

• Rep. Kevin Brady (R-TX) is Chairman of House Ways and Means Committee—very important to this issue


Tax Reform Progress • House and Senate GOP leaders meeting with White

House officials to draft common tax reform plan (no health care repeat)

• Plan is to broaden tax base to allow lower corporate and business income tax rates (less concern about individual rates)

• Good news? General belief that outright tax on municipal bonds unlikely

• Bad news? Continued calls for outright repeal of tax exemption

• Senate Republican Policy Committee – June 13, 2017 • Heritage Foundation – July 11, 2017 • CATO Institute – November 2, 2016


Watching Environmental Legislation and Regulatory Reform • Supporting common-sense environmental

regulatory reform in Congress and at the EPA • Explaining that public power utilities will continue to

be environmentally responsible, and responsive to the needs and values of their communities

• Public power utilities are looking at longer term trends, not specific policy pronouncements, as they develop or revamp resource mixes

• Seeing increasing number of members emphasizing carbon-free resources (e.g., utility and community scale renewables, hydro, energy efficiency, demand response) in their portfolios


Anticipating More Activity at the State and Local Levels • Many cities, states and governors are concerned

by current direction of federal environmental/climate policy

• They are taking up this issue at the state and local level

• As units of state and local government, public power utilities are often front and center

• Not always agreement between state and localities on the direction in which to move (!)


PMAs and TVA • Trump’s FY 2018 Budget Request: sell the

transmission assets of BPA, SWPA, and WAPA • Stoked swift and strong congressional reaction:

– Oregon and Washington’s entire delegations in the House letter (June 5)

– Bipartisan Senate letter – 21 signatures (June 7) – Bipartisan House letter – 50 signatures (June 26)

• Budget Request did not propose to auction off TVA (two Obama Budget Requests had done so)

• Picking up signals that this Administration does not support PMAs/preference power program, so we expect more in this quarter (in context of infrastructure proposals?)


Energy Bill • S. 1460 introduced last month by Senators

Murkowski and Cantwell; has many provisions from energy bill Senate passed in 2016

• Some provisions have been modified – based on language offered to House in late 2016 during (failed) conference committee negotiations

• Could come directly to Senate floor as soon as later this month?

• May be rolled into an infrastructure bill (or parts of it may be)

• APPA generally supported 2016 energy bill but we are watching closely for amendments, etc.


Grid Security • May 11 Executive Order, “Strengthening the Cybersecurity

of Federal Networks and Critical Infrastructure:” – Directs DOE, DHS, and DNI to assess within 90 days impact of a

prolonged power outage due to a significant cyber incident

• APPA, through the Electricity Subsector Coordinating Council (ESCC), is reviewing preliminary DOE assessment

• Cyber/grid security getting lots of attention on the Hill • The unified electric utility industry message:

– We take grid security very seriously – The NERC-FERC standards provide a solid foundation for security

efforts, but more mandatory standards are not the answer – We recognize we cannot protect all assets from all threats all the

time, and instead must manage risk – Close industry-government coordination is crucial


DOE-Association Cooperative Agreement • $7.5 million over three years (until 2019) has been

authorized; NRECA has parallel agreement (we are coordinating with them)

• Goal: develop a cyber security culture at public power utilities (especially smaller distribution utilities); help them understand and address their cyber security risks

• Developing technical and policy guidance, piloting deployment of new technologies and improving information sharing

• Trump Administration’s DOE budget would cut Year 3 funding; we are pushing back


Current Cyber Initiatives • Baseline Assessment Survey (to understand public

power utilities are addressing cyber security now) • Cyber security training (can bring to your region) • Public Power Resilience and Security Maturity Model • Onsite Vulnerability Assessments • Pilot Cyber security technologies

– Some joint action agencies doing cyber security as a service to their members

• Improving Information Sharing – Electric Sector Information Sharing and Analysis Center (E-

ISAC) is the national focal point; https://www.eisac.com/ – Burlington VT’s example of doing the right thing

https://www.eisac.com/


Distributed Energy Resources/Grid Modernization

• Much interest in Distributed Energy Resources (DER) in Congress

• There have been several hearings in the House and Senate focused on grid modernization

• Senate energy bill, S. 1460, includes some provisions related to DERs and grid modernization: – Grid energy storage R&D – Hybrid micro-grid systems – Voluntary model pathways

• Our message: DER policy must stay a state/local matter; no federal mandates/preemption


Events Outside the Beltway Are More Important in the Mid/Long Term…

• We are seeing rapid changes in our industry: – New technologies – New competitors – New ways of living – New customer choices and expectations

• We cannot assume “business as usual” will be enough in this new environment


How Can Public Power Keep Up?

• We must recalibrate our thinking • We need to redefine our relationships

with our retail customers, thinking beyond just “keeping the lights on and the beer cold”

• Can no longer stay in our “comfort zone”--on our side of the meter, providing basic electric service and sending bills; must diversify the menu


Raising Awareness of Public Power in Your Communities • Our research shows that only I in 5 public

power customers under age 55 knows their electric utility is community-owned!

• We need to raise awareness of public power in our own communities and nationally

• New Association brand to raise public power’s profile at the national level

• Developing turnkey communications resources for you to use at home—doing a pilot this year with 10 public power communities across the country


We Need to Be Prepared to… • Develop new rate designs to meet increased

levels of DERs • Handle flat and even decreasing demand for

electricity from traditional loads • Help customers reduce their usage through

energy efficiency, demand response • Develop and support new loads--electric

vehicles and even heating • Consider storage to expand use of

renewables and better align demand and supply (could be water heaters!)


What More and More Customers Will Want (Commercial and Industrial) • Industrial and commercial customers increasingly

want green/sustainable energy to meet corporate goals

• Following lead of Tesla, Mercedes-Benz, Apple, Google, Facebook, Walmart

• They are entering into direct contracts with suppliers and aggregating their loads to buy renewable power supplies

• If we do not help our customers meet these goals, they can do it themselves


What Some Retail Customers Want (and More Will Want in the Future)

• Increasingly, residential customers will want to: – Use technology to control their electric usage

(Nest) – Tell Siri or Alexa to pay their electric bill – Invest in their own onsite power and storage

facilities, so they never experience an outage • Public power utilities have to up our game — if

we cannot provide these services on our own, we will need to partner with third parties that have the necessary products and skills


Help From Inside & Outside Our Ranks

• Increase millennials in workforce to address changing customer behaviors/expectations

• Engage customers on social media for outage response, community engagement and advocacy efforts

• Partner with public power entities to help provide retail services — e.g., joint action agencies and state associations

• Use outside vendors for services you can’t otherwise obtain (but pick carefully!)


Leverage Your APPA Membership Dollars

• Subject area Conferences & summits • Training: online & onsite • Safety Manual (new Ed.) • Reliability best practices (RP3 and E-Reliability Tracker) • Mutual aid • Lineworkers Rodeo (CPS was host in 2017!)

• Grid security exercises • DG/rate design toolkits & case studies • Tools & resources to promote public power • Support for R&D projects (DEED) • Funding for internships (DEED)


The Goal: Become the Community’s Trusted Energy Advisor • Don’t tell customers what to do — they own

us, not the other way around • All customers are not alike — educate,

engage, provide options and lay out their pros and cons

• Explain the distribution grid is a shared public good — all who use it must contribute to its upkeep

• Be prepared for blowback — some may want to cut the cord (or think they do)


Building Strong Customer Relationships

• Offer attractive, affordable service options • Provide strong customer service • Support the community and its values • Visit your customers, invite them to visit you • Build real connections (get into the schools,

host a movie in the park, adopt a boys/girls club—there are so many ways!)

The more we connect, the more our customers will see our value


We Know Our Communities—We Live There • Large corporations tout ties to the community

but public power utilities have real connections • We live the values of our communities because

we are part of them—in the case of NBU and CPS Energy, for 75 years!

• Our actions are all out in the public view—(and sometimes it is not easy, I know)

• We must be guided by the community’s values and reflect them in everything we say and do


We Are Increasingly Seen As Leaders in the Industry • Policymakers and industry thought leaders are

noticing that public power utilities are often “first movers” in implementing new technologies

• Do not need to seek approval from state public utility commissions for new rates/programs

• No separate class of shareholders to satisfy • Great examples right here in TX:

– Georgetown—100% renewable energy – Seguin—100% LED streetlights – Bryan TU/CPS Energy—100% smart meters – Lubbock, others working on it!


The Public Power Advantage

• Public power has a great opportunity if we stay true to our to our ideals and roots while adapting our mindsets and services to this new era!


The American Public Power Association is the voice of not-for-profit, community-owned utilities that power 2,000 towns and cities nationwide. We represent public power before the federal government to protect the interests of the more than 49 million customers that public power utilities serve, and the 93,000 people they employ. Our association advocates and advises on electricity policy, technology, trends, training, and operations. Our members strengthen their communities by providing superior service, engaging citizens, and instilling pride in community-owned power.

The Elevator Speech About the Association


The Elevator Speech About the Membership

Community-owned, not-for-profit public power utilities power homes

and businesses in 2,000 communities — from small towns to large

cities. They safely provide reliable, low-cost electricity to more than 49

million Americans, while protecting the environment. These utilities

generate or buy electricity from diverse sources. They employ 93,000

people and earn $58 billion in revenue each year. Public power

supports local commerce and jobs and invests back into the community.

critical issues facing public power · trends, not specific policy pronouncements, as they develop...

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