Micro maverick Bill Althouse sees a grand conspiracy to blot out customer-owned generation.
Distributed generation is out of the box. It's time for regulators to wake up. The paradigm has already shifted."
That's Bill Althouse talking, president of Althouse Inc. of Albuquerque, N.M., a seat-of-the pants business (he says he's near bankruptcy) that helps homeowners and businesses install on-site generation. I met him via email as I researched why, on Jan. 12, in its first official act, the newly elected New Mexico Public Regulation Commission had suspended a rule approved only six weeks earlier by the now defunct Public Utility Commission that had allowed net metering for customer-owned renewable energy and distributed generation.
Althouse, a missionary for distributed generation designed to capture waste heat (CHP, or "combined heat and power"), takes his role seriously.
"I was once the head of Arco Solar's largest distributor," he told me. "We pioneered large heavy batteries in the heyday of tax credits. But I got my heart broke when I found out we could sell all the power in the world and it would never begin to cover our costs.
"But this [DG] is market-driven. You get greenhouse savings by capturing the waste heat. Think about district heating. That's eco-industrial symbiosis. In Denmark, there's a place where they get 97 percent efficiency for the entire city. Sometimes they use the heat two or three times. But our Four Corners plant would be lucky to get 20 percent efficiency, with five times the NOx and SOx."
In talking with Althouse, I got more than I bargained for. On the local level, he's battling the PRC and Public Service Co. of New Mexico (PNM), trying to get an interconnection agreement to move ahead on his deal to install a 400-kilowatt simple-cycle gas turbine on-site at Santa Fe's landmark La Fonda Hotel, located right off the city's historic 500-year-old Plaza. He charges PNM with foot-dragging. But on a grander scale, Althouse has launched a crusade. In these waning days of rate-case regulation, Althouse accuses the entire electric utility industry of conspiring to sabotage the private market in distributed generation - saving it for themselves, to exploit fully when competition arrives.
"Every utility engineer knows that distributed generation technology is the reason power plant investments are 'stranded,'" he says. "And utilities know that obsolescence does not justify stranded cost recovery."
"WHAT BOTHERS ME ABOUT ALTHOUSE," notes Bob Hagan, spokesman for PNM and liaison between the utility and its shareholder alliance, "is that he isn't entirely disinterested or altruistic. He would have us destroy the existing utility infrastructure - and all for an expensive technology that is far from proven."
When I asked him, Hagan confirmed why the PRC had suspended New Mexico's net metering rule. The original version apparently had failed to limit the size of the customer-owned generating unit (an amended rule set the limit at 1 megawatt), whereas in the discussion sessions leading up to the rule, PNM and other utilities had understood that net metering rights were restricted to facilities no larger than 10 kW.
That PUC rule, effective Dec. 31, until the PRC zapped it two weeks later, would have required utilities to interconnect with fuel cells, windmills, photovoltaic arrays, gas-fired turbines or other customer-owned generation. To gain that right, the customer would need to satisfy "all applicable safety and performance standards" set by the National Electrical Code, Underwriters Laboratories and the Institute of Electrical and Electronics Engineers (IEEE).
Hagan adds that PNM remains concerned about threats posed to power quality by distributed generation, as PNM serves electric customers like the silicon giant Intel, whose manufacturing processes require dependable power quality.
"It also bothers me," he told me, "that the Santa Fe New Mexican [a local newspaper] bought into Althouse's argument as if it were a realistic alternative." (In her front-page article, "First PRC Action Energizes Critics," published Jan. 13, reporter Nancy Plevin said the PRC had suspended the rule "at PNM's urging.")
"PNM WAS WILLING TO WORK WITH ME," said Mark Sardella, an independent engineer who installs 1-kW PV systems for self-generation. "But all I ever got was a temporary interconnection agreement, never a final. For a solar contractor, that's a little unnerving."
Sardella also is president of the Southwest Energy Institute, a non-profit research group begun in December. His group had hailed the PUC net metering rule as the most forward-thinking in the country, and lamented its demise.
"We see utilities putting up barriers to interconnection and net metering," Sardella adds. "Every other net metering rule allows the utility to impose its own set of safety standards. But you don't need that. The IEEE developed its draft standard 929, the PV interconnection standard, so if you comply with that, and the UL guidelines and the National Electrical Code, you should be OK.
"Here we have a customer who wants to raise his energy efficiency to about 80-90 percent, by capturing the waste heat, and the utility wants to discourage that and force him to burn coal."
"BOY IS THAT A BUCKET OF WORMS," said Jerry Stevens, senior member of the technical staff at Sandia National Laboratories, when I called him in Albuquerque and asked about the net metering fight. "I assume you've heard all about our political problems here in New Mexico, with the new elected PRC taking over.
"Yes," Stevens continued, "I'm the chairman of the committee working on IEEE standard 929, Recommended Practices for Utility Interfaces for Photovoltaic Systems. It sets standards for the internal technical connection, making sure of the technical aspects of tying the facility to the utility grid. There is a perception that the standard applies only to facilities smaller than 10 kW. For that size and smaller, you can easily get a UL stamp of approval and boom, you're ready to go. But actually, 929 will work for any size of PV facility.
"Usually it takes about four to six months after you send the draft to ballot before it works its way through all the committees for approval. I thought I was ready to send 929 to draft in December, but now I think that's still several weeks off. In fact, we have a meeting of an IEEE standards coordinating committee set for February at the Electric Power Research Institute. The committee will take 929 for PV and examine why we couldn't use some of those elements for an interconnection standard for wind generation, fuel cells or microturbines."
"THE ONLY MICROTURBINE FIRM THAT HASN'T SOLD OUT to the utilities is Capstone," concludes Althouse, "which is funded privately by Microsoft's Bill Gates. And then there's Tri-Gen. They're coming in and showing that some big money can be made.
"The grid as we know it is yesterday's technology. Everyone's trying to protect their investment. They say that deregulation is the choice to buy from utility A or utility B. But the most sacred choice is not to buy, and that's not being protected.
"I could put a power system on somebody's roof and make them personally innocent of killing the planet."
Albuquerque lawyer Margo Steadman, who represents Althouse, says he has one of the most active, perceptive and ingenious minds of any client she's ever represented in her years working in the utility industry.
"The fight over the opening of the interstate grid is just smoke," she says. "While that is happening, the real battle is about taking control of distributed generation. Why no one else has figured this out is just amazing to me."
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