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Smart-Grid Stimulus

Utilities hurry up and wait to apply for grant money.

Fortnightly Magazine - June 2009

makers to advance the standards-setting process.

The NIST (part of the U.S. Department of Commerce) effort on standards and protocols is authorized by the EISA 2007 (Section 1305) with the Recovery Act further funding these activities. NIST aims to establish a framework of concepts, principles, processes and models that will help promote the interests of smart-grid interoperability across the entire spectrum of smart-grid devices and uses. Once NIST completes its work, then FERC (primarily due to its bulk-power reliability jurisdiction) will “institute a rulemaking proceeding to adopt such standards and protocols as may be necessary to insure smart-grid functionality and interoperability in interstate transmission of electric power, and regional and wholesale electricity markets.” 4

A key part of NIST’s study effort is to evaluate business requirements and use cases and from these, decompose what devices are interacting with each other and what standards and protocols and policies pertain to these interactions. From that analysis, NIST can start putting together an understanding of the gaps and overlaps in standards and protocols. Criteria for standards and protocols include how they support such requirements as: system upgradeability, scalability, extensibility ( e.g., adding new features and devices), security, time sequencing, information logging, automatic detection and configuration, and asset identification. Part of what NIST also wants to accomplish is the development of a process that will help resolve interoperability problems as they emerge, a process predicated on deep technical expertise among working group members and a rigorously managed “interoperability knowledge base.”

In addition to its policy guidance around standards, FERC also issued guidance on March 19, 2009 about smart-grid project rate recovery. FERC’s interim guidance—until standards are established by FERC through the NIST process or otherwise—is to provide recovery for those projects that demonstrate compliance with established FERC reliability criteria and that demonstrate an ability to upgrade the system subject to recovery so as to avoid the risk of stranded assets. FERC also wants to ensure that recovery obligates the jurisdictional utility to share information about projects, especially demonstration projects that advance the interoperability challenges, with the information clearinghouse established as part of the Recovery Act.

As utilities struggle to understand the priorities and emphasis for potential funding opportunities, the federal legislative landscape already is shifting. Congress is working on new energy legislation that includes smart-grid provisions related to hybrid electric vehicles, smart appliances, and demand reduction goals. If passed, this legislation or a variant will promote new federal priorities for smart-grid advancement.

Many states have created mandates to reduce peak loads through demand-response programs, and many utilities within these states actively are evaluating and deploying smart meter and grid technologies. California, Delaware, Maryland, Illinois, Massachusetts, Pennsylvania and Texas are some of the states leading the way. Similarly, many utilities outside of these states are pursuing pilots and large deployments even in the absence of formal state mandates to do so, and in most instances securing recovery allowances for the investment. Due to Recovery Act requirements that there cannot be duplicative funding sources, state mandates to implement AMI—and to provide recovery of these investments—may blunt serious consideration