[BETA] Fortnightly

On Wednesday May 7, FERC will host a conference in Washington, D.C. that might prove extraordinary. The commission staff promises not only to review the forward capacity markets now operating in New England and PJM—each a story unto itself—but also to discuss a new rate-making theory that has come virtually out of nowhere and which proposes to help solve the notorious “missing money” problem.

If the recent backlash against California’s proposed new building codes proves anything, it’s that ratepayers won’t buy into the smart-metering concept by themselves. The industry will have to sell it. How then should electric utilities, municipals and cooperatives go about introducing smart grid technologies? Two major utilities—Public Service Electric & Gas (PSE&G) and Southern California Edison—are in the early stages of doing just that

When the California Energy Commission (CEC) proposed to include programmable communicating thermostats in the state’s new building codes, it expected some push-back from home builders. It didn’t expect what it got: a major public outcry.

Smart metering is entering the public consciousness. But gaining support from consumers is tricky business, as evidenced by the recent backlash in California. Customers will accept dynamic pricing and demand-response capabilities only if regulators and utilities take a soft-sell approach.

Structural and regulatory factors have allowed utilities in some countries to leapfrog America’s utility industry in terms of technology leadership. But U.S. utilities are learning valuable lessons from international advancements.

California hopes to reap $3 billion in benefits from demand response over the next 20 years. Maximizing the potential may require the California Energy Commission to exert its statutory authority. CEC’s chair co-authors.

Policy mandates might erode public support for green-energy efforts, even in an environmentally conscious state like California, by frustrating consumer demands instead of allowing them to be fulfilled more efficiently. Recognizing real consumer value will help policy makers develop economically rational green-energy regulation.

By displacing electricity produced from fossil fuels, renewable power plants produce two distinct products—commodity electricity and a set of environmental attributes (particularly avoided emissions). These environmental attributes can be packaged into a product called a renewable energy certificate, or REC, and sold separately from the electricity. As REC markets develop, key issues are being addressed regarding market interaction.

Recent predictions suggest that the U.S. electric industry will invest $300 billion in new transmission and distribution (T&D) facilities (including advanced meters) over the next decade, and $400 billion in new power plants over the next 25 years to meet forecasted demand growth. If we start now, we can build interoperability principles and capabilities into those investments and hasten the improvements in reliability, costs, innovation and value that interoperability can deliver.

Part way through the Feb. 27 conference on electric competition, it was so quiet you could hear a hockey puck slide across the ice. No, hell had not frozen over. Rather, it was Commissioner Marc Spitzer, who had found a clever story to ease the tension and allay fears that FERC somehow might want to undo the sins of the past, and give up its dream of workable markets for wholesale power.