After a brief hiatus, Smart Grid Legal News is back! So many issues and not enough time or space so I thought I would start with the basics. I recently had the pleasure of meeting Christine Hertzog, managing director of Smart Grid Library, to discuss Smart Grid Dictionary, now it its sixth edition. At 466 pages, Smart Grid Dictionary covers acronyms and terms that are not just smart grid related but industry related. If you are new to the industry, the book will quickly become a well-worn staple. Veterans might find it useful to zero in on terms you might gloss over. Like most good ideas, Smart Grid Dictionary was created out of necessity. Trying to navigate an industry riddled with acronyms can be challenging. So for her own use, Christine began keeping a list of terms she hears often and soon Smart Grid Dictionary was born. Perusing through the dictionary, some of the terms that I take for granted, like classes of service or rate case, made me smile as I thought about how they could be confusing to those not enmeshed in this regulatory world. Below is a random sample of terms found in the Smart Grid Dictionary:

ADA (Advanced Distribution Automation)
A collection of intelligent sensors, remote controllers and bi-directional communications to manage distribution grids – covering substations to AMI assets.

Classes of service
A class or group of customers with similar characteristics that have a common rate for electric service. Some common classifications are residential, commercial, industrial and transportation.

Electric industry restructuring
The reconfiguration of vertically integrated electric utilities into markets with competing sellers, allowing customers to choose their suppliers but still receive delivery over the power lines of the local utility. Generation is now generally competitive, transmission is regulated by FERC (Federal Energy Regulatory Commission) and distribution falls under state jurisdictions.

ICAP (Installed Capacity)
A monthly market run by an ISO (Independent System Operator) that provides generators compensation for locating units in specific regions based on the net capacity the unit provides to the market after accounting for forced outages at the unit.

IEEE 2030.5
This standard incorporates Smart Energy Profile (SEP) 2.0. It defines application message exchange mechanisms, the exact messages exchanged and the security features used to protect the application messages. This enables utility management of the end user energy environment, including demand response, load control, and time of day pricing among other functions.

The Citizens Utility Board (“CUB”) and the Environmental Defense Fund (“EDF”) recently filed a joint petition asking the Illinois Commerce Commission (“ICC” or “the Commission”) to initiate a proceeding to adopt the Illinois Open Data Access Framework (“Framework”). They hope the Framework will become the governing standards for access to customer usage data by customers, utilities and third parties. One interesting point about the proposed Framework is that the utilities are guardians of the data (sounds like a movie my son would like) but not owners of it. Below is the paragraph discussing ownership:

Customer is principal owner of retail electric consumption data. The customer has the ability to authorize third parties to access individual customer data, and the customer can revoke that access at the customer’s discretion. The utility serves as the guardian of retail electric consumption data, and must allow access to third parties where the customer has authorized it.

You can read CUB’s and EDF’s prefiled testimony and other pleadings by going to the ICC’s website. The case number is 14-0507. Com-Ed and Ameren Illinois have intervened in the case.

Before the chill of last winter’s polar vortex, many in the industry may not have even heard the term uplift payments. If you are still wondering exactly how it works, the Federal Energy Regulatory Commission (“FERC”) has a docket and workshop for you (Docket No. AD14-14-000). At this docket you will find an educational staff report on uplift payments in RTOs/ISOs. On Monday, September 8, 2014, FERC will hold a workshop to explore the technical, operational and market issues that give rise to uplift payments and the levels of transparency associated with uplift payments. The daylong informative workshop will begin at 8:45 a.m. and conclude at 5:15 p.m.

Panel 1 will address the basic issue of “What is uplift?” and explore issues that give rise to uplift payments as well as:

  • Drivers of uplift payments in RTOs/ISOs
  • Uplift payments that have been highly concentrated and persistent on a geographic or resource basis
  • Technical, operational and market issues driving uplift payments
  • The relationship between uplift payments and unit flexibility

Panel 2 will explore the impact of uplift on market participants.

Panel 3 will explore the adequacy of and the potential to enhance uplift transparency and recent market design changes that may address some of the causes of uplift.

Panel 4 will explore broader price formation issues and discuss next steps.

This agenda provides further details. As expected, the event will be held at the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426. This workshop is free of charge and open to the public.

This week the state of New Jersey took an innovative step in its continuing quest to remain Stronger than the Storm. The N.J. Board of Public Utilities (“BPU”) approved Docket No. QO14060626, a subrecipient agreement with the N.J. Economic Development Authority (“EDA”) to work jointly in the establishment and operation of the Energy Resilience Bank (“ERB”). The EDA and BPU also announced the hiring of staff to fill two ERB leadership positions. Utilizing $200 million through New Jersey’s second Community Development Block Grant-Disaster Recovery allocation, the ERB will support the development of distributed energy resources at critical facilities throughout the state with a primary goal of improving resiliency.

Superstorm Sandy caused extensive damage to New Jersey’s energy infrastructure, disrupting delivery of electricity, petroleum and natural gas to consumers across the state, and leaving an estimated five million residents without electricity. Distributed energy resources, including combined heat and power (CHP), fuel cells (FC) and off-grid solar inverters with battery storage, allowed some critical facilities, such as hospitals, wastewater treatment plants and universities, to remain operational while the electric grid was down. The launch of the ERB will enable many more such facilities to remain operational during future outages. In addition to providing resilience, the benefits of distributed energy resources also include lower and stable energy costs, a cleaner environment through reduced emissions, and increased overall efficiency.

BPU President Dianne Solomon said, “Increasing energy resilience, whether through the Energy Resilience Bank, the BPU-approved resiliency improvement measures implemented by utility companies or NJ’s Clean Energy Program, will minimize the potential impacts of future widespread power outages due to major storms like Superstorm Sandy.”

Governor Christie’s press release says the Energy Resilience Bank is the first of its kind in the nation to focus on resilience.

On June 30, 2014, the Supreme Court declined to hear Kansas City Power & Light Co.’s appeal of a lower court’s affirmation of the Missouri Public Service Commission order denying the utility the right to recover FERC-approved transmission costs, estimated at $100 million. The costs are for delivering power 500 miles from a natural gas plant in the Mississippi Delta to western Missouri customers. The Missouri PSC approved the purchase power but concluded the $5 million yearly interstate transmission cost at FERC-approved rates wasn’t “just and reasonable” because the plant was only used to meet summer peak demand. However, KCP&L was paying for transmission access all year and passing that cost on to its customers. KCP&L argued the decision to disallow FERC-approved transmission costs violated the supremacy clause of the U.S. Constitution, which gives federal law jurisdiction over state law.

The impact of the ruling further supports the concept that FERC approval no longer provides certainty regarding cost recovery. Billions of dollars in interstate transmission costs may or may not be recoverable from customers. It is already a hot summer and things could really heat up to the extent other state utility commissions consider denying recovery of FERC-approved transmission costs related to the growing area of distantly-sited generation, especially the popular natural gas and wind generation.

And there is more… I find the most interesting thing about this case is the fact that the Missouri PSC approved the recovery of the cost of the generation facility in base rates, yet denied the cost to transmit the power from the approved facility.

Bonus: The Solicitor General explains why cert should be denied.

In a recent order, the Massachusetts Department of Public Utilities (“Department” or “DPU”) stated that time varying rates are an essential component of grid modernization. As a result, the design of basic service must change to incorporate time of use (“TOU”) rates for all customers, including residential customers. The Department noted that in 2013, the average wholesale market price of electricity over the course of the year was $56 per megawatt-hour (“MWh”), but the peak wholesale price in the summer reached nearly $870 per MWh and in winter nearly $1,300 per MWh. However, despite the volatility in the wholesale market, basic service customers’ rates did not reflect the time varying nature of electricity supply costs. The Department sees this as a problem. (Warning: DPU should take a short flight down to PJM land where customers’ exposure to last winter’s price spikes is still being discussed.) Nevertheless, DPU is concerned because under the current basic service structure in Massachusetts, rates do not reflect the time varying nature of electricity supply costs. Additionally, customers who are able to shift more of their electric usage to off-peak/lower wholesale cost hours subsidize customers who use more electricity during hours with higher wholesale electricity prices.

The Time Varying Rates Order describes a policy framework that will require electric distribution companies to offer two basic service TOU options:

  1. A default product with time of use pricing that includes a critical peak pricing (“CPP”) component. Under this TOU pricing structure, the retail electricity price will be higher during certain hours of the week when customers typically use more electricity and wholesale energy prices rise (e.g., the “on-peak” hours of noon to 8:00 p.m. each weekday) than during the remaining hours of the week when electricity usage and wholesale prices are typically lower (i.e., the “off-peak” hours).
  2. A flat rate with a peak time rebate (“PTR”) option. With a PTR, customers will receive a rebate if they lower their electricity use relative to a pre-established baseline during times when wholesale hourly energy prices are highest. Thus, under PTR, customers will have an incentive to lower their electricity usage when it is most critical to do so, but even those who ignore the incentive will be insulated against higher peak prices because they will pay one price for all electricity consumption.

The Department anticipates that the on-peak rate will be higher and the off-peak rate lower than a flat-rate product. Thus, customers who respond to price signals by reducing on-peak energy consumption will pay less than they would under a flat rate.

Written comments regarding this policy framework may not exceed 25 pages and must be submitted no later than the close of business (5:00 p.m.) on July 3, 2014.

This month the Environmental Protection Agency (“EPA”) released its Clean Power Plan proposal. The Plan cuts carbon pollution from existing power plants, which according to the EPA is the single largest source of carbon pollution in the United States. The Agency says the proposal will protect public health, move the United States toward a cleaner environment, fight climate change and continue to supply Americans with reliable and affordable power. Milestones and goals of the plan include:

  • Reduce carbon emission from the power sector to 30 percent below 2005 levels
  • Reduce electricity bills by approximately 8 percent by increasing energy efficiency and reducing demand in the electricity system.

The Clean Power Plan provides guidelines for states to develop plans to meet state-specific goals to reduce carbon pollution and gives them the flexibility to design a program that makes the most sense for their unique situations. States can choose the right mix of generation using diverse fuels, energy efficiency and demand-side management to meet the goals and their own needs. It allows them to work alone to develop individual plans or to work together with other states to develop multi-state plans. States better get busy because a year will fly by. Here are the proposed state plan dates:

June 30, 2016 – Initial plan or complete plan due
June 30, 2017 – Complete individual plan due if state is eligible for a one-year extension
June 30, 2018 – Complete multi‐state plan due if state is eligible for two-year extension (with progress report due June 30, 2017)

EPA is accepting comments and will hold four public hearings for the Clean Power Plan the week of July 28, 2014. The hearings will provide interested parties the opportunity to present data, views or arguments concerning the proposed action. The hearings will be held on:

The Federal Energy Regulatory Commission (FERC) and the Nuclear Regulatory Commission (NRC) held a joint meeting on Wednesday, May 28, 2014, at NRC headquarters. Most of the meeting was open to the public and concluded with a tour of NRC’s new control center. Commissioners from both agencies participated. Speaking on the topic of Grid Reliability, Markets and Extended Loss of All Alternating Current Power were:

  • Mr. Burgess, NERC – 2014 State of Reliability Report
  • Mr. Quinn, FERC – Market Dynamics that May Affect the Financial Viability of Nuclear Power Plants
  • Mr. Smith, NRC – Nuclear Power Plants – License Renewals and Projections of New Units, Extended Loss of All AC Power Mitigation Strategies – Order Implementation and the Scope of the Rulemaking Activity

With EPA rulings, plant closures, polar vortexes as well as cyber and physical security issues, 2013 was a rough year. Despite the challenges, the first key finding from Mr. Burgess’ presentation is that the bulk power system has a sustained high performance level. This highlights the strength of the grid. You can read the transcript and presentations on NRC’s website.

The New York State Public Service Commission (“PSC” or “Commission”) recently petitioned the U.S. Court of Appeals for the Second Circuit to force the Federal Energy Regulatory Commission (“FERC”) to respond to the PSC’s pending requests for rehearing of FERC’s decisions to create a new capacity zone (“NCZ”) in the lower Hudson Valley. The PSC states that as a result of the NCZ, residential customers using 600 kWh/month in the lower Hudson Valley would experience increases in their total electric bill of between six percent to thirteen percent and industrial customers could experience a ten percent increase, causing unnecessary and unreasonable electricity price increases in the lower Hudson Valley.

Pending full judicial review of FERC’s decisions, the PSC has filed an emergency motion asking the Court to issue a stay of FERC’s decisions implementing the upcoming capacity auctions in the NCZ and ensure consumers are not harmed further. However, in previous pleadings, the New York ISO (“NYISO”) states that the NCZ Study determined that the Upstate New York/Southeast New York (UPNY/SENY) Highway interface into Load Zones G and H was constrained because it was bottling 849.2 MW of generation from Load Zones A through F, and therefore, NYISO is required to create a new capacity zone.

Entergy Nuclear also supports the creation of the new capacity zone and asserts that the erosion of the electric system in the lower Hudson Valley over time provides proof of the harm that results when inaccurate price signals fail to adequately value capacity in a region. It states that the capacity price signal for the lower Hudson Valley zones was suppressed by the excess capacity levels in the remainder of the Rest-of-State region that cleared against the NYCA curve, but were not deliverable to the lower Hudson Valley zones due to the UPNY/SENY constrained interface.

FERC has stated it does not believe the new capacity zone will result in unjust and unreasonable rates. Higher capacity prices in the new capacity zone will help to encourage the development of new generation and/or transmission capacity to help alleviate the constraint NYISO has demonstrated. FERC’s position is that the price changes promote efficient decisions and are not unreasonable. The NCZ capacity auctions have begun and the PSC has filed a Petition for a Writ of Mandamus and Emergency Motion for Stay to prevent what it believes is irreparable harm to customers in the lower Hudson Valley:

Because FERC has not acted prior to the implementation of the NCZ capacity auctions, New York electricity ratepayers face the possibility of paying an additional $158 million for electricity in the summer of 2014, without realizing a corresponding benefit. If the Court reverses FERC it will be difficult, if not impossible, to rerun the auctions to reflect whatever relief the Court provides.

– PSC Petition and Motion page 10

These are interesting grid management issues. The industry will be watching the Second Circuit.

Camps have changed a lot since my childhood days of learning to swim at the Y. Somewhere between the increased competition for college admission and the universities’ quest to monetize all that empty space during the summer, parents have started spending a lot of money for “enrichment.” Admittedly, I have fallen prey. Recently, I sat down with my 10th grader to finalize his summer plans. I was amazed at his options. There are camps pre-college programs for all of his hobbies and every interest he didn’t know he had! One in particular caught my eye – Rensselaer Polytechnic Institute has a Smart Grid Camp Pre-College Program! In this week-long program, students conduct a market experiment to learn about electricity pricing. Using a simulation tool, they will explore how the grid responds to loss of equipment, extreme power demands and other problems that might lead to blackouts. Students learn how the electric grid is being adapted to incorporate renewable sources of energy such as solar arrays and wind turbine farms. Working with RPI faculty and graduate students, high schoolers will learn about computer networks, cyber security and even tour power grid manufacturing or control facilities. Wow! This description is certainly deserving of the pre-college label. Unfortunately I will not be able to provide you with insider details. My interest in the smart grid has not rubbed off on my son. He selected a Gaming Academy and was not persuaded when I pointed out you need energy to power those games he will be designing.

Rensselaer also offers a Smart Lighting – Smart Power – Smart Systems Pre-College Program. It introduces high school students to lighting, power and sensor technologies and how they can be integrated into real world, sustainable and well-engineered Smart Systems. Students will be engaged in hands-on activities using the fundamentals of electronics and photonics to engineer solutions that address today’s social and environmental challenges. They will interact with engineers and scientists and participate in guided tours of high-tech manufacturing and/or research facilities. (Applications accepted until full.)

There are a variety of energy camps and pre-college programs across the country; some start as early as 3rd grade. This is good news. Optimizing the grid will require energy literacy. Like other transformations, children often lead the way. While it will not help with immediate needs, utilities should find developing the pipeline helpful to the looming talent shortage they face. Here’s a sampling of what is being offered:

  • Rethink Energy Florida hosts an Energy Ball to raise funds so that no kid is turned away from its Energy Camp for 3rd-6th graders. Campers make their own solar ovens.
  • The Touchstone Energy Camp in Indiana is just for 6th graders. A mixture of traditional camp, kids learn about electric distribution and go from rides in bucket trucks to horseback riding, swimming and archery.
  • The Green Energy Camp at the University of Washington-Seattle provides 6th-8th graders with a STEM approach to our energy future. Campers will build their own electricity-generating wind turbines and use math to measure the energy output of their designs and make them more efficient. (Waitlist available.)
  • The Shell Energy Venture Camp at LSU provides 9th-11th graders and teachers with the opportunity to learn about energy careers while having fun. They will perform hands-on experiments to explore the entire process of energy development; from how oil and natural gas are formed to the ways various types of energy are used. Campers will build a generator, a motor, a car, a windmill, a solar house and a robot! (Still accepting applications.)
  • University of Southern California/Chevron Frontiers of Energy Resources Summer Camp offers high school juniors and a few math and science teachers a preparatory, interactive training program focusing on various energy resources including fossil fuels, solar, biofuels, nuclear energy and information technologies for energy efficient operations
  • Also at USC, ExxonMobil sponsors the Bernard Harris Summer Science Camp providing activities, experiments, projects and field experiences for students entering 6th-8th grade in the fall of 2014. The camp promotes science, technology, engineering and mathematics (STEM) education and supports historically underserved and underrepresented students with limited opportunities. Selected students attend this two week residential camp free of charge! (Deadline May 9, 2014.) This camp is offered at other schools throughout the US and includes mentoring from Dr. Bernard A. Harris, Jr., the first African-American to walk in space and camp founder.
  • Purdue University is home to the Duke Energy Academy. Purdue University has launched an Energy Academy to address the looming national crisis in the number and quality of students entering the STEM disciplines. Concerned that a decline in STEM-based education will impact our nation’s ability to lead the world in the energy sector, the Duke Energy Academy provides a week-long course in STEM-related energy topic areas of power generation, transportation, power transmission, energy efficiency and new research frontiers. After camp, students and teachers will be encouraged to launch energy clubs in their schools.
  • The Renewable Energy Camp at University of Wisconsin-Platteville is a week-long program that immerses 9th-12th graders in programming that provides insight into the dynamic field of renewable energy. Activities focus on practical applications of renewable energy in the field. Students will develop core knowledge of systems at the intersection of physics, chemistry, biology, materials science, electrical and mechanical engineering and agriculture. (Registration is currently open.)
  • Skyline College in San Bruno, California provides high school juniors and seniors an opportunity to earn two units of college credit for free at its Green Energy Camp. Students will learn valuable marketing and business skills as well as an overview of solar and energy efficiency products and services. The camp is part of the Energy Systems Technology Management program.

I am impressed. I can’t recall specifics about my high school summers but I am pretty sure I did not do anything nearly as academic. This list is not exhaustive. Next year I plan to do a similar post earlier in the year, ahead of application deadlines. However, thanks to DOE’s Office of Energy Efficiency and Renewable Energy, no one has to be left out this year. Parents and teachers can create their own energy camp experience utilizing this lesson plan. There are so many energy related camps and pre-college opportunities, I am confident we will have a powerful future.