Often, gaining a thoughtful perspective on the retail energy industry requires an external view not rooted in the day-to-day issues of the trade. Such was the case today with the DNV GL Energy Executive Forum Keynote address by Anthony Foxx, former U.S. Secretary of Transportation under the Obama administration and current Chief Policy Officer with Lyft.
Foxx’s previous experience as secretary of transportation, as well as his earlier tenure as Mayor of Charlotte, has given him a unique perspective on how the retail energy industry can address some of its challenges and successfully move forward.
“You are in a fast-growing marketplace,” acknowledged Foxx. “Technology is moving at a rapid clip. At no point during my confirmation hearing for transportation secretary did anyone raise the issue regarding what to do about autonomous vehicles or about drones. Those things happened rapidly, so I feel a kindred spirit with you by being in an industry that is emerging very quickly.”
“The big question, I believe, for this conference is the issue around regulatory coherence,” added Foxx. “There are three primary issues that are of great importance. I call it the AAA of regulatory compliance. [Alignment. Anticipation. Advocacy.]”
Foxx walked through the details of the AAA of regulatory compliance, highlighting the need for:
Foxx thought the notion of alignment might seem odd, especially in an environment where there is a great deal of competition, but Foxx countered with an example from the airline industry, where fierce competition exists on many levels. “The catalyst was the relatively high rate of airline accidents and the understanding that when there was a fatal accident, regardless of which carrier it involved, it had a negative impact on the entire industry.”
In response, the different airline companies gathered together in the 1990s and decided they would share data on accidents and near accidents with the FAA and among themselves – along with an assurance from the government that individual airlines would not be penalized for the data they shared.
This has been in place for nearly 30 years and has contributed to the decrease in safety and the common interest.
“Executives attending this conference should look at this example and think about how it might apply to the energy industry,” Foxx suggested.
“It’s important to spend time with regulators when your regulator is not regulating.”
Another example provided by Foxx detailed how the former CEO of Delta Air Lines, Richard Anderson, would meet with him during his tenure as transportation secretary and update him on how Delta was doing. Foxx found this to be a good strategy on Delta’s part, as it allowed him to develop a relationship with Anderson and understand how the airline was managing a number of issues.
“It’s important to spend time with regulators when your regulator is not regulating,” Foxx offered. “which some of you, I’m sure, would rather stick yourselves in the eye with a fork than do this, but I would recommend that as a strategy.” Foxx believes you can build trust and a rapport with regulators, often coming up with solutions before there is ever a problem and remaining one step ahead of regulators.
The third and final area Foxx suggested retail energy executives consider in order to keep the industry moving forward was in the area of advocacy. He relayed a story during his time as the Mayor of Charlotte. In the aftermath of the recession, when Charlotte was recovering from significant job loss due to its status as a major financial hub, an idea arose to bring a major event to the city to help set its direction for the future.
“I had the opportunity to meet President Obama often during that time and each time I would see him, I would introduce myself and say, ‘Charlotte wants to host the 2012 Democratic National Convention,’” Foxx remembers. “This went on for a while, until one time, when I had an opportunity to see him again, I introduced myself and the president beat me to it, saying, ‘…and you want your city to host the 2012 Democratic National Convention.’ It was an important moment because the president now knew what our city’s talking point was.”
Foxx explained that the key regarding this third recommendation was to ensure that your audience knows your talking point as well as you do, and that it remains simple and focused.
In all, Foxx recommended that energy companies figure out how to best align with other players in the industry in order to further everyone’s overall objectives. He also suggested that companies and executives better anticipate what changes may be coming down the path and work with regulators to more effectively anticipate what may be an issue. Advocacy also needs to be straightforward and simple, making sure there are key individuals who can easily and simply carry the advocacy message.
Foxx closed his remarks with a brief Q&A with John Landry, Vice President, Competitive Markets with DNV GL. He sees an opportunity for private and public entities to work together on a number of issues. In addition, he foresees cities and urban areas continuing to change, requiring new methods of energy and transportation solutions. As a result, the energy industry must be able to anticipate what’s coming next and properly align to better solve problems before they become problems.
Foxx also mentioned that challenges within the transportation industry intersect with energy industry challenges. Four primary areas of intersection between the two include:
- The emergence of personal mobility due to increased urbanization. This is occurring in surprising places while we also see a lower rate of growth in midwestern cities and the northeast.
- Our freight system is heavily taxed. We will see an increase in freight volume by two and a half times over the next 20 years. Our highways and roads will be pushed to the limit as volume increases and concentrates more into metro areas.
- Climate fluctuations and severe weather will be challenges. Various states and the Federal Government are working hard to build systems that will help our energy infrastructure to be more resilient in the face of severe weather.
- Transportation is evolving. As technology permeates through transportation channels, such as the use of autonomous vehicles, regulation will increase. Not only will states look to implement their own regulation, but the Federal Government will do the same. This reality can perhaps initiate a move to a more common set of standards nationwide.
- Regulation coherence should be a logical outcome. As states and the Federal Government move to occupy the same regulatory field in many areas, there should be a streamlined, cohesive approach that properly aligns state and federal requirements.
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