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 Electric Power Research Institute (“EPRI”) has launched a three-phase initiative regarding distributed energy resources (“DER”) and grid integration. Phase I was completed this month with the release of The Integrated Grid, Realizing the Full Value of Central and Distributed Energy ResourcesIt is a concept paper designed to frame the issues necessary for consideration by stakeholders such as utilities, regulators, and customers, as well as distribution and DER vendors. DER includes forms of electric generation supply such as small natural gas-fueled generators, combined heat and power plants, electricity storage and solar photovoltaics (PV) on residential rooftops and in larger arrays. Typically, these generation sources must be connected to the distribution system. One of the most significant and important elements of the report is that it highlights a critical distinction between connection and integration. Being connected to the grid is not the same as being integrated into the grid.

In most service territories, the current distribution system was not designed to accommodate an expansive amount of DER while sustaining high levels of electric quality and reliability. Unlike centralized power plants, technical characteristics of certain types of DER, such as variability and intermittency, present challenges that must be addressed to facilitate long term grid integration. According to the report, in order to maintain established standards of quality and reliability, DER must be integrated into the planning and operation of the electric grid. To facilitate DER’s integration, the report presents a call to action in four key areas:

  1. Interconnection Rules and Communications Technologies and Standards
  2. Assessment and Deployment of Advanced Distribution and Reliability Technologies 
  3. Strategies for Integrating Distributed Energy Resources with Grid Planning and Operation
  4. Enabling Policy and Regulation

Phase II of the initiative will encompass a six-month project to develop a framework for assessing the costs and benefits of the combinations of technology that lead to a more integrated grid. Phase III will include demonstrations and modeling using the analytics and procedures developed in Phase II to provide comprehensive data and information to stakeholders, hopefully yielding successful and cost effective integration of DER.

With another round of storms expected to yet again pound most of the East Coast this weekend, let me remind everyone to acknowledge the first responders braving often dangerous conditions to restore and maintain your electricity. It has been a rough winter and many may feel like they are always losing power. However, this fact from the report reminds us that electricity is usually there when we need it:

Today’s power system has served society with average annual system reliability of 99.97% in the U.S., in terms of electricity availability.

– The Integrated Grid, Realizing the Full Value of Central and Distributed Energy Resources, page 9.

Later this year, NIST expects to release a draft of the Framework and Roadmap for Smart Grid Interoperability Standards (“Framework”) document for a formal 60-day public comment period and the final version of the document is planned for publication in the first half of 2014. However, those attending the SGIP Inaugural Meeting received an advanced look at the new Framework.

NIST says the smart grid will ultimately require hundreds of standards. To prioritize its work, NIST chose to focus on seven key functionalities plus cybersecurity and network communications. Together, they create nine priority areas:

  • Demand response and consumer energy efficiency: Provide mechanisms and incentives for utilities, business, industrial and residential customers to modify energy use during times of peak demand or when power reliability is at risk. Demand response is necessary for optimizing the balance of power supply and demand.
  • Wide-area situational awareness: Utilizes monitoring and display of power-system components and performance across interconnections and over large geographic areas in near real-time. The goals of situational awareness are to understand and ultimately optimize the management of power-network components, behavior and performance, as well as to anticipate, prevent, or respond to problems before disruptions arise. 
  • Distributed Energy Resources (DER): Covers generation and/or electric storage systems that are interconnected with distribution systems, including devices that reside on a customer premise, “behind the meter.” DER systems utilize a wide range of generation and storage technologies such as renewable energy, combined heat and power generators (CHP), fixed battery storage and electric vehicles with bi-directional chargers. 
  • Energy Storage: Means of storing energy, directly or indirectly. The most common bulk energy storage technology used today is pumped hydroelectric storage technology. New storage capabilities — especially for distributed storage — would benefit the entire grid, from generation to end use.
  • Electric transportation: Refers primarily to enabling large-scale integration of plug-in electric vehicles (PEVs). Electric transportation could significantly reduce U.S. dependence on foreign oil, increase use of renewable sources of energy, provide electric energy storage to ameliorate peak-load demands, and dramatically reduce the nation’s carbon footprint. 
  • Network communications: Refers to a variety of public and private communication networks, both wired and wireless, that will be used for smart grid domains and subdomains. An interface is a point where two systems need to exchange data with each other. Effective communication and coordination occurs when each of the systems understand and can respond to the data provided by the other system, even if the internal workings of the system are quite different.
  • Advanced metering infrastructure (AMI): Provides near real-time monitoring of power usage. AMI consists of the communications hardware and software, and the associated system and data management software, that together create a two-way network between advanced meters and utility business systems, enabling collection and distribution of information to customers and other parties, such as the competitive retail supplier or the utility itself. 
  • Distribution grid management: Focuses on maximizing performance of feeders, transformers and other components of networked distribution systems and integrating them with transmission systems and customer operations. As smart grid capabilities such as AMI and demand response are developed, and as large numbers of distributed energy resources and PEVs are deployed, the automation of distribution systems becomes increasingly more important to the efficient and reliable operation of the overall power system.
  • Cybersecurity: Encompasses measures to ensure the confidentiality, integrity and availability of the electronic information communication systems and the control systems necessary for the management, operation and protection of the smart grid’s energy, information technology and telecommunications infrastructures.

Given the importance and magnitude of the smart grid, at the most basic level just about everyone you know is a stakeholder. According to NIST, the stakeholder groups who may find Framework 3.0 most useful include:

  • Utilities and suppliers concerned with how best to understand and implement the smart grid (especially Chapters  4, 5 and 6);
  • Testing laboratories and certification organizations (especially Chapter 7);
  • Academia (especially Section 5.1 and Chapter 8); and
  • Regulators (especially Chapters 1, 4, and 6, and also Section 3.5).