Epic events have a way of inspiring change.
Superstorm Sandy is no exception. Singlehandedly, the unprecedented event has propelled a national conversation around the resiliency of 21st century energy systems.
It’s with good reason. During Sandy, 8.5 million businesses and residences lost their electricity across the eastern seaboard. In New York, more than 140,000 National Grid natural gas customers were impacted, leading to the largest restoration effort in the history of the natural gas industry.
We know what kind of damage severe storms can do to our energy infrastructure. And we know that extreme weather is here to stay.
A report by the Intergovernmental Panel on Climate Change confirmed in September, 2013 that extreme weather events fueled by climate change are on the rise. Another study by the Munich Re Group found that between 1980 and 2011, the frequency of weather-related, energy system-threatening events rose by nearly 500 percent in North America, a faster increase than anywhere else in the world.
Times have changed, and utility models need to change too. Indeed, Sandy left no doubt we need to modernize the grid better to serve the environmental, innovative and customer demands of the 21st century.
All of us – customers, utilities, regulators, policymakers – seem to agree on what needs to happen. First, we need to open our networks to partners focused on distributed generation, such as solar, wind and biogas. Second, we must embrace technology partners and aggressively upgrade the intelligence of our systems. And third, we must change how we regulate and finance the industry.
It’s a full agenda, but the potential payback is enormous. We can cut wasted energy in half by 2030, reinvest $327 billion into our U.S. economy, and create as many as 1.3 million jobs.
Transforming our energy systems, in a cost-efficient manner, requires a new approach. At National Grid, we’ve introduced “Connect21,” a framework we believe can revolutionize our infrastructure, linking customer needs and policy goals with technology and market solutions.
Of course, utilities cannot deliver this new approach alone. Together with customers, regulators, policymakers and others, we are all responsible for defining the future.
While utilities have always been accountable to regulators, this new approach will require a new regulatory model that broadens the mandate of utilities to be more accountable for policy outcomes, such as promoting cleaner energy, advancing innovative technologies and driving economic growth.
We’re seeing great progress here. In Massachusetts, the Department of Public Utilities announced its Grid Modernization program, which envisions a modern electric system that will be cleaner, more efficient and reliable, and will empower customers to manage and reduce their energy costs.
In New York, the Public Service Commission (PSC) has taken it even further with its launch of Reforming the Energy Vision (REV). REV challenges New York utilities to identify and implement a model that incentivizes utilities to embrace innovation and take risks. Innovative approaches to financing outside of utilities will be essential as we seek to provide customers with new choices, and as market participants offer new products and services.
We’re up to the challenge, as we believe anything worth having is worth working hard for. Investing in the future now will unleash our 21st century digital economy with a more customer-centric, resilient, agile, efficient and environmentally-sound energy network.
It also leaves us better prepared to withstand natural disasters like Sandy in the future, which, as we painfully learned, is no longer a choice.
Tom King is president of National Grid US.