(November 2009)Regulators are in the unenviable position of determining an allowance for ROE that’s fair to consumers and investors in a volatile economy. The cases that stand out this year...
Transforming DR and smart-grid policies into reality.
buying into not only the federal funding opportunities, but also the federally-fostered pricing reforms, is the fact that nearly all smart-grid proposals are accompanied by utility dynamic DR pricing policies.
As Congress contemplated, the FERC and other federal agencies are making progress with their EPAct and EISA-mandated tasks by:
• Implementing a common open platform for smart-grid communications and controls;
• Setting priorities for smart-grid functionalities ( e.g., facilitating DR);
• Developing a computer model to help states decide what level of DR is feasible, and to estimate the total national DR that’s feasible (which FERC estimates to be 188 GW, or 20 percent of total peak demand); 15 and
• Developing, with stakeholder input, a national action plan to provide states, localities, utilities, alternate service providers, and end-use customers with the technical and regulatory tools they need for wide-scale deployment of DR.
Standards represent another key factor in the evolution of DR and the smart grid. In EISA Section 1305, Congress assigned primary responsibility for developing standards for the smart-grid communications platform to the National Institute of Standards (NIST) and responsibility for the adoption of such standards by rulemaking to the FERC. Following a year of intensive stakeholder activity involving 1,500 individuals representing hundreds of organizations, in September 2009 NIST released for public comment a draft of the “NIST Framework and Roadmap for Smart Grid Interoperability Standards.” As the report notes, it’s “only the beginning of an ongoing process to create the full set of standards that will be needed and manage their evolution in response to new requirements and technologies.” 16 Nevertheless, the report takes the following significant steps:
• Describing a high-level reference model of the grid functionalities to which interoperability standards must be applied;
• Identifying nearly 80 existing standards that can be used now to support smart-grid development;
• Using priorities adopted by the FERC in its July 2009 Smart Grid Policy Statement and Action Plan , it establishes eight smart-grid functionalities for which standards should be developed on a high priority basis; and
• Setting forth an action plan with target completion dates for developing interoperability standards on an expedited basis for 14 high-priority areas.
Following a public comment period, NIST plans to finalize the report and send it to FERC for implementation.
Congress gave FERC numerous responsibilities for both design and implementation of its DR and smart-grid policies, including the responsibility for receiving and adopting NIST consensus interoperability standards. Indeed, FERC didn’t wait for NIST, but issued its own policy statement not only to aid NIST’s standards development work, but also to encourage states and utilities to move ahead to initiate new programs to implement priority smart-grid functions, including cross-interface communications and wide-area situational awareness, cyber security, DR, electric storage and electric vehicles. 17
In addition, Congress gave FERC the even more challenging task of providing the information, coordination, and direction needed to stimulate and enable the state and utility infrastructure development and rate-making reforms that are essential to the success of the smart grid.
Through a series of reports mandated by