FERC

The North American Electric Reliability Corp. (NERC) holds substantial enforcement powers as the nation’s electric reliability organization for bulk power transactions. Taking affirmative steps will help utilities and system operators to avoid or minimize NERC penalties.

These are challenging times for the electric and gas utilities. Reliability projects, renewable portfolio standards, greenhouse-gas emissions control, AMI, smart-grid investments, and conservation programs—all these things add to costs, but might bring in no additional revenue. Moreover, there will be unprecedented capital investment in transmission, renewable generation projects, and replacement of old facilities from the 1950s and 1960s. Thus, earnings likely will be more closely watched and traditional general rate cases might not be able to keep up.

Six weeks ago, FERC opened a notice of inquiry to invite industry comments on whether wind, solar, and other intermittent energy sources face unfair obstacles in wholesale power markets. Now assigned their own acronym—VERs, for “variable energy resources”—renewables make up a growing percentage of the nation’s energy supply portfolio. But as FERC notes, they present “unique challenges,” especially in terms of constraints on location and limits on the degree to which system operators can control or dispatch individual VER units. Thus, FERC suggests that certain common rules and practices, such as those for unit commitment, dispatch, and scheduling, might make it overly difficult to integrate VERs into the grid.

The IEEE P2030 Work Group is developing standards to encourage seamless deployment, integration and operation of energy, information and communication technologies across the smart grid. Utility input and engagement is needed to produce workable standards.

Power delivery efficiency gains constitute a valuable utility asset that can offset or defer new generation and T&D investments. Enabling technologies, utility demonstration projects and supporting regulatory frameworks are needed to validate potential savings.

In light of all the excitement created by smart-grid regulatory initiatives and stimulus funding, three clever tech startups have come forward with proposals for novel grid projects. In California, Western Grid Development proposes to install energy storage devices ranging in size from 10 to 50 MW at various discrete and strategic locations in PG&E’s service territory where the California ISO has identified reliability problems. Second, a company called Primary Power proposes to deploy a total of four advanced, 500-MVAR static VAR compensators (SVC) at three separate locations within the PJM footprint. Third, in Clovis, N.M., Tres Amigas plans to allow power producers to move market-relevant quantities of electric power and energy between and among the nation’s three asynchronous transmission grids: ERCOT and the Eastern and Western Interconnections.

Regulatory policies are evolving to make demand response and smart-grid planning a reality across the country. Cooperation between federal and state lawmakers will allow local flexibility within a uniform national framework.

Pilot projects are demonstrating the potential of smart metering and smart rates to make the most of supply and demand resources. But as empirical studies show, not all pricing designs are equally suited to every region.

Now that fuel prices have fallen recently from the highs seen in 2008 and wholesale electricity prices also have decreased, it might be tempting to attribute the lower prices to the restructuring of the wholesale electricity markets. Unfortunately, it’s a little more complicated than that.