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Doing what is right for customers: Sue Kelly addresses public power’s greatest challenges

From the June 17, 2014 issue of Public Power Daily

Originally published June 17, 2014

By Meena Dayak
Vice President, Integrated Media & Communications

A video and transcript of Sue Kelly’s speech are available on her blog, Public Power Lines

In her first public power "state of the union" address, the president and CEO of the American Public Power Association, Sue Kelly, urged public power leaders to reboot for the future by doing what is best for customers, being responsible stewards of customers’ money and the environment, and giving back to the community.

Kelly was speaking at the 2014 APPA National Conference in Denver, Colorado on June 16, where nearly 1,200 public power professionals from across the U.S. have gathered for three days of learning, networking and planning for the future.

Kelly discussed several challenges that public power faces today—threats to the federal power system, wholesale market dysfunction, distributed generation, climate change, and grid security.

Kelly offered a tribute to Alex Radin, APPA’s CEO for 35 years, who passed away on April 10, 2014. She remarked, "I was struck by how similar the policy battles we are fighting now are to the ones [Alex] fought decades ago. And by how relevant the example of his leadership is to the challenges that confront us now."

Kelly discussed the battles that public power is fighting today—threats to the federal power system, wholesale market dysfunction, distributed generation, climate change, and grid security. "As we take these challenges on, we should be guided, as Alex was, by what is right for those we serve. By what will keep the lights on, the rates reasonable, and the environment protected," she said.

Speaking about threats to the federal power system, Kelly  pointed out that the Obama administration, for the second year in a row, has raised the specter of divesting the Tennessee Valley Authority. In the recently released proposed budget for 2015, the administration called for Congress to explore options that include a transfer of ownership of TVA to state or local stakeholders. The preservation of TVA "should frankly be a no-brainer," said Kelly.

Kelly expressed concern that centralized markets run by regional transmission organizations, and particularly mandatory capacity markets, are not adequate to support needed new generation resources. "We have seen far too much faith-based regulation in wholesale electric power markets in this new century. It’s time for FERC [the Federal Energy Regulatory Commission] to think outside the box of the RTO-operated mandatory capacity markets," she said. Kelly called for support of bilateral contracts for generation and demand side resources and said public power systems should be allowed to self-supply their own loads.

Reflecting on the challenges and opportunities of distributed generation, Kelly noted that public power utilities are adding renewables, demand response, and energy efficiency—and need to do more as they respond to the changes in the industry. "Technology, especially at the edges of our distribution systems where we interconnect with retail customers, is rapidly evolving, and we need to keep up. While central station generation is and will continue to be an important part of our electric grid, we need to broaden our thinking and incorporate new kinds of resources, some of which will be customer-sourced," she said.

On climate change, Kelly noted that the biggest regulatory challenge public power faces right now is how to comply with the slate of pending and new Environmental Protection Agency regulations. The Mercury and Air Toxics Standard, Section 316(b) cooling water regulations, coal ash regulation, and reinstatement of the Cross State Air Pollution Rule "all are upon us." And EPA’s proposals for reducing carbon dioxide from new and existing fossil fueled power plants are "on deck."

The better way to deal with greenhouse gases would be for Congress to enact legislation that is specifically tailored for this challenge, she said. Legislation should be economy-wide, consider the financial impacts on consumers and the affordability of electricity, recognize regional differences, allow credit for early action, and avoid overreliance on a single fuel. But Congress shows no signs of acting, and EPA clearly intends to do so. "We must deal with the times we are given," Kelly said. "APPA will participate actively and constructively in the EPA’s rulemakings. We will do our best to protect our members’ interests and support sound public policies, both before the agency and, if need be, in the inevitable court appeals that will follow."

Kelly also discussed the evolving nature of physical and cyber threats to the security of the electric grid. The electric utility sector is the only critical infrastructure sector subject to mandatory, enforceable cybersecurity standards, she noted. At the direction of FERC, the North American Electric Reliability Corporation has submitted proposed standards for physical security at critical facilities. APPA will be actively involved in the FERC proceeding to consider the new standards. APPA also participates in the Electricity Subsector Coordinating Council, a group that works on increased information sharing between government and industry, and disseminates tools and technologies to address system threats.  

"...the price of freedom is eternal vigilance-—now it seems that same price has to be paid just to maintain reliable electric service. And if that is what it takes, that is what we must do," said Kelly.

In closing, Kelly said, "We need a vision that spans not just the next two or even the next ten years, but beyond, to future generations of public power customers. We need to continue to diversify our generation and demand side resources to ensure a sustainable future—sustainable in both the environmental and the economic senses of that word. We need to plant seeds, as Alex did, for the long term."

A video of her speech is on Public Power TV.


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Vice President, Integrated Media and Communications
Meena Dayak

Editorial Director
Robert Varela

Editor, Public Power Daily
Jeannine Anderson

Communications Assistant
Fallon W. Forbush

Manager, Integrated Media 
David L. Blaylock

Integrated Media Editor 
Laura D’Alessandro