Commission Watch

Feds seek plug-and-play for distributed generation, but utilities want the power to stay local.

Pity the poor Federal Energy Regulatory Commission (FERC). With its market crusade out of favor, and transmission reform suddenly suspect after the Aug. 14 blackout, it could use a new agenda. And what better than to promote the development of smaller, distributed generation (DG) plants closer to load, to minimize reliance on a widely diffused power grid that some now see as one of the nation's most vulnerable economic assets?

Indeed, FERC this past July had proposed a new set of standards for the connection of small- and micro-sized power plants units to regional transmission networks, or even to radial or local distribution lines operating at low voltages. (See Notice of Proposed Rulemaking [NOPR] Dkt. No. RM02-12, July 24, 2003, 104 FERC 61,104.) And just about the time the proposal emerged, the Institute of Electrical and Electronics Engineers (IEEE) was releasing its Standard 1547 (Standard for Interconnecting Distributed Resources with Electric Power Systems), raising hopes for plug-and-play for fuel cells, wind turbines, and reciprocating engines.

Yet the commission still waits in vain for the applause. The reaction to its small-gen proposal has been tepid, if not angry.

Opponents fear a threat to reliability if small gen units come on line without sufficient study by transmission owners. They urge no retreat from "good utility practice." But to the small-scale generators, the joke in the negotiations room was that the only "good utility" is one that is willing to interconnect. A coalition of such firms (Plug Power, BP Solar, the American Wind Energy Association, etc.) sees reliability as a red herring.

"The underlying issue," they say, "is not whether interconnection of small resources harms reliability." (After all, as the coalition points out, small-scale units are generally built downstream from the points where the biggest failures occur.) "The true threats to reliability," the coalition insists, "come from grid constraints, large power plant outages, and high-voltage facilities."

The Rule: Bright Line and Dual Use

State authorities in California, Texas, New York and Ohio (making up nearly a third of the nation's population) already have adopted rules governing the interconnection of small-scale generator units with electric distribution lines, and as of October, draft rules were under development in New Jersey.

The California Public Utilities Commission (CPUC) offers statistics showing the wide acceptance of DG interconnections under state-sponsored programs:

• California: 2,000 MW of DG (350 MW installed since 2001), representing 3.5 percent of statewide generating capacity
• New York: 5.197 MW
• Texas: 220.3 MW (plus 1,213.35 MW of renewables)
• Ohio: 265.5 MW
• New Jersey: 10 MW Class I DG renewables (plus 5 MW photovoltaics)

Further, the U.S. Department of Energy says it expects 20 percent of new generation to come from DG by 2010. But who will run the show?

Clearly, FERC anticipates that many of these new small-scale generators will interconnect with state-controlled distribution lines but also will participate in wholesale markets, throwing some "wholesale electrons" on to those lines, thereby creating a hook for federal jurisdiction.

If that happens, according to