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Katie Dykes Shares Lessons on Building and Regulating a Modern Grid

from Columbia Energy Exchange

48m 30s

Katie Dykes Shares Lessons on Building and Regulating a Modern Grid

Electricity affordability in New England is now a central issue, driven by structural challenges including aging infrastructure, rising transmission costs, and limited grid flexibility. While decarbonization remains a priority, the region has pivoted to address cost pressures stemming from both demand growth—such as electrified homes and data centers—and systemic inefficiencies in planning and regulation. Connecticut’s experience highlights the importance of intergovernmental collaboration, particularly through shared transmission projects and coordinated permitting reforms. Key successes include reducing permitting backlogs by 78% and advancing regional investment in offshore wind. However, significant challenges remain in ensuring that utility investments are prudently managed, especially in asset replacement projects with little oversight. Regulatory innovation—such as performance-based regulation and more transparent valuation of clean energy resources—is essential to align utility incentives with grid reliability and affordability. The region’s approach underscores that affordable, resilient, and low-carbon energy requires a multifaceted strategy involving cross-state coordination, robust oversight, and public engagement. As the U.S. faces broader electrification and supply volatility, New England’s model offers lessons in balancing environmental goals with real-world affordability and reliability for consumers.

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You can find solutions to improve the affordability of your electric costs, but it's not going to be just by, you know, implementing one policy. Some are legislated, some are happening at the utility commission, some are at FERC. They all add up to be able to reduce costs on the bill. Energy costs are a big consideration for voters in much of the U.S. today as they head to the polls for elections. But implementing decisions regarding those costs will ultimately fall on state regulators and policymakers and will vary across different regions. Today, we'll look at New England, which sits at the center of a shifting energy landscape. States there spent years focused on how fast they could decarbonize the region's power supply. Now the conversation is dominated by cost. The challenges reflect deep-seated structural issues, aging infrastructure spending, transmission costs, and a regulatory system built for a different era. And they're colliding with a new wave of pressures, rising electrification, growing demand from EVs and heat pumps, and a resurgence in manufacturing. Connecticut has spent more than a decade at the center of this shift, working to balance reliability, affordability, and decarbonization within a shared regional grid. It doesn't fully control. So our rising electricity prices are reflection not just of load growth, but also structural problems in how the system is planned and regulated. Is New England's current electricity market structure capable of delivering this combination of affordability, reliability, and decarbonization the region needs? This is Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I'm Bill Lovelace. Today on the show, Katie Dykes. Until this summer, Katie was the commissioner of the Connecticut Department of Energy and Environmental Protection. She spent 14 years with the agency. Before that, she chaired Connecticut's Public Utilities Regulatory Authority. Earlier in her career, she worked at the U.S. Department of Energy and the White House Council on Environmental Quality during the Obama Administration. We discussed what Connecticut and the rest of New England have learned about balancing affordability with the push to decarbonize the grid, and how the region states and its grid operator, ISO, New England, have moved toward more collaborative transmission and market reforms. We get into the real course drivers behind rising bills and the tension between funding new grid investment and delivering relief customers can feel today. And we looked at what other states can learn from Connecticut's experience with permitting reform, regional coordination, and the challenge of maintaining public trust as the pace of change accelerates. Here's our conversation. Katie Dykes, welcome to Columbia Energy Exchange. It's great to be with you, Bill. We're glad to have you here today to talk about a lot of stuff that's going on in the electricity markets and energy markets and the regulatory and policy aspects of that. But you are well known within the regulatory and policy community in the United States and among the states. But for those who may not be as familiar with you, tell us a little bit about yourself, where you're from, and what took you along the career path that you've had. Sure. Well, I've been really fortunate to get to serve in a lot of different roles in the energy space. I started off at the Department of Energy in the Obama administration and the Council's office there and then I did a stint at the Council on Environmental Quality and then had the opportunity to work at the state level here in Connecticut, starting in 2012. Connecticut did a really interesting thing, which is the legislature merged the energy and environment and natural resources functions into one agency called Connecticut Deep. And I've served in various roles over the last 14 years here in the state. First leading effectively the state's energy office for several years is the deputy commissioner within that merged agency. Then I was fortunate to have two and a half years serving as the chair of the Public Utility Commission, or pura, as it's called here in Connecticut, which was fascinating working directly on regulated utility matters. And then for the last seven and a half years, I've been privileged to serve under Governor Ned Lamont as the head of Connecticut Deep. So covering the whole broad sweep of environmental permitting for land, air, water, and waste, natural resource management, state parks, if you have issues with wildlife and bears and Connecticut, I'm your girl, but also still having a key role on energy issues as well. So I'm fortunate to have that vantage point. And I think my interest in energy probably stems a bit from growing up in the state of West Virginia a little bit different than Connecticut. My mom was an environmental science teacher, energy issues are obviously very present across the economy, you know, in that state. And so I think it was probably not much of a surprise that this is a sector that has really drawn my fascination and interest over the years. Yeah. You certainly have drawn from your roots in the work that you have done throughout your career. Well, when you became Connecticut's energy commissioner back in 2019, the dominant question was how quickly and effectively we could move toward a cleaner energy system. Say electricity affordability and reliability have moved much closer to the center of the political debate. Well, at the same time, we're anticipating significant new demand from data centers, manufacturing, electrification, and other sources. Looking back at your experience, what do you think we've learned about the challenge of building a cleaner energy system that people can actually afford? Well, that's a great question. I think that's a good way to characterize the debates back in 2018. A lot of the discussion was, you know, what types of generation we should be building in order to, you know, speed this transition. Connecticut, at that time, like many of the states in the Northeast were leaning hard into a huge opportunity for domestic energy production with offshore wind. And it's been exciting to see, you know, that the deployment of offshore wind move forward, you know, the Northeast, particularly New England, is a region that has not historically had a lot of sources of energy that were, you know, economically recoverable in our back yards. We had to import, you know, coal and oil and gas from other parts of the country or even other countries. And so that's been a perennial challenge for the Northeast in terms of maintaining competitive energy costs. And suddenly, we, as a result of technology advances and so on, all of this wind potential right off our shores, you know, became realizable. And I think that that drilled, you know, that that really gave policymakers a lot more confidence that rapidly decarbonizing our power generation would be realizable in a shorter period of time. Of course, a lot of things, you know, we learned a lot of things along the way. What some of these things were really things that we couldn't have anticipated. And the biggest one I think that we don't talk about merely enough is the, you know, effects of a global pandemic on the cost of energy generation, not just renewables, but all types of generation. As we've seen, you know, commodity cost increases, interest rate increases, supply chain breakdowns, those really contributed to seeing the cost of offshore wind and other types of generation, you know, increase over time. And of course, along the way, consumers were feeling that pinch, not just in our region, but nationally, we've seen some of those macroeconomic factors really influence the cost of energy inputs across the bill. And so, you know, I would say during our response to the pandemic, we were also seeing the real grounds well and concerned around affordability growing at the same time that, you know, we are experiencing more and more frequent and intense extreme weather events, which also have an impact on cost and our driver of, you know, need for reliability investment. So I think that, you know, as we stand here today, the conversation has really transitioned from just a debate about what is the best source of generation to meet our public policy needs and how much we should pay for it and so on and so forth. But really about what investments we need to make and one of the best regulatory frameworks to drive those investments in the grid itself to be able to access the generation that we need and provide electricity in a way that's reliable, given changing demand and changing, you know, weather conditions and concerns about ability to pay. Yeah. And as you note, some of these concerns over affordability are not new ones. I mean, they go back several years. We recall the pandemic and the difficulties with sourcing materials for various pieces of infrastructure. But now, of course, we have, we're seeing the projections of increase. energy demand coming as well. The U.S. Energy Information Administration just put out a report saying, projecting that U.S. electricity consumption will hit record levels in both 2026 and 2027 with growth driven by AI data centers as well as broader electrification. So we're entering a period in which electricity demand is growing after decades, a relatively flat demand. And you're making the point, too, that it does fundamentally change how regulators should think about electricity markets and utility investment. That's right. You know, New England, I think, well, first of all, I'll say that over the last several years, of course, I would say many people didn't know what an RTO or an ISO was. PGM was not like a household acronym, household word. And that now, you know, suddenly these issues are front and center. I would characterize, you know, ISO New England as sort of similar to PGM, we're a multi-state RTO. We have states with lots of different public policies, but we don't have the data center of low growth. But we are expecting and seeing low growth occurring as a result of electrification, more people shifting to heat pumps for home heating, electric vehicles, as well as good old fashioned economic growth in our manufacturing sector is driving demand increases. And we're expecting, you know, more of that to materialize. So there's been a lot of ink spilled about, you know, ways that you can harness low growth to improve grid utilization, which could have a positive impact on affordability for all customers. It can also be a driver of cost increases for customers. I think one of the tricky issues for regulators, and particularly as we think about consumer driven, you know, electrification, you know, low growth is what is the pace of that low growth actually going to turn out to be. Because you know, you know, matching the speed of deployment and of, you know, grid infrastructure and generation to when that load is going to materialize. And also, you know, is critical to tearing it up boardably. Not to mention that the kind of low growth that we're dealing with and working to accommodate in New England, if it's associated with more EVs on the road, more heat pumps and homes, that kind of demand can be different in different seasons or even different parts of the day. And so it points to, you know, the importance of being able to deploy distributed energy resources and better visibility and control on the distribution system on the grid itself to find that, you know, that sweet spot where you can integrate those loads reliably in a way that's going to be affordable for customers. Yeah. And as a parent for Connecticut or for that matter, any state, but in the case of Connecticut, it doesn't control its electricity destiny. It depends on ISO New England and as well as regional transmission and generation and decisions made by these five other states. But at the same time, Connecticut ratepayers are asked to pay for regional infrastructure. So, you know, is New England's current electricity market structure capable of delivering this combination of affordability, reliability and decarbonization that the region needs? Well, I'm more confident about that today, Bill, than I was when I first started working in the state and I have to say there's some, really proud of and encouraged by the level of collaboration that's emerged between the New England states and also with the ISO New England leadership itself. You know, it's been fascinating to see more discussion around governance as an issue in PJM. We, the New England states actually came together in 2020 and issued a vision statement calling on the ISO New England to advance key reforms in its governance structure, making it more transparent and more collaborative with the states transmission planning and market reforms. And we've made a significant amount of progress in those three areas. I'll never say we, you know, mission accomplished. There's much more to be done. But having the states come together, it was a significant effort to try to come up with a joint statement that each one of the six different states in New England could sign on to. We all have different public policies, different drivers. But when we were able to do so and speak with that singular voice, it led to some important changes. And so just to give you a few of them, first off, the ISO New England in response undertook a more active role in regional planning exercises that allowed the states to understand where investments on the grid could be helpful to access cheaper forms of generation or to better integrate our public policy needs in a more cost-effective way. And the result, just a few weeks ago, was the New England states announcing the selection of a 1,200 megawatt transmission project in northern Maine to access onshore wind resources that are fairly low cost up there in northern Maine. I mean, there's so much of work that went into both the states coming together and agreeing to share the costs of a project, agreeing on how to allocate those costs. States are notoriously bad at finding ways to agree to split the bill for things. But we did it. And of course, that all started with the ISO New England coming together and agreeing to do these planning exercises to help the states make these types of decisions. So there are some positive examples of how the states and our market administrator have been able to find ways to work together, respecting that each, we have these different jurisdictional roles and our success collectively depends on finding ways to collaborate. Is there anything you would change about the way New England plans and pays for transmission and generation? Because it is, I mean, the region does face some challenges, right? I mean, it's heavily dependent on gas. And if there's limitations on the pipeline capacity for the region, it's reliance on nuclear power has diminished significantly over the years. Offshore wind has been a big deal for the states and some of these offshore farms that come online now, but others have been set back because of opposition from the Trump administration. Is there anything more that the region needs to do to assure affordable, reliable electricity and energy generally in the years ahead? Well, I think it's two things. First, the New England states have to continue to build on their progress of coordinating for energy and transmission investment in a grid that's shared across, you know, where the costs are shared and the benefits shared across multiple states. That kind of coordination is really important to ensure that one state doesn't end up paying more than its share. It's, you know, of a project that benefits the whole region and vice versa. And one of the things I'm most proud of in my tenure working at Connecticut was, you know, just the progress that we made building, starting with strong relationships between governors who, you know, wanted to work together, which trickled down to commissioners and staff, you know, really collaborating so effectively on coordinated procurements. And this recent selection of the transmission project in northern Maine, I think is just one more data point, but certainly a lot of coordination has occurred around offshore wind investment and around securing federal grants under the Inflation Reduction Act that have catalyzed investment in the region as well. The other example that I'll point to that's really important is multi-state and stakeholder coordination around finding ways to rein in costs and having greater oversight and assurance that the investments that we're making are prudent and are going to deliver value for customers. At the same time, we know we need to build more infrastructure, you know, build out our grid to access more sources of power. We also in New England have seen rapid growth and spending utility spending on replacing aging infrastructure. Transmission is still the smallest portion of the electric bill, but for Connecticut repairs, it's nearly doubled since 2015. And this spending on aging infrastructure turns out to be one of this part of the transmission cost profile that has grown really substantially. I'll be the first person to say that we need our utilities to be fixing aging poles and wires, but we know that this category of spending around so-called asset replacement projects is one that has very little oversight from FERC and our utilities are on a double-digit ROE for building these types of projects. So, you know, as a result, our states came together with consumer advocates calling for greater oversight of these projects. And just a few weeks ago, the ice in New England filed with FERC a proposal proposal to strengthen review of these asset condition projects are really timely step. So just as we're advocating for building more new transmission, we have to be working very hard to make sure there's adequate oversight of other types of costs coming onto the bill. And that's sort of twin focus happening across the whole region. All states is an example of really good state coordination that's necessary at this period of low growth and affordability pressures. I'm glad you brought up the whole question about asset management. Doug Arrent and Robin Millicand here at the Central and Global Energy Research, as well as some of the other scholars here have argued recently that we're too quick to blame rising electricity prices on demand growth and data centers. They point instead to structural problems like inefficient infrastructure planning, utility incentives, transmission constraints permitting and the way costs are allocated. So from your experience as a regulator and state energy official, how much of Connecticut's electricity affordability problem is really a problem of how we plan and regulate the system? We have a bill that is if you look across the electric bill, we know that there's not one single lever that will solve your affordability challenge. There's lots of different systems that we're paying for in different categories, different parts of our electric bill, generation transmission distribution and public policies. And so you can find solutions to improve the affordability of your electric costs, but it's not going to be just by implementing one policy. It's going to require a concerted effort and really diligent effort to look for those for 25 different levers that you can pull. Some are legislated, some are happening at the utility commission, some are for across different jurisdictional homes, but they all add up to be able to reduce costs on the bill. And I'm really proud of some of the accomplishments that we've had over the last couple of years in Connecticut, in New England, in pulling those different levers. We worked really hard on things to reduce those transmission costs. I just mentioned that piece, working effectively with our attorney general and others to oppose the stop work orders from the Trump administration that we're seeking to halt offshore wind projects that were nearly completed was critical to preventing a significant increase in generation costs for our customers because we knew if those projects were halted, there were no ready alternative power plants ready to turn on a new England. You know, it's critical to maintain that predictability. We also have worked really closely with the legislature in Connecticut to find common sense improvements to some of our public policy programs. Our renewable portfolio standard, for example, we recognized was actually providing incentives to sources of generation that are emitting air pollution and carbon emissions. So out of step with our greenhouse gas reduction goals, sources like biomass or landfill methane gas. So we embraced some reforms to the renewable portfolio standard to better align it to our carbon goals and actually found a way to achieve millions of dollars in savings for customers as a result. And continuing to invest in energy efficiency and other programs to help bring bills down has been really, really critical. But across every part of the bill, you can find solutions and improvements to make whether it's turning a dial on changing the regulatory structure and just strengthening oversight of utilities to taking a hard look at public policy programs to figure out. How can we get more clean energy and pay less for it? For example, we have great examples of that happening across all parts of the bill in our state that I'm really proud of. But a utility regulatory incentive still better aligned with building things than with getting more out of the things that we already have. Of course, and that's one of the huge challenges. We know that since the World War II, the old cost plus model of providing a predictable ROE for utility shareholders, to deploy capital, to get more polls and wires built just to serve our customers, has been the engine of our economy, frankly, and how our great got built. But today, as we have more distributed batteries and virtual power plants on the distribution system that could enhance grid utilization, for example, on the distribution system, they can become indirect competition with traditional utility investment in expanding a substation and building out more polls and wires to meet a resource adequacy need on the distribution system. This is where it's going to require more innovative models performance based regulation is one that we've attempted here in Connecticut on to better incentive and remunerate utilities for operating the grid more efficiently. There's lots of different models being debated all across the country. Very clearly with the technologies that are now available to us, especially on the distribution system, for better activating demand management, that can be a huge unlock for customer value and affordability and reliability and speed to power, but it's going to require a very different conversation with utility investors about how they are compensated. That's a long process, right? I mean, it's one, I suppose, or I know, that is beginning in some places, it appears as I was beginning in Connecticut, but it's a slope process to implement, to persuade others to buy into at a time when the concerns over reliability and affordability just continue to build. I will agree. And so I think it's going to remain to be seen, which jurisdictions are going to be the most successful at providing that better incentive to their utilities to get the grid that we need. I think these affordability pressures are going to arrive at that, but ultimately utilities, they thrive on predictability, and you have to have some finding that marrying of our ratepayers needs for affordability and reliability are needs for public policy goals to be achieved with utility leadership that recognizes increases the need to reform these models is going to be more critical than ever. But I am optimistic that we will accomplish this because I've never seen this level of attentiveness to public utility commissions, to regulatory processes that used to be incredibly obscure. And now you see an outpouring of interest and focus from a broad range of stakeholders. And also the technology innovations that are available and the economic growth that is possible if we can solve for this gives me a lot of optimism that these models are going to emerge. It's a really exciting time. We're in an election season and I'm not going to delve very deeply or deeply at all into the politics of things, but nevertheless, electricity prices have become a significant political issue in Connecticut as they have in other states. And a lot of it is over data centers and we hear the calls from some governors and other politicians and all to put a halt or slow down the advance in them. Of course, you've mentioned that data centers are really not a big issue for Connecticut and New England, but nevertheless, you know, there is a lot of increased expectations over increased power demand there as it is everywhere. How much do you think the politics of energy have changed and does the focus on affordability represent a legitimate correction in policy priorities or is there a risk that political pressure for immediate bill relief could undermine investments that are necessary to keep the system reliable and affordable in the long term? I think in the long term, the focus on affordability, I think, is a good one. I think it has created more political support and momentum for stronger oversight, you know, just good regulatory practice than we've ever experienced before, just harping back to the example of greater oversight over those asset-conditioned projects, as well as strengthening even the time frame for a rate case, you know, that was the big deal in Connecticut. We had one of the shortest time frames in the country. The legislature chose to, you know, provide for more time for regulators to conduct those rate cases. And that came from just, you know, recognizing there was a lot of rape here, concern of storm response and utility costs. So it has created a space to have better resources. Which I think helps both utilities and rate pairs and public policy over time At the same time, I think that there's also One of the challenges is that Look sometimes the most impactful step you can take is to spend now to avoid having to Spend even more in the future, right? Or some of the most the biggest wins that we've achieved for affordability are Preventing cost from being higher for a program than they otherwise would be take for example the reforms to our renewable portfolio standard But those don't those kinds of wins don't translate really readily to customers who are who are Experiencing real pain, you know for going refilling a prescription or being late on their on their rent Because they couldn't afford, you know their utility bill and so So I think that has been a critical recognition I think coming from a political leaders is that delivering relief to customers, you know these solutions all have to be They have to be sound they have to you know work well, but they also have to provide something That's meaningful and real to customers today, and you know some of the steps that we've taken here in Connecticut We're you know involved Securitizing certain costs related to Repairing storm damage on our Distribution system, you know those would have been a big lumpy cost that if would have come on to customers bills Spreading those payments out over time and using public finance for that was a solution that we reached for Also using state bonding to help cover some of the costs of things like Rearage and hardship programs that were really important to have available during COVID for folks who are falling behind on the bill But those costs became really significant and so finding ways to Help alleviate some of those near-term big, you know expenses To provide some relief for customers bills that they could feel today Has to be you know, it's a necessary part of the solutions that at a time that Great hairs are experiencing a lot a lot of affordability challenges And with this pressure comes the risk right of Cutting back on some programs who were adopted previously with with good intentions Whether it was energy efficiency or emissions. I'm thinking you know Reggie the regional greenhouse gas initiative to Reduce carbon emissions or energy efficiency programs. There is some cost attached to that. There's a term public Public interest them public. Yeah, attached to those types of programs. There's some You know, there's some risk to those programs as well that people that there may decisions Maybe made to cut the cost of those programs or to even eliminate them as has been considered with Reggie and some states in the past. Yeah, not speaking to Reggie, but I'll just say in general Yeah, there's a lot of the debate that's been framed particularly in Washington around you know energy costs has been a Again, back to you know a focus on which types of generation are the most you know are the best right fossil resources versus clean and so on And I think it's been really important and I think our experience in New England has shown that we We really need to stop thinking about you know clean energy investment as just a climate policy Clean energy investment is also an important price risk management tool for States like in New England. You know New England is a grid that's heavily, you know supplied by natural gas Powered by natural gas and and during the war in Ukraine. We saw you know significant spikes in gas commodity prices which directly translated into more volatility on the energy bill The you know so investments in solar and wind which have no fuel costs are Helping to you know drive down emissions and primary quality, but they also provide a hedge Against the price volatility of of delivered fuels and so it's really teasing apart Those different benefits that these resources provide to the grid is really important to have in the conversation But I will be someone who will say you know all day long The key that we need to focus on is how to get those those clean energy resources and those benefits from our clean energy resources At the lowest cost possible and and that's where I think some of these tools that are so important You know we're regulatory schools they're like improving You know streamlining permitting making permitting go faster can have a direct impact although hard to quantify on Making energy sources more affordable Seeing with appliance regulations, you know, the the story about LED lighting right of course is one of a massive Energy affordability tool, but it's a regulatory tool and so those can be a little harder sell In today's environment Sometimes because the savings are harder to quantify, but they are very much Need to be a part of every governor's toolkit for helping to address these challenges Well given that and given the times that we live in these days. What does New England's optimal generation mix look like now and but or has that debate become Too ideological about particular technologies and options. Well, I think you see many governors including governor LeLondt You know talking about the importance of a and you know, or openness to an all the above Approach I you know, I think that something that I'm really encouraged by is the The ISN New England Is working on some reforms to the capacity market in New England again. It's a little less attention than BJM, which is fine, but You know, there's been a move by the ice in New England to provide for for more granular Way of crediting different types of resources based on when they can actually perform and supply customers And why that matters is that you know a decade ago we were fighting over This thing called the mooper and you know, whether a state's Investing in clean energy resources to meet public policy was somehow interfering With you know the capacity market and crossing jurisdictional lines Today again, I think you know because of this this more collaborative approach That states and the ISO are embracing the the idea we've moved away from Or moved towards just you know a more transparent way of Valueing these different types of resources that better reflects their their contribution to reliability Offshore wind is an important resource for meeting you know long-term decarbonization goals But it also happens to perform really well during the winter time You know during those multiple day cold snaps that are the Achilles heel of the you know A reliable grid for New England and I think that that move by the ISO to really provide for this more transparent accounting of the The capacity Contribution of these different types of resources offers policy makers a way to transcend this this old sort of like clean versus Fossil, you know green versus brown Debate and focus on the the most cost effective ways to meet you know provide for a reliable affordable grid You know Connecticut as you know it hasn't experienced the scale or of data center development We're seeing in Virginia, Texas or parts of the Midwest, but the national debate over large electricity uses raises a fundamental question of when a new industrial customer or a data center Once hundreds of megawatts of power who should pay for the infrastructure needed to serve it? Yeah, these are the classic issues that regulators are tap you know have tackled and and utility commissions Of course, we have not had a lot of data center development in New England But I think that there are opportunities to get this right You know not not speaking to the the data center, you know some of the tariff designs and so on that have been developed in other parts of the country But you know if you look at the the New England grid and in Connecticut for example We experienced a wave of deindustrialization You know in the 70s and 80s and 90s as manufacturers fled to lower cost places to produce and that's created in some pockets of our grid some opportunity we're adding Manufacturing load could actually increase utilization of the grid and lead to a more efficient use of the system of being able to spread the costs of our distribution system Across more or kill out our sales more customer base Connecticut to two years ago our legislature Enacted a goal. I think maybe one of the first in the country to improve the efficiency of our overall system and increase grid utilization and It's great to see other parts of the country, you know other jurisdictions are are tackling and pursuing that opportunity as well This is something that I think could present a really positive model as it as it emerges in our state and and also Another parts of the country and if the the needs just seems so enormous. I was just looking at a piece that appeared in latitude media recently It was a new research from the nonprofit group power lines And they found that utilities are gearing up to spend $1.4 trillion of the next five years across 51 investor-owned utilities, and the executive director of power lines, Charles Waw, said to latitude, "This is a tremendous amount of spending. It's like three interstate highway systems worth of spending. It's thousands of Hoover dams worth of spending." Wow. It's really, really remarkable, and so as those great resources are getting built out, it's more important than ever that we have the regulatory framework to ensure that those dollars are spent to borrow the term that every regulator uses and maybe gets overused it, but prudently, right? And so I've been someone who's been a fan of even inciting our utilities to right size projects, build them bigger. The first time it produces some of the cost of permitting and the challenges of citing over the long term and helps us to better interconnect more generation, more readily. But you can only afford and be willing to allow for that right sizing if you have that trust in that confidence that comes from a strong oversight that the utilities are not overspending in other categories of great infrastructure, such as those asset condition projects. So I think we're moving in a good direction, new England is moving in a good direction. It was great to be able to be part of some of those reforms when I was with Connecticut Deep and it's going to be exciting to see what the region will accomplish going forward. But as you describe, Connecticut has been something of a laboratory futility regulation on affordability, grid modernization, distributed energy resources, demand response. And it seems the way regulators think about costs and benefits of energy transition. What can regulators in other states learn from Connecticut's experience, both what has worked and what you would do differently? Well, I think I would put it the other way. I think we were constantly trying to copy off the homework of our neighboring states if we saw something that was working well. And I'm constantly, you know, inspired by the creativity of other states who are tackling issues maybe a little ahead or a little differently than we were in Connecticut. I do think that we, one of the structural advantages that we've had in Connecticut is having this merged agency that includes energy and environment and natural resources under one roof. I think it gave us a lot of ability to be more comprehensive in the policy work that we were doing. We designed a climate resilience incentive program that leveraged all the best knowledge of our, you know, water resources team that was, you know, knew what to do to mitigate flooding and also incorporated microgrids and protecting substations and critical energy infrastructure as part of that climate resilience program. So there's a lot of synergies there. Our energy facilities citing process is able to take an account, not just environmental impacts, but how to accelerate environmental permitting, for example, on landfills and brownfields and previously disturbed sites that, you know, has been critical to helping get more projects built before, you know, tax credits were expiring. When we are working really hard at the outset of our offshore wind journey, you know, we can able to engage marine fisheries experts to help review mitigation plans. It's not – and now as we tackle the possibility of new nuclear in New England, it can actually be able to leverage the expertise of radiation safety experts as well as folks working on energy procurement. So I found that to be really valuable to achieve more comprehensive policy where we were able to, you know, leverage a different staff expertise within one agency. It's not a must-have. You can accomplish the same thing if energy and environmental and separate agencies, if you have strong governor's office coordination or cloud relief relationships among the agency heads, but I did find that it was pretty helpful, and it also kept us really busy. Yeah. Anything you would do differently? I think that – I think there is just – it's not doing differently, but doing more. One of the things I'm most proud of is the work that we tackled in terms of improving permitting and citing processes. And Governor LeMont asked me to take on the role of deep commissioner. He said he was hearing a lot that our permitting processes were too unpredictable. It was like a black box, folks didn't know how to navigate it. And so we've launched an initiative called 20 by 20 and the 20 by 26 to set performance goals to improve permitting. This was back in 2018 before permitting the scheme, like the big buzzword. We set expected time frames for all of our permitting processes. We reduced permitting backlogs by 78%. We now have launched a process just before I left to explore the use of more AI and IT tools to speed up permitting and improve the quality and consistency of environmental views. There's so much great work happening at the state level across the country in this space. I think that the thing that – if you asked what I would do differently, I think that the next challenge that we face in terms of permitting is not just the technocratic ways to speed things up and make process go faster, but how do you maintain public trust and consensus around the permitting process in the first place? And at a time where I experienced during my tenure again, largely, I think, a result of COVID, the trust in government is at a low and it's really hard to speed up a process if the public is skeptical about the whole enterprise in the first place. A permitting process is designed to ask, is this the appropriate – is it appropriate to put this technology in this particular place and have this particular person build it? But it may not be the best place to get into those existential questions of, like, would it better technology be better, or how does my community even benefit from this technology being built? I don't have to do more to think about how to improve processes. We want them to be predictable and fast, but we also need to bring the public along with these decisions at the outset to understand what state they have in Project Skating Build. Big challenge, a big need, as we see across the landscape these days when it comes to electric power, energy needs, and public support, and as well as affordability, reliability, emissions, all of those things, a lot out there, but a lot has been done in Connecticut as well. Katie Dykes, thanks for joining us on Columbia Energy Exchange. It's been a pleasure, thanks so much for having me on. That's it for this week's episode of Columbia Energy Exchange. Thank you again, Katie Dykes, and thank you for listening. The show is brought to you by the Center on Global Energy Policy at Columbia University School of International and Public Affairs. The show is hosted by Jason Bordoff and me, Bill Loveless. Mary Catherine O'Connor, Dara Diamond, and Q. Lee produce the show. Greg Ville Frank engineered it. You'll find more information about the show or the Center on Global Energy Policy online at energypolicy.columbia.edu or follow us on social media at ColumbiaUenergy. If you like this episode, leave us a rating on Apple, Spotify, or wherever you get your podcasts. You can also share it with a friend or colleague to help us reach more listeners. Either way, we appreciate your support. Thanks again for listening, we'll see you next week.

Podcast Summary

Key Points:

  1. Rising electricity prices in New England stem from structural issues like aging infrastructure, transmission constraints, and inefficient regulation, not just demand growth.
  2. States have shifted from focusing on decarbonization to balancing affordability, reliability, and clean energy in a shared regional grid governed by ISO New England.
  3. Cross-state collaboration, especially in transmission planning and permitting reform, has improved coordination and enabled shared investment in projects like the 1,200 MW Maine transmission line.
  4. Regulatory oversight of utility spending—particularly on asset replacement and infrastructure repairs—needs strengthening to ensure prudent, cost-effective investment.
  5. Clean energy investments, such as offshore wind and solar, provide both emissions reductions and price stability by hedging against fossil fuel volatility.
  6. Policy tools like renewable portfolio standards and energy efficiency programs must be reformed to align with climate goals and reduce costs for consumers.
  7. Distributed energy resources and demand response offer opportunities to improve grid efficiency, but require innovative regulatory models like performance-based regulation.
  8. Public trust in permitting and energy policy is critical, and balancing speed with transparency and community engagement remains a key challenge in achieving sustainable reform.

Summary:

Electricity affordability in New England is now a central issue, driven by structural challenges including aging infrastructure, rising transmission costs, and limited grid flexibility. While decarbonization remains a priority, the region has pivoted to address cost pressures stemming from both demand growth—such as electrified homes and data centers—and systemic inefficiencies in planning and regulation. Connecticut’s experience highlights the importance of intergovernmental collaboration, particularly through shared transmission projects and coordinated permitting reforms.

Key successes include reducing permitting backlogs by 78% and advancing regional investment in offshore wind. However, significant challenges remain in ensuring that utility investments are prudently managed, especially in asset replacement projects with little oversight. Regulatory innovation—such as performance-based regulation and more transparent valuation of clean energy resources—is essential to align utility incentives with grid reliability and affordability.

The region’s approach underscores that affordable, resilient, and low-carbon energy requires a multifaceted strategy involving cross-state coordination, robust oversight, and public engagement. S. faces broader electrification and supply volatility, New England’s model offers lessons in balancing environmental goals with real-world affordability and reliability for consumers.

FAQs

Rising electricity prices are driven by structural issues like aging infrastructure, transmission costs, and regulatory inefficiencies, compounded by increased demand from electrification, electric vehicles, and data centers.

Connecticut has balanced decarbonization and affordability by reforming its renewable portfolio standard to reduce emissions and cut costs, investing in energy efficiency, and improving permitting to accelerate clean energy projects.

Regional coordination among New England states has improved transmission planning and market reforms, enabling shared investment in projects like the 1,200 MW transmission project in northern Maine and stronger grid reliability.

Increased demand from EVs and heat pumps is driving load growth and seasonal variations, requiring better grid management, distributed energy resources, and more flexible transmission planning to maintain affordability and reliability.

Connecticut has implemented reforms to its renewable portfolio standard, expanded energy efficiency programs, and introduced longer rate case timelines to allow more thorough oversight and reduce utility cost overruns.

Yes, with stronger regional collaboration, transparent governance, and coordinated investments, New England’s market structure is increasingly capable of delivering all three — though ongoing reforms are still needed.

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