 which is revolutionising the electricity system and my day job is to manage as Alex said the DSO the electricity network the distribution network so it's a topic that's of huge interest to me because it's a comprehensive energy strategy and it's helping to build a clean resilient and more affordable energy system and the resilience part is both at this time of the year is extremely interesting to me and I get extremely interested in weather when you get towards this time of the year because when you're trying to manage two million poles out there and 170,000 kilometers of network I become as well versed in the weather as met here and so we had a very serious situation I know that I think your program came out and you're gonna tell us about it out maybe out of Sandy the big hurricane and that we were all very aware of that devastated an awful lot of New York communities and we had our own slightly smaller version of that called stormed our one back in 2014 and that caused us a huge amount of issues as well so we lost supply to 270,000 customers and that is about 13% of our customer base so the huge impact so that idea of resilience and how we deal with that because I suppose the thing that we all do have to recognize is that climate change is a big issue first and the electricity network does get affected by climate change and the frequent storms and weather events that we have on the flip side with a very big role which we could play in trying to avert that climate change issue or things getting any worse so it's an interesting balance were affected at one level but we could benefit the whole industry greatly at another level by helping with decarbonization so we're really interested to see and what Audrey has to say to us shortly and certainly what learning we can get from that and what we can adapt from what they're doing in New York to what we have here in Ireland so Audrey has a huge long list of achievements and this is only a very short synopsis of it because I saw a list yesterday and I think we would take up or full half an hour if we were to go through all of it so Audrey Liebelman is an internationally recognized expert in energy and very deservedly so she was appointed chair of the New York Public Service Commission just over three years ago and in this role she sits on the state energy planning and siting boards and oversees the regulation of New York's electricity gas telephone cable water and steam utilities so our own utility regulator here has a little ways to go to catch up on all of those but it has some of them she is a founder past president and chief executive officer of veridity energy in which she formed which she formed after more than 25 years of electrical utility industry leadership experience in both the public and private sectors previously she was the executive vice president and chief operating officer at PJM she has also held positions at Excel energy and served as general counsel in the New Hampshire Public Utilities Commission and was special assistant attorney general in the Minnesota Attorney General's office so quite an amount of achievements in a really interesting career so ladies and gentlemen it's a great pleasure for me on behalf of ESB to welcome Audrey Liebelman and thank her very much for being here with us today. There's a first here my husband's with me Phil Harris and Phil's actually spoke here a few years ago so I don't know how many American couples you've had so I'd like to claim that as a first so let me first of all I was so today I really do want to talk about the reforming the energy vision which is New York's name for our program to restructure the electric industry yet again in a way that's sort of what we post 20th century and really thinking about the new technologies of the future and I'd like to do is sort of give you a little bit of grounding for why we did it and just just for framing purposes not not I won't spend a lot of time on it but I'm gonna just basically so people understand because the United States is a little different New York is one of the states though it that liberalized its energy system back in the 90s that means that one of the things we did is we have our delivery companies our network companies transmission and distribution don't own generation so they were they that is owned separately we they we sold those off we have an independent system operator very much like your independent system operator who operates the gear in a in a power pool and we also allowed retail access so we have retail companies who can supply supply although our distribution utilities are what we call default suppliers meaning that for customers who do not choose an alternative supplier that distribution utility still plays that role I know in parts of Europe distribution utilities have that role in parts of Europe they don't so in Ireland you don't so that's sort of our basic situation the reason why that's important is that unlike a lot of utilities our state our utilities because they don't own generation had no real incentive disincentive to pursue energy efficiency or other types of alternative forms because that's not how they made money and we did a lot in New York around promoting what we did call different programs around energy efficiency as well as you know as well as thinking about forward-looking test years different things in a regulatory format to try to make our utilities economically neutral around pursuing conservation and things like that and what we found while we made them neutral we didn't make them very interested because it really wasn't an economic model they could do better no better than even and so for us reforming the energy vision was is really about reorienting the utilities towards consumers and really thinking about efficiency not just energy efficiency but capital efficiency and system efficiency as a way of really creating a format where actually you're looking at the creation of a two-way system and so that's that's our overall objective and I'll tell you why and foundationally why we got there so one of it is the fact is that in after Sandy New York City Manhattan was underwater for a couple weeks and the governor governor Andrew Cuomo was was this was his third major storm in five years that he was in office where he saw extended outages as a result of major climatic events but the if you can imagine what it's like in a city like New York which is a mega city and you have people living on 30 story buildings and we had I was at one event where someone was talking about their grandmother who was 82 years old who had lived on the 20th floor of the building and had to walk down every day 20 floors to get water and charge her phone and suddenly you suddenly realize that that's an intolerable situation and that you you really need to address it and so that really was in it in the start of what we were looking at is the governor said we've got to change the nature of the grid and so that there are really three fundamental policies that I that I talked to you that we're really trying to achieve through Rev that I that I think are going to be critical not just in New York but really become I think for any country that or any government that's trying to decarbonize carbon reduction so one of the objectives of Rev is to reduce carbon we have a goal in New York as a state to read to get to 50% renewables by 2030 but also to get a 50% reduction in carbon by 2050 or 30 or 40% by 2030 so very much like Europe we have a very aggressive carbon goal in New York City the city itself actually has a goal to get to 80% by 2030 so they actually have an even more aggressive goal than the state which is as you know she can imagine how competitive New Yorkers are that's probably not to be unexpected we also have a goal around energy efficiency even though and I would say New York is compared to a lot of United States States is actually consumers tend to be more efficient in terms of consumption for BTU it's only because we live in small places more apartments than you would see outside the US but still we have a goal to you know get there through energy efficiency the other thing that we're pursuing in Rev is capital efficiency and this is I think for you know I'm sure everyone here is familiar with the Rio Rio program Rio Rio in England but the same sort of sort of same principle one of things that we're aware of is that the load factor for our for our distribution utilities is about 54% so if you think about that that's a many many hours per year that we have distribution plant transmission plant in generation that's sitting idle and that that becomes a huge waste to the system so one of the things that we started to look at is how can we actually increase the efficiency of the system by using distributed energy resources whether it's solar whether it's storage whether it's geothermal whether it's CHP whether it's fuel cells to actually make the efficient it's the system itself more efficient and using third-party capital so part of it was just this house construct that just like competitive firms what the utility should be thinking about is how can we drive value by not just investing in new transmission or new distributions or or having new generation that sits idle most of the year but how do we use backup resources to actually be able to shift load and make demand itself much more smooth so it's not as peaky because one of the things we were seeing in New York and I think a lot of cities are seeing this is that the megawatt hour growth of consumption was actually flat or declining but the peak growth was was increasing and so that meant that you had a lower base that you're gonna have to build resources on and why that's important is New York like sure many parts of Europe we were looking at putting in a lot of investment to replace old distribution and transmission plant you've got to replace those poles and so there's a lot of expenditure going into capital and the thought was well we can avoid having to build new systems just in for those few hours of year let's look at how we use that better so just to give you just a quick example of what we've done in Brooklyn part of Manhattan and Queens there are a lot of four-story lovely brownstones and they were being knocked down and being replaced by 20 and 30 story buildings that people were moving into so we're seeing a huge demand growth in just one part of the city connet the local utility con Edison was looking at having to build a substation to meet that demand at two billion dollars of investment you can imagine taking that much property in the middle of Manhattan New York City would be in a rather expensive proposition and so we challenged them and said well rather than putting in a new substation what if we put demand-based resources things behind a meter storage solar more efficiency controls and as in doing so avoid having to build the substation so they did a study and what they found is that in lieu of the two billion dollar investment in a substation they can invest 750 million in demand-based resources and save that capital and also save the need to build the substation and now they've subsequently have another program they're looking to create a microgrid which will actually where that delayed the need for the investment this is made may avoid it and so the point is is that it becomes not only less expensive but also it also allowed us to achieve our emission reductions by the types of resources we were going in now the question then becomes how do you get a utility to want to do that it's one thing to say a mandate because what happens if it's just a mandate they'll do just what the government says we're we then said well how are we making it a business and then the other thing that so so that becomes really part of what we're trying to do and so then the other piece was consumer orientation you know it's interesting when we when we deregulate it on the wholesale basis and I'm sure it's the same when you liberalize the markets here everybody kind of knew what they were going to do the distribution utility to had their role the generators had their role the transmission operators had their role now though what we're trying to do is move into a whole new orientation around consumers engaging with the electric system and one thing we know about consumers at least US consumers is they have very short-term memories so they'll be very angry after an outage but asking them to sustain behavior is very difficult so the question then how do we change the nature of the system to get consumer engagement and so the other piece was to one drive value for consumers so that they see the value of adopting different types of behaviors but also around creating the system that was more reliable and more resilient and then products and services so those three things became the foundational element of us saying well things have to change so the other piece though that we said would not change and I think this is important as two pieces for restructuring one and what I call if those were the foundations of the basement here's the roof one is certainly the issue of the fact that electricity is an essential commodity and so we needed to make sure that we recognize it was an essential service and we protected consumers of such a low-income consumers so that energy remained affordable so one piece of what we said on the restructuring is we have to think about the issue of the fact that we don't want to create an energy divide in the US and we've we when we introduced the internet one of the things that we didn't think about was the fact that the adoption rates would diff would be different so today we have what we call the digital divide and for us it means that our low-income consumers or new Americans or older Americans adoption rate of broadband is probably around 40% versus 90% of other communities and now that we've moved into an economy where you need really internet access to fill out a job to get medical care that becomes a problem and so we're dressing that on the communication side but I didn't want to scrape the same problem the electric side where rich people had solar on their rooftops and poor people were paying for the grid and so we that was what that's when I talk about that kind of equity it remains important as a as a sort of part of what we do and then the other is the financial health of the utilities we saw what happened in Germany to RTE when they made when we restructured and all the value that came out of the utility we we did not want that to happen in New York we want we believe our utilities are very efficient razors of capital and we and we recognize that if the financing costs for capital from the part of utilities goes up substantially that just hurts consumers so we wanted to make sure as we were changing the structure we can't we kept the confidence in the investment markets that utilities continue to be a good place to invest so those were the the chief elements so to do that then what and this is sort of the drumroll we change then how we're going to regulate utilities so if I go back to the example of the Brooklyn Queens project the issue was not just telling kind of you ought to go out and spend a half a million dollars instead of two billion dollars and be happy we're letting you do that since they make a read their only way they make money is a return on their investment what we said is is that the utility ought to make as much earning capability out of not spending capital and even more earnings than spending capital so that if we're shifting the utilities from just capital spend to operating spend and this is the real that they that the earnings have to be there so one of the pieces that we said in reforming the energy vision is a couple things that have to happen one is we want to change the job of the utilities we want the utility the distribution utilities not just to be distribution utilities but distribution system platforms meaning that their job is to integrate in distributed energy resources like solar like storage like fuel cells and help manage the grid much more efficiently but to do so then we needed to change the economic model because today our utilities only got a return on their investment and so we said is that now they're going to be making money by one getting greater savings out of the system so so that they get a portion of those savings but also the ability to charge fees for data and information so if you think about a platform business the element of a platform business sort of like this iPad is that you have apps and we want to do and the when we want the distributed energy resources to be sort of like the apps on the system and for the distribution utility to see these as customers and that their job is to optimize those resources so that the system itself becomes that much more efficient and that we would allow them to charge fees for the information to reduce the transaction costs to enable those types of resources so that rather than thinking about distributed energy as sort of the anathema to the traditional utility model rather they should think about these resources as new customers and that their job then is to make the best of those resources to drive down prices to produce efficiency and reduce carbon so it really changes that model and the reason why I think this is important is that in the electric industry today there is nobody that makes money off of a more efficient grid if you think about it generators make money off of high prices distribution utilities traditionally make money off of putting in capital and so compared to competitive firm nobody really makes money by making prices go down in fact everyone sort of opposes it so we felt like we had to put our thumb on the scale and say that is the role the distribution utility that their economic model ought to be about driving greater and greater amount of efficiencies in the system so rather than just living up to a mandate their earnings capability ought to be higher to the extent that they're making the efficient the system itself more efficient and that that should be their new role and they should do that by using things like distributed energy resources so now our utilities in addition to getting a return on capital get a return on efficiency get a return on making data and information available so third parties can come in and put in solar and distributed resources where it best is they get a return on making consumers individually more efficient so suddenly rather than one stream of income just based on raising capital they have multiple streams of income of creating these markets that they can do so that's that is really sort of the basic thing the other thing that we did was differently is around innovation so changing the nature of the networks so that you're actually starting to think about how to use demand better because remember what we just did that we didn't we are not building that substation it will not be there that means that those consumers do not go off the grid the lights will go out in Brooklyn which will not be a good thing and so one of the things we recognize is that you're really changing the nature of the networks these are networks and utilities are utilities are like all utilities they like having things they could move and control to have to actually now start relying on human behavior to maintain reliability I'm sure that you know sort of gets them right in the gut and makes us all a little bit nervous so one of the things we recognize is to get there is we're gonna have to drive this concept of innovation around business models and how you run the system and so we also did what I think it's gonna be in historically probably the best thing we did is to say we want the utilities to do a number of and continue to do demonstration projects so think about how do entrepreneurs introduce new products and services they don't just design it and then just go out worldwide and offer the service if they develop a new product they'll test market it they'll see if it works and then if it doesn't work they'll pivot to something that does work and so we're telling our utilities the same thing go to a community that wants to go a hundred percent green and work with them and let's develop how the system will work and what products and services will get rapid adoption and how do you price out the services better and then once we figure it out we'll take it further so for example we have the project I mentioned in in New York upstate New York we have a couple of green communities where local utilities are working with local communities that are interested in going a hundred percent green and helping them design the system and then we'll figure out from there how do we make the scale that so part of it is we don't want a number of one offs but we also know that getting our utilities experience on how to use storage better how to use these resources better was going to be critical and that therefore as the regulator we allocated a certain amount of their revenue every year that they could use to apply against these demonstrations without having to go through an approval process because we wanted them to be able to operate quickly without the sort of typical regulatory back look back and say well why'd you do that that wasn't so smart so so that is a big piece of it the other elements that we're doing that are different are creating market transparency so one of the things that we know about markets is that information is ubiquitous and available so what we're looking at of course is thinking about how to put distributed energy resources at the local level but if you have people who want to put in solar or fuel cells or combine heat and power and they don't know the best places on the grid they could spend a lot of time and end up not being in the best place so we're requiring our utilities to file what we call distribution system integration plans and they work with their stakeholders to develop this but the idea is to make on their system available as to where the best places would be for backup resources and where the worst places would be so people aren't spending money the other thing that we're looking at is a big piece is value of distributed energy resource pricing and I think this is also critical so New York like many states had a feed-in tariff for solar we recognize that that may make sense when you had a small percentage but when you're looking at vast percentages distributed energy resources the pricing scheme then becomes very inequitable so we decide so we have what we've done now is we have a docket that's open that's talked about the value of distributed energy resources and the value is not just in terms of the and energy price and capacity but also the avoided distribution plant the ancillary support they can give to the grid such as inertia and reactive power so that there's a pricing scheme that the distribution utility could then pay for these resources as accurate as they can so that people who are putting in resources that allow them to respond to a price or support the grid can get a credit or a payment scheme so it's really creates that transactional market so that the distribution system operators essentially operating a retail market underneath the wholesale market with the objective of making usage itself the most efficient and part of the grid so if you so that's that's a big piece that I think is going to be necessary because if you can't monetize the value of a reduction of consumption then it's very going to be difficult to create a market and an investment profile and then the other piece that of elements that we're doing which I think are also important is looking at aggregation so for example there's another scheme that we have where a number of buildings who are putting storage or aggregating themselves into a virtual generating plant so that we're allowing them to work as a portfolio the other thing that we've done is we've looked at community distributed generation so again think about New York lots of vertical buildings very few roofs that you could put solar on so there may and there are many tenants renters who don't have control of their roofs so we have what we call community solar or community or distributed generation where an individual consumer can actually invest in a solar farm that is not located in the community and we will treat it as if they have solar on the roof so it's as long as it's in the same region and we find that's more efficient because larger-scale solar is cheaper but it also makes it equitable and so you don't have to you can have businesses and you can have communities and it and it could work really much better with the system and so we that was another piece of what we did and then all of our utilities are developing portals where a consumer can get information about how they're using energy what can they do better where they might be able to buy a resource so again on this platform concept we really want our distribution utilities essentially to become the Amazon of the energy business so if the customer cuts in and they they get their bill and they since they get in message from utility would you be interested in buying a smart thermostat we have a program and we're working with these vendors and so it makes this information very available one of the things I've learned from talking to folks at Google eyes on the page are important and so what our goal is is that every time a customer touches anything about energy it's a learning experience to learn what they can do and again I very much focus on small businesses and residential our large customers tend to be very sophisticated but it's really getting that residential market to understand how they can do it and one of the things that we've learned you know why we can make pricing more accurate etc is that because how electricity represents such a small portion of people's overall costs it's really other outside of I always say rooms like this where people care about these things and think about these things it's hard to get consumers to pay attention just on price to tell someone oh if you do all this you can spend save $10 a month on your electric bill it's like really that I don't really want to do it so it has to be a moral thing like and I'm trying to put it in terms of you know we all understand food waste we understand waterways we understand littering is a bad idea we need to get into the human mindset you know us in our work days and at home that electric waste is also a bad thing and then we need to make it easy for people not to waste electricity by doing and so it's all about education and various pieces and a continuous reminder and frankly I think working with children because I think children will bit discipline their parents to me much better about these things so so so for us it's a sort of 360 view of the world we don't think that getting to where we want to go is going to be a single solution but certainly we felt that changing the nature of the utility business model so that the utility would lean in towards efficiency and carbon reduction as a economic element of their of their business was going to be a critical piece and you know and our results early in are very positive one of the things that resonates with me more than anything else is I have you know the utilities come in periodically and tell me about their demonstrations and their new ideas and when it started it was people that I had known in these companies for a long time who had been there a long time in the last round they're coming in with folks that are young they're in their 20s and their 30s they're new to the company and they're excited it's like they they feel like they are cutting edge now whoever would have thought electric utilities would become the place where the new millennials will feel like they can make an impact and to me that if anything says we're successful because I think it's they're the people and it's that mindset in those very bright minds that we wanted to attract to the industry because they're the ones who are going to drive the change and so you know that I feel if anything is going to sustain us into the future