The security and resilience of our critical infrastructure is a long-standing national and economic security matter. I recently spoke at an Electric Transmission Conference about grid resilience as a national security challenge. A common question arose – namely, how we can help Public Utility Commissions (PUCs) understand the national security imperative? Moreover, how can they grow more favorable to rate recovery for utility owners making security and resilience investments?
PUCs are governing bodies that regulate organizations that maintain the infrastructure for public services such as power, water, natural gas, sewage, telecommunications, or transportation. They regulate utilities in all states, territories, and the District of Columbia. Commissioners in 14 states are elected; the majority is appointed to their positions by their Governor or Legislature. The charter for PUCs is to ensure safe and reliable utility service at reasonable rates and protect the public interest. In theory, they also foster economic development and new technologies to support competitive markets. In reality, however, PUCs have become hyper-focused on protecting consumers.
Like much of corporate America, they are unwittingly advancing a “looming crisis” in their obsession with the short term. They have failed to take a long term view or to act as an activist for the future, educating the consumers they are protecting about the need for investment and its relation to the future.[1] Looking out to the horizon is of particular importance for PUCs because any inaction related to creating a cohesive strategy for a robust, modern infrastructure represents leaves the very states and municipalities they regulate vulnerable. More importantly, it represents an existential threat to our country.
The Rise of the Rest
FSF2016 Award for Excellence in Innovation recipient Steve Case has observed that the modern world is approaching a massive technological and societal shift. He cautions that if the U.S. doesn’t get ahead of this change, our economy and our citizens are at risk of falling behind. Confirming Case’s concern, a new report from the Center for American Entrepreneurship clarifies that the real “rise of the rest” is global.[2] The report shows that the geography of startup activity and venture capital investment is undergoing a rapid and profound period of globalization. While the U.S. continues to generate the largest amount of startup and venture capital activity, its share of the global total has fallen significantly from more than 95% in the mid-1990s to around 66% in 2012, to a little more than 50% of global share today.
There is no doubt that our current immigration policy is causing many talented entrepreneurs to build their startups at home. The Center for American Entrepreneurship (CAE) believes this pattern will continue unless our government creates ways for highly skilled foreign nationals to live and work here. Equally important is understanding why people want to live and invest in a region, and what makes future employees put down roots. Infrastructure, quality of life, and cost of doing business all are critical factors.
Finding the Path to Progress
Herein lies a major example of the problem with short-term vision. If our cities, states, and regions fail to create a future vision – and the financial and regulatory paths to achieve it, entrepreneurs are unlikely to want to settle and remain in a developing area. Over the long-term, that lack of innovation and new growth will worsen the current pattern of inaction.
Even in major urban areas like Washington D.C., the lag in infrastructure development is problematic. To share a personal example, our family recently purchased an all-EV Chevy Bolt. We live in a single-family home in the District that has neither a garage nor a home charging option. Fortunately, real estate developers and the electric vehicle industry have recognized the growing demand and related challenges. New EV Charging apps point to garages that offer charging stations.
Innovation that benefits our city, nation, and planet shouldn’t be this hard. It was the negative environmental impact of petroleum-based transportation that sparked the (re)interest and (re)introduction of the electric transportation infrastructure at the beginning of this century. Innovative startups like Tesla arose to meet the need, standing as a catalyst for a new era when electric vehicles and alternative energy sources would be affordable to the average consumer, so their positive impact could spread.
Despite the promise of positive impact, we find ourselves 15 years later with major cities still struggling to take full advantage of electric transportation movement because they lack the infrastructure to support the charging requirements of the more than 1,000,000 EVS on the road.[3] With cities failing to keep up with the entrepreneurs invested in developing start-ups to solve demonstrated needs, how can we expect to attract an innovative companies and an inventive modern workforce that will keep the U.S. resilient in the global marketplace?
A Strategy and Structure for the Future
The risk environment is exacerbated by the fact there is no unified organization or strategy for infrastructure modernization. We need a national interstate vision and ambitious goals, paired with recognition that the infrastructure solution is local. PUCs, along with state and municipal leadership, must execute to ensure the infrastructure fits the unique characteristics and requirements of their communities. The myriad of stakeholders must be held accountable with measures of progress, and leadership must serve as a megaphone for one the most reliable yet underappreciated ecosystems in our country.
We propose that this collective, The Department of Infrastructure, would comprise public and private entities working in partnership (P3). Its central objective would be to accomplish the improvements not only to the physical infrastructure itself, but also to the innovation infrastructure necessary for continued development and progress. The validity of the P3 structure has been proven out through 20 years of providing the foundation for infrastructure security and resilience. Its role would include creating future value models that would provide a national decision investment framework for traditional innovation centers like Silicon Valley, but also emergent funding mechanisms like qualified opportunity zones. The entity also would educate the marketplace at large, contributing to the development of a future workforce that understands the importance of continuing to modernize our infrastructure.
November is National Critical Infrastructure Resilience and Security Month. By presidential proclamation, this period is dedicated to raising awareness of the importance of critical infrastructure and reaffirming the public commitment to keep our critical infrastructure secure and resilient. As we move into this period, take the time to consider whether your organization is prepared for the disruption and the opportunity that advancements in infrastructure will present.
How will an electrified and digitized economy change your organization? What does the shift mean for the services you provide and how will you take advantage of the robustness of services and the data generated? More importantly, are you an active partner in advocating for and realizing the future infrastructure ecosystem?
Leverage Toffler Associates’ infrastructure expertise to help you build a better future.
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[1] This is a topic of conversation we have hosted at Toffler Associates Future Shock Forum (FSF) 2018
[2] Rise Of The Global Startup City: The New Map Of Entrepreneurship And Venture Capital, Center for American Entrepreneurship
[3] InsideEV
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