Commissioner Sherina Edwards just completed her term on the Illinois Commerce Commission (“ICC” or “Commission”). I am honored to catch up with her this month to discuss NextGrid and the future of the electric industry. This is a must-read for utilities and anyone interested in the utility of the future.

Q. Commissioner Edwards, thank you for taking the time to provide me with this interview. Let’s just dive right in. Why is it important for the Illinois Commerce Commission to do a “NextGrid” Modernization Study?

One thing that all parties in the electricity industry agree on is that with new and ever-changing technologies, the industry will evolve more in the next ten years than it has in the past one hundred. What we don’t necessarily know is how these changes will affect the system and what part the key players – consumers, regulators, utilities, policy advocates – will play in this evolution.

NextGrid is a statewide collaborative that will bring those key stakeholders together to address these critical issues by examining the use of new technologies to improve the state’s electric grid while also minimizing costs to consumers.

Illinois is not new to progressive and trailblazing leadership from customer choice laws in 1997 to the Energy Infrastructure Modernization Act in 2011 and, lastly, to the most recent Future Energy Jobs Act at the end of 2016. Illinois, and the ICC, as the energy leaders in the state, would be remiss if it did not address these coming changes that will face the utilities and ultimately every citizen in the state of Illinois. At the end of the 18-month process, NextGrid should serve as a guiding tool for all key stakeholders in how we can continue to work together to implement some of these significant changes.

Q. What do you think is currently the biggest challenge facing the utility industry?

I think the biggest challenges currently facing the utility industry are the silos built up between all of the key stakeholders. There so often seems to be a hard wall between industry, the regulators and the consumer advocates. In a day when the conversation regarding the utility of the future is based on the evolving and changing consumer, from passive to active, having all relevant players at the table is something that is required if we truly are going to make the massive improvements on all fronts in the industry from grid modernization to consumer education and understanding.

Q. It is an exciting time as more and more nontraditional companies are becoming involved in the utility industry. What advice do you have for these entities regarding their need to understand the existing regulatory framework and the ICC’s concern for customers?

My advice to non-traditional players is to work with both the traditional players (e.g. utilities, consumer advocates, etc.) and the Commission early and often so that their strategic goals and products can be integrated into Illinois’ energy landscape more seamlessly.

The ICC’s official mission is to balance the interests of consumers and utilities to ensure adequate, efficient, reliable, safe and least-cost public utility services, while promoting the development of an effectively competitive energy supplier market. You’ll notice that both consumers and the development of a competitive energy market are included there. Ultimately the Commission’s job is to balance these sometimes-competing interests, but I fear the perception often is that regulators are “against” the non-traditional companies and favor the status quo. In reality, there are so many experts throughout Illinois, particularly at the Commission, who can guide new entrants through the process of integrating their products and services. My experience has shown that Commissioners view their role as a unique opportunity to unite stakeholders and encourage dialogue, not create difficulties for non-traditional stakeholders. However, the onus is on these types of stakeholder to engage in coordination and discussion via formal initiatives, such as NextGrid, and informal conversations; when companies operate in silos, they are ultimately doing themselves a disservice.

Q. Do you envision a need for legislative changes to fully address the rate design challenges utilities face regarding DER and Micro-grids?

Because the goals and vision of each Commission can be different, I think updates to legislation are the surest way to guarantee that the current Commission’s emphasis on increased technology and innovation continue in perpetuity. A change to legislation also gives utilities and other stakeholders the certainty they need to make investments and plans for the future. However, I also think that market transformations and shifting customer expectations will continue driving the demand for increased DER, micro-grids, battery storage, etc., regardless of if/when laws and regulations change.

I personally believe that it is important for Commission regulations and State legislation to keep pace with these kinds of changes, but I also recognize that not all stakeholders can afford to wait for “regulatory lag” to catch up with in real-time innovation. I think the NextGrid process is a big step in the right direction for regulators in Illinois. While the long-term goal may be legislative certainty, I think we are on the right track for the short-term by engaging with stakeholders and investigating how processes like rate design will be impacted by the integration of new technology.

Q. There is a concern nationwide about the aging utility workforce. What are utilities in Illinois doing to respond to the challenge of the aging workforce … to ensure that the next generation of employees are adequately trained before there is a mass exodus of institutional knowledge?

More than one-half of the current utility workforce will be eligible to retire in the next six to eight years which has the potential to greatly impact utilities’ ability to continue to innovate and solve the electrical transmission challenges of tomorrow. In Illinois, utilities have shown that they understand how the aging workforce could potentially negatively affect their operations and have taken measures to address it head on. Mainly, the utilities have developed strategic plans to retain and develop employees to fill these critical roles, hopefully before any such mass exodus will occur. Additionally, these measures include aggressive recruiting programs in an effort to fill the gaps that may be left in a few short years or less. One positive of this demographic shift is an increased focus on diversity and a much-needed emphasis on the recruitment/retention of a more representative work force and supplier base. Of course, many utilities have also incorporated technology solutions that will allow utilities to break down internal silos and address significant issues using less people than they historically have had to (i.e. convergence of information and operational technology and customer service and distribution operations).

Commissioner Edwards, this was an incredible interview. Thank you for providing us with such an honest, insightful and fresh perspective. You may no longer be on the ICC but your knowledge and wisdom will continue to shape the industry. I appreciate your time. 

The utility industry has a reputation for being stodgy and slow to innovate and change. Yet one of its main regulators is quite different. The Federal Energy Regulatory Commission (FERC) has often taken the lead when it comes to embracing technology and adopting new ways of connecting with the public. From electronic filing to webcasts of public meetings, the FERC seemed to be an early adopter. Last month, FERC did it again with the launch of “Open Access,” the podcast series. According to host Craig Cano, the goal is

“to have a conversation about FERC, what it does and how that can affect you. FERC can get very legal and very technical, so we will strive to keep it simple.”

The podcast begins by explaining what FERC does:

“… oversees the interstate transmission of electricity, natural gas and oil. FERC’s authority also includes review of proposals to build interstate natural gas pipelines and liquefied natural gas terminals, and licensing of nonfederal hydropower projects. FERC protects the reliability of the high-voltage interstate transmission system through mandatory reliability standards and it monitors interstate energy markets to ensure that everyone in those markets is playing by the rules.”

In the first episode, Mary O’Driscoll of FERC talks with Charles Curtis, the first chairman of the FERC. They take a walk down memory lane where I learned the good ole days were not always so good. The former commissioner states,

“The Federal Power Commission, before it, was a commission in significant disarray. It had a decisional process that assigned the Commission about 22,000 decisions per year, and it had a backlog of some 20 to 25 years of matters awaiting decision of the Commission.”

Ouch, I can’t imagine any business waiting that long for adjudication.

In the second episode, Ms. O’Driscoll connects us with then-commissioner Tony Clark, who reflects on his time at the Commission as he prepared to leave at the end of September 2016. Former commissioner Clark served one term at FERC, having been nominated by President Obama and sworn in on June 15, 2012. Prior to that, he served 12 years as a member of the North Dakota Public Service Commission, including a term as its president. With this being one of the most lethal presidential elections since I have been voting, it is refreshing to hear former commissioner Clark discuss FERC’s nonpartisan approach:

“When you’re talking about something as important as energy, which is critical to the safety and well-being of the nation’s economy and our people, you want to have decisions that are made in a nonpartisan, nonpolitical way. … You may disagree from time to time with commissioners on a certain issue, but it tends to not be political. It is often said around here there’s not a Republican way or a Democrat way to keep the lights on. So I think that nonpartisan nature of it makes it easy to work with people in good faith. Over the four-plus years that I’ve been here it would be difficult to find any particular pattern in terms of vote. Here was a coalition of commissioners that always voted together and here is the other side that voted together in a bloc on certain things. It never worked that way. And I think the key is you have to maintain a degree of collegiality and respect.”

Wow! The house, the senate and candidates should take note! You can listen to both episodes here.

I am looking forward to the National Town Meeting on Demand Response & Smart Grid July 9-11, 2013. It is one event I enjoy attending as it typically provides a wealth of information about these important topics. I am pleased to offer readers a glimpse into the National Town Meeting as I recently had the opportunity to ask Dan Delurey, president of the Association for Demand Response and Smart Grid (ADS), a few questions regarding the upcoming meeting.  

Evers: Dan, what would you describe as one of the foremost issues facing DR and how will it be addressed at the NTM?

Delurey: At the Town Meeting we will discuss a whole range of issues, challenges, and opportunities facing DR and smart grid. One of the key topics is the issue of time-based pricing and how to move that forward in the states. Time-based pricing is critical for making people aware that electricity does not cost the same to produce and deliver at all times, and for giving them the price signals that will encourage them to participate in DR programs. Many smart meters (which are necessary for such pricing because they measure on intervals) are now installed, and a very large amount of research shows that many customers will accept time-based rates. Now we need action by state utility commissions and utilities. At the Town Meeting we will discuss some new data on time-based pricing, and talk about how policy can be moved forward in a way that all stakeholders will accept.  

Another important issue we will be covering at the Town Meeting is including DR in new business and policy areas, such as building codes and design. Technologies such as building energy management systems (BEMs), programmable thermostats, and smart lighting and appliances have opened up a great opportunity for DR to reduce building energy usage. However, to really encourage this growth, these kinds of technologies must be included in the buildings themselves, which is where building codes and design standards come in.

Evers: This is all really great stuff. Will there be any information provided regarding the smart grid?

Delurey: On the smart grid side of things, we have an entire session devoted to microgrids and another one devoted to improving flexibility and resilience. We will also present some case studies on distribution automation and management. All of these may not get as much attention as smart meters, smart buildings and smart pricing, but they are very important in optimizing the overall electricity system.

Evers: A lot of small cities and towns are hurting financially and like most businesses, energy is most likely in the top five of their budget spend. How can they benefit from DR and the conference?

Delurey: Institutional buildings, such as municipal government buildings, are prime candidates for DR programs. If they have not done so already, local governments should talk to their utility or to a DR company about joining a DR program. DR usually provides an additional revenue stream to the owners of buildings on top of what they get from their energy savings. That would help them from a budgetary standpoint.    

A new area where local governments can engage in DR is dynamic street lighting. Almost all local governments spend money on street and public area lighting.  With new technology that allows lighting to be automatically and dynamically controlled, local governments can better optimize their street lighting and save money. For example, they can program these lights to dim when electricity costs more (if combined with time-based pricing), or they can even brighten the lights in certain areas or at certain times to deter crime (but save money by not having to brighten all of the lights). This is an exciting new area of the smart grid, right at the intersection of DR and energy efficiency, and we will have a presentation at the Town Meeting about it.

Evers: Last year you gave out your first Griddie Awards. How was it received? Care to give us a teaser on some of this year’s nominees? Any new faces or organizations?

Delurey: Last year we got a lot of feedback that the Griddie Awards were a great new addition to the Town Meeting. The Griddie Awards recognize the best marketing and communications efforts for smart grid programs and technologies. Attendees at the Town Meeting got to vote in real-time on which finalists they wanted to win, so it was another way to encourage participation and involvement in the event by all attendees. This year we’ve gotten a lot of great submissions from all over the country, which can be seen on our website. The large number of submissions shows that there are a lot of marketing and educational efforts going on to make customers aware of the DR and smart grid programs and technologies available to them, and how they can benefit from these. I hope you’ll come to the Town Meeting to find out who the winners are!

Evers: Thanks Dan.

If you are interested in attending the National Town Meeting, it’s not too late to register. I’ll see you there!

I recently had the opportunity to interview the Chairman of the Pennsylvania Public Utility Commission, Robert F. Powelson, regarding his views on smart meter opt-outs and other issues affecting Pennsylvania’s energy future. Because I live and practice in Pennsylvania, I may be biased but I think Smart Grid Legal News readers will agree it is refreshing and rare to hear regulators like Chairman Powelson promote smart meters, energy efficiency and other practices that advance our energy future.

Evers: Chairman Powelson, thank you for taking the time to discuss smart meters with me. Why is it important for customers to have smart meters?

Powelson: Act 129 of 2008 has really paved the way for the rollout of smart meters, also referred to as Advanced Metering Infrastructure (AMI), and the implementation of Act 129 continues to benefit Pennsylvania customers. As I see it, smart meter technology is a “win-win” situation for the Commonwealth – both electricity customers and electricity providers alike reap the benefits of advanced meters. 

Smart meters give customers greater control over their energy consumption by allowing them to measure their energy usage, monitor real-time electricity prices, and adjust their consumption and behavior in order to realize significant savings on monthly bills. Customers can even shut down appliances during peak periods or pre-program appliances and devices to operate only at predetermined (and lower cost) timeframes if they so choose.

Similarly, electricity providers also benefit from increased smart meter deployment. The two key concepts here are efficiency and reliability. AMI makes meter reading quicker and more efficient by eliminating the current practice of estimated meter readings. Additionally, with smart meters, utilities have the ability to monitor distribution networks to allow for the immediate detection of irregularities, which leads to drastically reduced response time in addressing outages. 

Finally, smart meters can help reduce both overall electricity use and peak demand use, leading to lower emissions from fossil power plants that will not have to generate as much power – a direct environmental benefit.

Evers: Chairman, across the country several states have implemented an opt-out process due to customers concerns about health and privacy. I am concerned about the impact of an opt-out process as people relocate in and out of homes with smart meters. I call it a smart meter mosaic. I joke that real estate disclosure forms will soon have to start indicating the home’s level of smartness. Seriously, I think the implementation and long-term management of such a process could eventually put upward pressure on rates for everyone. What are your views regarding a smart meter opt-out process?

Powelson: In May, I testified before the Pennsylvania House of Representatives Consumer Affairs Committee on a proposal to partially repeal Act 129 and permit smart meter “opt-out” programs in the Commonwealth. My testimony addressed two pieces of legislation – House Bill 2186, which would allow consumers to opt out of having smart meters installed at their premises, and House Bill 2188, which would require consumer consent in order to share information from electric meters with government agencies. These bills represent a significant step backward in policy, with the potential to negate all of the reductions already achieved under Act 129.

The proliferation of opt-out requirements for AMI deployment has the potential to cripple efforts to modernize grid technology. Maine has received a lot of attention regarding its AMI opt-out, and Central Maine Power (CMP) has considered, analyzed and provided substantial cost information relating to a variety of potential solutions or mitigation measures for customers seeking to opt out of CMP’s Smart Meter Program. CMP estimates these incremental infrastructure and support costs to be as high as $70 million over the life of the AMI project – and that is assuming only 1 to 2 percent of CMP customers opt out. At an opt-out level of 10 percent, these incremental costs grow to hundreds of millions of dollars – exceeding the costs of CMP’s advanced meter project.

While I appreciate that there are consumers who have security and privacy concerns with respect to AMI, the PUC, legislature, and Electric Distribution Companies (EDCs) may be able to help alleviate these concerns through increased education and outreach. It is worth noting that many EDCs and their customers have had AMI in place for years, namely PPL and PECO. Additionally, we are already facilitating the continued implementation of smart grid technology by establishing rules that more precisely address conduct in the areas of reliability, privacy and security. California and Ontario have undertaken similar efforts through a “Privacy by Design” rulebook, which was integral to customer support for advanced meter roll out.

In sum, opt-outs cause operational gaps that will lead to additional costs for companies and their customers, defeating the stated purposes of Act 129. Such a system reduces reliability for all customers, as well as the benefits of a completely modernized electric grid. Simply put, there is no compelling reason for an “opt-out” program.

Evers: Smart meters have received a lot of attention but there is so much more to the concept of smart grid. Beyond smart meters, what do you see as other benefits as utilities upgrade their systems?

Powelson: Nationally, billions of dollars are being invested in smart grid technology because of the many benefits to consumers and utilities, as well as the positive impact on the environment through increased energy efficiency. (By way of background, federal support for the development of smart meter systems began with the Energy Policy Act of 2005, was supplemented with passage of the Energy Independence and Security Act of 2007, and funded by the American Recovery and Reinvestment Act of 2009 – which set aside $11 billion for the creation of a smart grid.)

For me it is not just about the technology. The most important objective is to better serve the needs of consumers and build stronger, more vibrant communities in which to live, work, and play. Smart meter and smart grid programs will be much more efficient in delivering electricity to homes and businesses; responding to outages and other emergencies; monitoring and seeking to curtail usage, especially during peak periods; preventing theft and fraud; and helping electric customers save dollars on their monthly bill. In short, the benefits to Pennsylvanians will continue to grow.

Evers: Recently many utilities have partnered with Opower and Facebook to allow customers to form teams for energy saving contests and compare energy usage with friends, hopefully creating positive peer pressure. Why are innovations like this important to our energy future?

Powelson: Any method of educating consumers and raising consumer awareness is vital. The real benefits will come when people start to realize that we are all in this together, and everyone contributing a little adds up to significant decreases in demand, which then puts a downward pressure on prices.

I particularly like this idea of comparing energy usage with neighbors and friends, as it dovetails nicely with the idea of “competition” in Pennsylvania’s electricity market. The more customers learn about competitive electricity providers, and the benefits and potential price savings available in the marketplace, the better. Increased dialogue that leads to decreased energy usage is exactly what we are looking for under Act 129.

Evers: Are there any other thoughts regarding Pennsylvania’s energy future you would like to share?

Powelson: Pennsylvania has really embraced a two-pronged approach in considering its energy future. On one hand, we are doing all that we can as regulators, providers, and consumers to comply with Act 129 and become more energy efficient. On the other hand, we are strengthening Pennsylvania’s competitive marketplace to increase competition among electric generation suppliers and produce better pricing and greater savings for the Commonwealth’s 5.6 million electric customers.

In addition to fulfilling its regulatory and oversight responsibilities, the Pennsylvania PUC will continue to educate consumers on the benefits of both energy efficiency and conservation, including smart meter technology, as well the advantages of shopping with competitive suppliers for their electric generation.

Although PJM headquarters is just minutes from Steven & Lee’s Valley Forge office, it took a recent trip to Washington, DC, for me to catch up with its President and CEO, Terry Boston. PJM manages the largest power grid in North America and the largest electricity market in the world. It is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity, operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 58 million people. While attending PJM’s conference, Grid 20/20: Focus on Markets, Terry made time to discuss some key issues with me.

Evers: I really appreciate you taking the time to meet with me. This is a real privilege. Terry, what is the most exciting thing about your job?

Boston: I guess dealing with all of the customers that we have. We’re up to 756 customers now and being able to have innovative markets that they can play in is probably the most exciting part. I love the technology. I’m a geek at heart. At the end of the day, the customer service function is probably the most fun part.

Evers: What keeps you up at night?

Boston: Cyber security. It has changed in the last three to four years. It’s no longer just a matter of trying to keep kids out of the system. Making sure we have security built in not bolted on to all of our networks and systems is probably the most important part of what we do. You have to realize this is a new world we’re in. We have to be very diligent, and we need resilience. Resilience is the ability to recover after a breach or intrusion.

Evers: I’m glad to hear you say that because after today’s session, I sat there thinking about distributed generation and I wondered whether or not cyber security a paradox. Is it even real? Can we ever really have cyber security? So I love the focus on the resiliency part.

Boston: That’s interesting. I was pleased to read a report that went to the President last year that basically came to the conclusion that you can’t protect against everything. The President had an interesting quote, and it goes something like this: “We have to accept the world as it is.” There will be hurricanes, there will be snowstorms like the October snowstorm, and we have to be realistic. Resiliency is about how well you recover after that big event, like Hurricane Irene or a cyber-attack.

Evers: That is a perfect transition into my next question. I heard you talk about some of extreme conditions in the past year: an earthquake, very hot days or the early snowstorm that I call the “October surprise.” As a result of the snowstorm that hit the Northeast, some top executives came under fire and one even resigned. I thought, “Is this fair? What if people could see what linemen have to go through to restore service? Often the conditions are not great.” What ideas or suggestions do you have that can help the public have realistic expectations for reliability?

Boston: First of all, there is the weather roulette wheel. You never know what you’re going to have thrown at you in terms of extreme weather. This year has been extreme as I mentioned in the meeting here today. We had an ice storm in February, tornadoes in mid-April, the hottest day of record on July 22 of this year, Hurricane Irene, Tropical Storm Lee, and then an “October surprise” as you call it. It was an unusual snowstorm. A combination of the leaves still on the trees, very wet snow and high winds. Electric distribution is going to be affected. The one thing that I’ve always done is to show the linemen out there working. Show what they have to go through to make a storm restoration work. You have to get good information out. Our staff learned from Texas where they had some problems in February in an extreme cold spell. The social media got the word out to lots of people. When they had rotating brownouts, they used social media to get to people, not just television.

Evers: You know I recently took a trip to Kenya this summer with my church. We were in remote villages six hours outside of Kenya where there is no infrastructure.

Boston: You were thankful for any grid.

Evers: Exactly. Reflecting on it caused me to think about the snowstorm and how we complain, how we’re a victim of our own really good reliability. Have we created the expectation of perfect service?

Boston: Generally speaking, worldwide you don’t have five nines — 99.999% reliable service on most of the transmission network.  We are very fortunate that we do have that here in this country. We have a digital economy, though, that runs on electricity. It is the fuel of the digital economy and it just shows the importance of what we have to do every day. And while the innovation summit we’re at here is about markets, it’s also very much about how to improve reliability. Electricity is the lifeblood of our economy and the lifelines to our homes.

Evers: Absolutely.

Boston: And it’s not fun when the power’s off.

Evers: Right. And you really can’t do anything without electricity. You need electricity just to innovate and create new products like the iPhone. 

So here is my last question. What does the man responsible for the largest power grid in the U.S. do for fun? How do you take vacation with such heavy responsibility?

Boston: We have three kids. Two on the West Coast and one on the far West Coast in Hawaii, and we travel with them. We love to go boating and water skiing. Unfortunately, the kids are so far away now and busy that we have them one at a time. But recently we went hiking in Hawaii with our son, and it was a good trip. Our daughter, Rachel, is an actress. We are very tightly tied to her career. We go to her shows. She’s coming to visit in December. She just won an award, the Emergent Talent Award in the New York Film Festival. Celebrating with her is another thing that we do for fun.

Evers: Wonderful.

Boston: I have a world class woodworking shop. I can’t think of a single tool that I do not own.

Evers: You make your own furniture and stuff like that?

Boston: I’ve made a lot of walnut furniture from kids’ cradles to grandfather clocks to some of the furniture in our house. As a matter of fact, I built a passive solar home, and I did all of the finished crown molding. The house has 6,000 square feet, and it uses about the economic equivalent of a cappuccino from Starbucks’ in terms of energy. So about less than $5.00 of electricity and energy a day. I built it in 1988, but it is designed-built to energy standards that people would be very pleased with today.

Evers: Terry, thank you so much for your time. I appreciate it.

Today my friend Commissioner Tim Simon provides us with insight regarding the California Public Utility Commission’s Smart Meter Privacy Order.

Evers: Commissioner Simon, California has long been an energy policy leader. Now with the popularity of the smart grid, the CPUC is often in the national spotlight. Regulators and industry participants nationwide follow your rulings. Recently you did it again, leading the nation with the release of your Privacy and Security of Customer Electricity Usage Data rules. Tell us why these rules are important and how they will help California residents.

Commissioner: The rules established in the recent CPUC Decision are important for a number of reasons. In brief, it protects customer privacy while making customer information available on the customer side of the meter. This will benefit home area networks and other demand response applications. The prudent use information should spawn market applications of customer usage data. When California returns to retail competitive markets this data will spawn innovation in retail ESP power products.

Evers: That is great. Commissioner, it is apparent the Department of Homeland Security’s Fair Information Practice (“FIP”) principles served as a guide to this Commission as you developed the rules. For those not familiar with FIP, please explain the relevance of these principles and how they were helpful to you.

Commissioner: The rules make California practices conform to the best national privacy and security practices. The FIP principles (Transparency; Individual Participation; Purpose Specification; Data Minimization; Use Limitation; Data Quality and Integrity; Security; and Accountability and Auditing) is a widely accepted framework that is at the core of the Privacy Act of 1974 and is mirrored in the laws of many U.S. states, as well as many foreign nations and international organizations. These principles are relevant because they ensure that the use of technology sustains privacy protections relating to the use, collection, and disclosure of personal information and that personal information is handled in full compliance with fair information practices as set out in the Privacy Act.

Evers: Very insightful. Now turning to everyone’s favorite topic, smart meters. Although this sector surely has generated the most passion about smart meters, I am sure you know smart meters are not just for electric companies. Quietly, gas and water companies have been installing smart meters without much fanfare. Why has the Commission declined to apply these important data protection rules to gas companies and other entities as this time?

Commissioner: I want to emphasize electricity use data are different than gas or water use data. While gas and water can be stored, electricity is produced instantly (except for pumped storage).  Naturally, the demand for gas and water does not vary as substantially as the demand for electricity. Additionally, two-way electric smart meters will be capable of feeding power back into the grid. It seems smart meters will provide a lot more personal information on personal electricity use than water or gas use. However, I am not advocating that customer data protection rules should not be applied to water and gas smart meters. Currently the Commission is looking into the electricity smart meters privacy only. Eventually we will have a system where smart meters for electricity, gas and water will be inter-connected with the smart grid.   

Evers: I know this is a bit off the subject but it will be a bonus for my readers…How is the smart meter opt-out going? 

Commissioner: The Commission is in the process of reviewing additional detail and analyses provided by the utilities regarding smart-meter opt-out. We had a workshop on September 14, 2011, to address the following issues:

  • Are the costs/opt-out fees reasonable?
  • What additional procedures, if any, should be adopted for residents in multi-unit apartments who wish to opt-out of a utility’s Smart Meter program?
  • What level of assistance should be provided to low income ratepayers?
  • What provisions are there for ratepayers who wish to delay installation of a Smart Meter at this time?
  • And does it address all the radio frequency concerns?

The proceeding is expected to conclude by the end of this year. I do not expect all parties will be satisfied, but I do anticipate a balanced, cost effective opt-out policy.

Evers: Thank you Commissioner Simon for taking time to provide your insight on these important issues.

georgearnold_pic.jpgAlthough the term “smart grid” has recently become vogue, the phrase is everyday lingo to many at the National Institute of Standards (“NIST”). In 2009, NIST launched a plan to expedite the development of smart grid interoperability standards. Recently FERC issued an order regarding five families of standards up for consideration. Today, I am honored to discuss FERC’s order with George Arnold, the national coordinator for smart grid interoperability at NIST.

Evers: George, I’d like to join in with the hundreds of others and personally thank you for your leadership and hard work towards helping to make the smart grid a reality. George, the FERC order is certainly complementary of NIST and the Smart Grid Interoperability Panel (“SGIP”), of which I am a member. However, the order declines to institute a rulemaking process to adopt the five families of standards. What is your reaction to the order?

Arnold: NIST supports the Commission’s order. It is consistent with NIST’s public comments to the Commission that it can send appropriate signals to the marketplace by recommending use of the NIST Framework and that it would be impractical and unnecessary for the Commission to adopt individual interoperability standards.

Additionally, NIST is pleased that FERC supports the NIST interoperability framework process, including the work done by the SGIP, for development of smart grid interoperability standards. As the Commission’s order reaffirms, the NIST Framework is comprehensive and represents the best vehicle for developing standards for the smart grid. NIST appreciates FERC’s guidance encouraging stakeholders to actively participate and look to the NIST-coordinated process for guidance on smart grid standards.

Evers: What happens now to the five families of standards? 

Arnold: They are already widely used in industry, either in their entirety or their constituent parts. The work on these and many other standards continues. I have said all along, the standards continue to evolve. These standards are among the 83 others making their way through the SGIP process.

Evers: Thanks George. Please take a moment to explain interoperability and the SGIP.

Arnold: Interoperability is the capability of different systems and devices to communicate and operate effectively with one another without significant manufacturer or user intervention. Devices that are fully interoperable are often described as having “plug and play” characteristics: i.e., connect them and they work together. This is important because interoperability impacts customer satisfaction, reliability, life cycle cost, and regulatory compliance.

NIST initiated the SGIP to support NIST in fulfilling its responsibility, under the Energy Independence and Security Act of 2007, to coordinate standards development for the Smart Grid. Established in late 2009, the SGIP is a public/private partnership that defines requirements for essential communication protocols and other common specifications and coordinates development of these standards by collaborating organizations.

The SGIP is composed of over 670 member organizations representing 22 stakeholder categories, including federal agencies as well as state and local regulators. More than 1,700 individuals are participating in SGIP activities. Membership is free and open to all organizations interested in achieving the Smart Grid vision.

Evers: George, I really appreciate your time. I hope your explanation encourages others to get involved in this important work  by joining the SGIP.

Jason_Brogden_photo.jpgWhen we discover friends in unexpected places, we often say, “It’s a small world.” While I usually cover the smart grid issues throughout the US, today’s post connects us to our utility friends across the pond. The Smart Utility Summit 2011 will take place on June 28-29, 2011, at the Chelsea Football Club, London, UK. A quick look at the agenda for The Smart Utility Summit and you will soon discover “It’s a small world” when it comes to smart grid issues. Utilities and Suppliers throughout the UK face many of the same challenges and concerns currently being addressed here in the US. Jason Brogden, the smart meter programme manager at the Energy Retail Association (“ERA”) will provide the energy retail perspective on smart metering developments. He will discuss the progress made to-date in Great Britain as well as identify some key risks and strategies for mitigation. The good news is that smartgridlegalnews.com readers will also get to benefit from Great Britain’s experience because I recently had the opportunity to interview Jason:

Evers: Jason, this is a real privilege for me. Thank you for the opportunity to provide some international insights to smart grid issues. While the Energy Retail Association is known in the Great Britain, tell my readers a little bit about the organization.

Brogden: The Energy Retail Association, formed in 2003, represents the six main electricity and gas suppliers in the domestic market in Great Britain.

The ERA works closely with government, NGOs, charities and other organisations in England, Scotland and Wales to ensure a coordinated approach to dealing with the key issues affecting our industry and the British consumer.

All the main energy suppliers, operating in the residential market, in Great Britain are members of the association – British Gas, EDF Energy, npower, E.ON, Scottish Power, and SSE.

Evers: Thank you Jason. Here in the US, a retail supplier is the company that provides the generation/energy to a customer. Is it the same in the Great Britain?

Brogden: The energy supplier (or retailer) is the company that has the contract with the customer to provide energy (gas and/or electricity).

Evers: Now I am going to jump to the smart grid and specifically, smart meters. What is ERA’s position on smart meters? Are you supportive? Do you want them installed?

Brogden: The ERA has long been a supporter of smart meters and has been running a smart metering programme for over four years now to help make the universal deployment of smart meters a reality in Great Britain.

Evers: What is the current state of smart meters in Great Britain?

Brogden: There is a Government mandate for energy suppliers to deploy smart meters to all households and small businesses using reasonable endeavours by the end 2019.

Evers: In the US a critical issue is cost recovery. Is this something you have to deal with? Who will pay for the new meters?

Brogden: We have a different regulatory framework here in GB where the energy retailer has the responsibility for metering, not the network operator. This is delivered in the competitive marketplace and not under regulated price control, therefore the energy retailers will pay for the meters to be installed.

Evers: How do customers feel about smart meters? Are they resistant, passive or do they look forward to it?

Brogden: In 2010 Energy UK commissioned research* which found:

  • There has been a marked increase in awareness of smart meters; over half (56%) of respondents said they had heard of smart-meters and knew what they were – a significant increased compared to a third saying so (32%) in July 2009.
  • Overall, 88% have now heard of smart meters.

Evers: What steps are being taken to educate your customers? Are customers engaged? Are they changing their behavior based on price signals?

 Brogden: We await for the consumer engagement strategy from Government for the mass smart meter roll-out, but the evidence from recent smart meter trials show that some aspect of the experience of getting a smart meter can itself prompt a reduction in energy consumption, particularly gas consumption (savings of around 3%).

Evers: Without giving away too much of your presentation, what other strategies would you suggest that we have not already discussed?

Brogden: I think it is important to ensure that there is appropriate access to data to deliver some of the consumer benefits set out in the Government’s business case and also important for industry to step up to the plate to provide confidence to consumers that they will have a positive experience for smart metering. This is why we are in the process of developing a Smart Metering Installation Code of Practice and a Privacy Charter to embed the principles of best practice within industry.

Evers: Jason, thanks for your time. It sounds like those attending the summit are in for a real treat and will get valuable information as you share ERA’s perspective and experience. Have a great conference.

The Smart Utility Summit has become the place to keep up to date on the latest developments in smart utility technology in the UK. Companies come together to discuss the success of recent smart meter rollouts, the views of policy makers across Europe and the next steps in moving from concept to reality.

Ted_Wood.jpgToday I would like to introduce you to my colleague Ted Wood. Ted is a patent attorney with the law firm of Sterne Kessler Goldstein & Fox and is at the forefront of the smart grid cyber security and innovation discussion. He has some great ideas to help smart grid technology developers and is passionate about what innovation means to our energy independence and security.

Evers: Ted, how is innovation relevant to those in the energy industry and to businesses that rely on reliable energy delivery?

Wood: Thank you for the opportunity to discuss my views concerning the role of innovation. Innovation does and will continue to play a critical role in reducing vulnerabilities to the power grid. A recent article in the Washington Post citing top government intelligence officials indicated that “a major cyber attack somewhere in the United States is increasingly possible.” The article went on to warn that an assault on America’s power grid system “represents the battleground for the future.” Based upon this article and several others, as well as my own observations and analyses, it goes without saying that a successful cyber attack on the grid could have a devastating impact on our national security, economy and our way of life.

Evers: Ted, I agree. One of the goals for the smart grid is for it to operate resiliently against attack and natural disaster. A smarter grid protects against outside forces by incorporating a system-wide solution that reduces physical and cyber vulnerabilities and enables fast recovery from disruptions. What is the connection to innovation?

Wood: Innovation = grid resiliency

Evers: OK, connect the dots for me.

Wood: Through innovation, new technologies can emerge to help enhance the grid’s resiliency. Such technologies should address protecting the grid from cyber and other attacks, detecting when failures occur and responding and recovering accordingly. Successful innovation includes creativity, investment and intellectual property (IP) protection. Investment is essential to transforming creativity into tangible technologies and IP protection is a significant factor considered by investors when deciding in which technologies to invest to maximize their returns. And it is critical to have strong IP protection in place before entering the marketplace.

Evers: So it’s a cycle. Innovation → Investment → IP protection→ safer, smarter grid?

Wood: That’s right. However, I would adjust your model a bit:

Innovation → IP protection → Investment → safer, smarter grid. Most investors want to know the IP protection is in place first.

Evers: So Ted, with all of the American Recovery and Reinvestment Act funding, the race is on. I imagine there are a lot of great ideas out there and the developers may feel like they can’t get to the marketplace quick enough. Any ideas on how you can help them? Admittedly I am not from the Patent and Trademark Office, but I have been involved in getting regulatory approvals for a long time and they usually don’t occur at the speed of innovation.

Wood: Recognizing the urgency of cyber security and the development of the smart grid, I believe that some sort of Grid Resiliency patent incentive program might help to spur grid resiliency innovations. The objective of one such program, for example, would be to streamline the examination of patent applications specifically focused on technical innovations to reduce vulnerabilities by ensuring the grid’s resiliency. This streamlined process could help improve the revenue stream for innovators by increasing the development speed of their products and technologies. For example, patent applications covered under such a program would include resiliency-enhancing technologies that could be added to existing grid components and systems, as well as resiliency-enhancing technologies integrated into next-generation components and systems. The intent is to leverage the U.S. patent system to encourage grid related R&D investments and innovations which would reduce the grid’s vulnerabilities. There are other programs, some already underway at the US Patent and Trademark Office, to encourage innovation across the board. These programs could be used to spur grid innovations.

Evers: That is great! What is the current status of the Grid Resiliency Patent Incentive Program?

Wood: We are vetting a number of different ideas through different means, such as industry blogs and discussions with industry and government representatives. The goal is to try and find the right mix of ideas that will help promote innovation and R&D investment in grid resiliency enhancing technologies.

Evers: I can imagine there are a lot of entrepreneurs hoping to participate. It will be a game changer for those who need funding as soon as possible. Please let me know when this is finalized. What are the other programs at the PTO that can be leveraged by smart grid innovators?

Wood: There are two that come to mind. The first is the Green Technology Pilot Program, which provides for accelerated examination of patent applications related to development of renewable energy sources, energy conservation etc. A few of the technical categories covered by this pilot program also related to smart grid. The second program is the newly implemented Track 1 initiative. Track 1 provides for accelerated examination for applications for payment of a $4,000 fee. Given the limited scope of the green pilot program with respect to grid resiliency and possibility that all innovators may not have access to Track 1 given the required fee, there may still be room for additional programs or incentives to spur grid resiliency innovations.

So Linda, I am going to switch things up a bit and if you don’t mind, I have a few questions for you?

Evers: Sure, but let me remind you…it’s my blog. (laughing)

Wood: I think the next roadblock is getting the utilities to try the new products. I know you represent a lot of utilities so I wondered if you had any insight to share on this issue?

Evers: Absolutely. …cost recovery.

Wood: My turn. Please connect the dots for me.

Evers: Ted, you are talking about new technology. The developer should expect to demonstrate to the prospective utility client that the benefits outweigh the risks. We take risks everyday or nothing would get done. In the case of the smart grid, we know the cost of doing nothing is high. However, it will be an extremely expensive undertaking to fully develop the smart grid. Utilities are very careful when making investments out of concern they will not get the cost recovery they seek from state regulatory agencies.

Wood: But developing the smart grid is a huge priority for our country. I would think the state regulators would be supportive?

Evers: I know this may surprise to you, but there is a fair amount of regulatory uncertainty in this area. Views towards the smart grid will vary by state and some states have laws that require aggressive action in this area. Generally, utilities have to summit their plans to their state PUCs for approval. Part of the approval process is making the business case to support the proposed expenses. And let me tell you, 2010 was a rough year for smart grid approvals, particularly the cost recovery issue, in spite of Uncle Sam contributing $4.5 billion.

Wood: Really?

Evers: Yes! Maryland, Connecticut, Indiana and Ohio to name a few. And in California and Maine, the regulators are acting on one of my favorite lines: “I reserve the right to change my mind,” and are contemplating revising plans they have already approved, notwithstanding the fact that these utilities have already implemented most of the plan.

So for the innovators out there, the best way to get selected is to educate, educate, educate. Spend time explaining to regulators and consumer advocates the importance of your product to the grid. In the end, how does it benefit customers? Ideally, the product should be apart of the utility’s plan that gets approved.

Ted, it will happen slowly at first – layer by layer, but we will get there. Remember when cell phones first came out? For the first few years they were big and clunky and really only used by executives. And now just last year, even to my surprise, off we went to buy my son an iPhone for his 13th birthday. Progress can be like a sluggish car, slow to get going but it can hold its own on the highway. One day you will look around and bam: you will be driving to Pennsylvania to visit my family without any thought as to where you will charge your electric car; people will just know not to wash clothes and dishes in the afternoon; their appliances will conveniently start the laundry and dishes for them at 2:00 am and utilities will restore service before you even know there was an outage. All these great smart grid related things will be happening and as a county we will be more energy efficient.

Pecan Street Project has kicked off the first phase of its smart grid demonstration project in the Mueller community of Austin, Texas. One hundred residences volunteered to have Incenergy’s Home Smart Grid System installed. This system will capture electric and gas usage data for the home and six major appliances on a minute-by-minute basis. It will also gather data from the 10 homes that have solar PV rooftops. 

Project researchers will use the data collected during the first phase, which will last a year, to design the second phase that aims to produce user-friendly ways to manage individual appliances, systems, electric vehicle charging and rooftop PV systems. The second phase will involve up to 1,000 homes and 75 businesses. 

Project team members include the UT Austin, Incenergy, Austin Energy, Texas Gas Service, Environmental Defense Fund, the City of Austin and the Greater Austin Chamber of Commerce. 

Austin Energy, a smart grid success story, has already deployed 400,000 meters with only 25 meters having to be replaced and only a little over 200 requesting meter accuracy tests. Austin Energy credits its success to understanding what customers really want and having an extensive communication and outreach effort.  

The Pecan Street Project seeks to continue the success that Austin Energy achieved by following the same customer-oriented approach: Two of the participants in the demonstration project serve on the executive committee, offering a valuable customer perspective. Imagine that! Customer involvement in the planning process! A great idea that should reap benefits as it will provide the project team with valuable insights on customer values and behavior.