Power infrastructure: Washington UTC


State Commissioners

Fortnightly Magazine - June 2024

Ten Commissioners discuss their concerns about electric power infrastructure.


PUF's Paul Kjellander: What are the most important needs for electric power infrastructure?

Commissioner Ann Rendahl: In addition to the transmission needed to bring on the utility-scale renewables, clean energy, and capacity that is being built outside of the load centers, and the amount of energy and capacity needed to meet the growing demand, we need to focus on the distribution system. Some utilities have started focusing on creating a smart distribution grid infrastructure.

The distribution system needs communication and management systems to provide a greater understanding of what's happening on the distribution grid as large and small customers are installing more distributed energy resources. With this understanding of what's happening on the distribution system, utilities can better manage peak demands and ensure reliability.

In addition, for both the distribution and transmission systems, the most important needs are focusing on system resilience and mitigating extreme weather issues; both hot and cold weather, wildfire protection, wind, and protecting generation equipment, transformers, distribution and transmission lines, to ensure reliable electricity for customers. Those are the big issues that I see.

PUF: What are the greatest concerns within this infrastructure? The pieces that if you don't deal with now, you're going to regret.

Commissioner Ann Rendahl: It's beefing up how resilient the infrastructure is to extreme weather. Replacing or upgrading the problem areas of your system susceptible to wind, tree strikes, to ensure consistent operation in heat or cold, and addressing the problem areas of your system that could spark a wildfire or be seen as sparking a wildfire.

That's a huge financial risk for utilities, as well as a safety risk for their employees and customers. Utilities also increasingly need to protect their systems from physical attacks, which we've seen, and cyberattacks, the threat of which just doesn't stop.

PUF: Do there need to be changes? Do you have what you need in terms of being able to deal with some of the infrastructure needs you see coming?

Commissioner Ann Rendahl: From the regulator's perspective, there is always the argument that utilities do not get recovery for costs fast enough, that regulatory lag creates a barrier to meeting their infrastructure needs. We've done a few things in Washington State to address that issue, including allowing for recovery of investments in rates up to four years beyond the rate effective period.

The rate recovery process will never be perfect because utilities always must come to the Commission and get approval for recovery of expenses — there will always be some lag. But allowing recovery in rates on a provisional basis, then reviewing the rates to ensure the utility put in service projects it said it would build, is a process our legislature adopted, and we are in the process of implementing.

The process includes an annual review, with a refund option if the utility was not able to put the plant in service, as the utility should not be recovering costs for or a return on assets that are not in use.

There's such a need for additional capacity that we're looking at addressing how utilities can get a return on a purchase power agreement to make it worth their while to get the capacity they need. It's going to be a continuing conversation about how to make the regulatory process as efficient as possible and as close to the need for recovery as possible.

The Washington Commission has also approved trackers for wildfire prevention and mitigation costs, which helps with recovery of costs for these important efforts. I don't think there's a single magic solution. It's going to be a suite of things that we continue to improve on over time.

PUF: Looking out twenty years into the 2040s, how different do you think the electric power infrastructure will look as we move forward with decarbonization?

Commissioner Ann Rendahl: There will be more nuclear power on the system. There'll be more battery systems on the grid, both on the distribution and the bulk power levels. The distribution grid, with increased distributed renewables and storage, will provide more demand flexibility to the system.

There'll be things we haven't heard of yet. Hydrogen will likely be an important resource for reducing emissions in industrial systems, but not so much for serving residential and distribution system customers.

As the grid is decarbonized, there will be solutions for different parts of the industry sectors that work best for them to continue to be competitive in their businesses. There's no one size fits all here. We have to continue looking at the most efficient ways of serving customers, the most affordable ways of serving customers, and still reaching our goals.

We don't know everything we're going to need, but we should try to plan for things as we start learning about them. I appreciate all the work the Department of Energy is doing, and all their commercial lift-off reports to provide the information, details, and plans for these potential options that do need to get to commercial viability.

But at the same time, utilities should be planning for various options, some of which in the long term may come to fruition and some may not, but still include what is the best, least-cost effort for customers.

PUF: How do infrastructure needs compete with concerns about affordability?

Commissioner Ann Rendahl: It's not a competition, but we will need to continue balancing infrastructure needs and affordability as we go forward. Customer affordability is one of the biggest issues we face, not just addressing the needs of those customers who have difficulty affording this essential service but ensuring that the solutions for affordability do not create financial pressures for other customers.

In a perfect world, there is a lot we need to do to reach the goals that states like Washington have or even to meet the growth needs of states without clean energy goals. There is so much that we need to do to protect the electric grid from cybersecurity, to protect against wildfires, and to meet the growing demand with whatever capacity we're putting in.

We are also seeing that the risk of wildfires to the grid impacts a utility's ability to attract capital to improve its system, and insurance becomes either unaffordable or not available. These costs create additional affordability issues for customers.

These important expenses are going to continue to increase, yet there is a large segment of the population that is not seeing the economic growth, and will continue to have issues with affordability, with being able to pay.

We're going to have to continue to figure out how best to manage that, to prioritize expenses, because if a utility's customers can't pay their bills, then the utility won't have the necessary funds to operate, unless the utility is getting funds elsewhere to serve its customers.


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