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EXECUTIVE SUMMARY SCOTTMADDEN, INC. | 4 Neither Fish Nor Fowl The energy industry is in a period of transition. Distributed resources, like rooftop solar photovoltaics, are taking hold. Non-traditional players are increasingly involved in energy-related endeavors. Natural gas remains cheap, which along with proposed environmental regulations and other mandates, is prompting changes in the power generation mix. Regulation and business models are evolving, too, as traditional utility roles and functions are being reconsidered. Thus, stakeholders are acting and reacting to technology, regulation, and operating models that are sometimes “neither fish nor fowl.” Neither Fish Nor Fowl Neither fish nor fowl (phrase): of indefinite character and difficult to identify or classify; like one thing in some ways and like another thing in other ways Some Highlights of This ScottMadden Energy Industry Update Blurring Operating Boundaries • Roles and responsibilities that were the exclusive province of utilities are being assumed (or at least impacted) by new utility- related energy services such as distributed generation (largely solar photovoltaics) and microgrids. Critical questions remain, though, such as who is responsible for reliability? Blurring Technology Boundaries • Operating technology and information technology are merging with increasingly ubiquitous digital systems, leading firms to seek converged cybersecurity solutions • Energy storage is of increasing interest and proponents advocate looking at the multiple value streams that some storage technologies can provide, but classifying it according to the traditional power system rubric of generation, transmission, or distribution is proving tricky • Gas-fired generation and utility-scale renewables continue to grow and are the nation’s shifting power supply portfolio. Influencing this trend is the still uncertain legal outcome of the Clean Power Plan Blurring Regulatory Boundaries • Frictions at the regulatory boundaries of each of the Federal Energy Regulatory Commission, the U.S. Environmental Protection Agency, and state regulators are having legal ramifications, as energy industry stakeholders seek to determine their limits— and the rules of the road—in “seams” areas such as wholesale power markets, emissions regulation of power generators, and demand response compensation