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SEPA Town Meeting told grid still ripe for assets

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DC, Hawaii, Maryland regulators describe potential benefits

The National Town Meeting on DR and Smart Grid kicked off yesterday with panels looking into the future of the power grid. The Smart Electric Power Alliance event is focused on a more dynamic power system and many of the speakers said the biggest changes would happen on the distribution system.

“This is the last frontier for wringing out inefficiencies in the grid,” former Hawaii PUC Commissioner Mike Champley said. “The deregulation of the wholesale markets and retail choice in the ’90s really enabled a lot of inefficiencies in… generation operation and planning to be wrung out. But if you look at the distribution system, that is for a lot of utilities, the least asset-utilized system.”

Distribution systems have to be designed to serve every individual customer’s peak demand and those do not all occur at once. Since those peaks occur at different times, adding them all up together is often three times the size of a utility’s total system peak demand, Champley said.

Using distributed energy resources can really help remove inefficiencies in the distribution system that is currently underused most of the time. Making the grid more efficient will also make it more reliable and resilient, Champley said.

Hawaii is an interesting case study since its high prices for grid power and sunny weather put it on the leading edge of distributed energy penetration. From a capacity standpoint, some of its islands are over 100% solar, which means on the sunniest days, they now have to turn down production of that resource, Champley noted.

But even in states with less distributed energy penetration, conversations are starting on how to plan for a new distribution system.

Maryland PSC Commissioner Anne Hoskins noted a lot of effort in restructured states went into maximizing efficiencies from the transmission system, but in the state, which has rolled out smart meters in most of its utility territories, now is a good time to start looking at improving the distribution system by leveraging their capabilities.

“We’re now at the point where we really have to think – how are we really going to use all of this?” Hoskins said.

Regulators, utilities and third parties will now have to come together and work on plans for what the grid of the future will look like, even if the term “planning” has not been widely used in restructured states such as Maryland.

The District of Columbia (DC) has lot in common with Maryland – Pepco is the only utility in the first and provides power to its suburbs in the latter, and both are restructured. DC PSC Commissioner Willie Phillips said at the conference that the commission does not try to regulate innovation.

“I think it may be a side effect of what we do,” he added. “Like Maryland, we’re a restructured state, so I believe that restructuring promotes competition and that competition then promotes innovation.”

Washington State is vertically integrated and has not seen the same kind of rush to DG as Hawaii, but even there, the utilities and transportation commission are starting to look at the electric distribution system in a much more granular way, Commissioner Philip Jones said.

“But why are we doing it?” Jones asked rhetorically. “Are we doing it just for traditional reliability, outage management purposes? What’s the value proposition?”

One utility in Washington is working to grow new kinds of energy storage and build a smarter grid while others have not done that in their planning processes. It is an open question for Jones and other regulators in his situation is whether they should start to push those things universally through rulemakings that apply to all utilities and entities that they oversee.

© 2016 Modern Markets Intelligence Inc.