[BETA] Fortnightly

Despite overwhelming theoretical and empirical evidence, we aren’t seeing more DR when it is needed most—during emergency periods. The reasons boil down to two obstacles, both of which must be addressed before widespread DR implementation can move forward.

After pleading with Congress for so many years, and then at last winning the requisite legislative authority to impose mandatory and enforceable standards for electric reliability, to replace its legacy system of voluntary compliance, NERC finds itself at a curious juncture. It wants to slow the transition.

The North American electric power grid has suffered several significant outages in recent years. These events and other incidents around the world spotlight the need for enforceable grid-reliability standards, wide-area visibility of the health of the power system, and real-time monitoring of grid-reliability performance to prevent blackouts. Effective reliability management requires real-time tools and technologies that can detect standards violations so that timely corrective or preventive actions can be taken.

A look at how regulators, grid operators, and consumer advocates in Arkansas, California and Connecticut have posed challenges to established law and policy at FERC.

The idea behind the NIETC is a noble one: to help facilitate the construction of badly needed transmission capacity to relieve congestion problems and improve reliability. In fact, the promotion of new infrastructure investment is at the heart of EPACT. But there’s just one problem. The new process for permitting and siting electric transmission under EPACT appears to be as flawed and contentious as it was pre-EPACT.

Hold on to your hats. The vaunted and vilified “standard market design”, once thought dead and buried, has been resuscitated, with all attendant chaos and rhetoric, but this time in the guise of a new proposal under the code name “open dispatch.” This new construct, as remarkable in its way as Einstein’s theory of indeterminate space and time, declares that electric transmission, long seen as one of a triumvirate of unique and essential utility industry sectors (along with generation and distribution), is little more than a mirage.

Something seems deeply disturbing about the utility industry these days. An almost palpable tension rises whenever the utility CEO is asked how he will build enough power plants to meet the skyrocketing demand for power. Some consultants predict that sometime after this decade the time will come when utilities won’t be able to build enough to meet demand, no matter what they try.

The most important action regulators can take to minimize consumer electricity costs is, and will continue to be, ensuring competitive wholesale markets, while demanding a rich mixture of products from the suppliers in these markets.

FERC granted formal certification to NERC as the nation’s sole ERO and reliability czar, making it inevitable that NERC would delegate the job of regional enforcement to its various regional reliability councils, already constituted. To understand why FERC acted as it did, turn back the clock nearly a decade.

Higher electricity prices have drawn sharp attention to the design of organized wholesale electricity markets—particularly to areas where residential customers’ rates will increase because multi-year rate freezes are ending. Some suggest changing the way that markets set wholesale electricity prices, or doing away with competitive markets entirely and returning to government regulation of prices. They say that the design of the markets exaggerates the effects of natural-gas price increases and unfairly rewards generators that use lower-cost fuels.