Are Regulators’ Heads in the Cloud? Primary Challenges to Utility Adoption of Cloud-Based Solutions
While companies like Amazon, Google, Netflix and Uber are using the cloud and IoT to disrupt entire industries, offering dynamic pricing and services, utilities are lagging behind. As the energy landscape evolves, regulators must consider whether the technical and functional merits of the cloud can create value for utilities and ratepayers.
Increasingly, unregulated businesses are adopting cloud-based information technologies to improve service while leveraging back-office scale and security to generate greater value for consumers and shareholders. Burdened by outdated accounting rules that incentivize investments in legacy technology, cloud adoption by public utilities is relatively low due in large measure by the failure of regulators to consider forwarding looking policies. As the electricity grid evolves, cloud-based services will become necessary to manage a smarter, more efficient, and more distributed network and regulators will have to overcome antiquated views regarding how we think about rate-base and cybersecurity.