Rethinking the Electric Utility Business Model
Electric utilities must make changes to their current business models to serve new economic and policy objectives.
In order to make these changes, according to the Rocky Mountain Institute (RMI), utilities must answer these questions:
- What functions will electric utilities perform in the future?
- What is the appropriate electric utility size and earnings?
RIM indicates that there are two possible business models that can answer these questions:
- Expand the current business model with electric utility ownership or financing of all new assets and services including DERs, or
- Transform the platform operator, where electric utility serves as a neutral asset integrator and host for market activity.
There are four hybrid options for the new electric market design to balance the limitations of these business models and adapt them to the circumstances of particular regions and objectives (RMI):
- Electric utility procurement of third-party solutions
- Split roles by-product or scope of activity
- Electric utility competition with third parties
- Electric utility hosted microplatforms
TEG will work with regulators and electric utilities to select options for the economic growth.
In addition, we will work with utilities to address integrated generation, transmission and distribution (GT&D) planning, grid modernization and rate design issues.