TODAY’S STUDY: The Fight For The Future Grid
The 50 States of Grid Modernization: 2018 Review and Q4 2018
February 7, 2019 (North Carolina Clean Energy Technology Center)
Executive Summary 2018 GRID MODERNIZATION ACTION
In 2018, 44 states plus DC took a total of 460 policy and deployment actions related to grid modernization, utility business model and rate reform, energy storage, microgrids, and demand response. Table 1 provides a summary of state and utility actions on these topics. Of the 460 actions catalogued, the most common were related to policies (113), followed by deployment (81), and planning and market access (78).
TOP TEN MOST ACTIVE STATES OF 2018
Ten states taking the greatest number of actions related to grid modernization, or some of the most impactful actions, are noted below. New York New York adopted an energy storage target of 1,500 MW by 2025 and 3,000 MW by 2030, while the Public Service Commission (PSC) Staff developed a roadmap for achieving these targets. The PSC also approved interconnection standards for energy storage systems and a Hybrid Tariff for compensating eligible generators paired with energy storage. Several bills related to grid modernization were also considered during the year.
Nevada The Public Utilities Commission of Nevada approved distribution system planning rules in 2018, as well as a revised version of integrated resource planning rules. The Commission also finalized NV Energy’s energy storage rebate program, addressed interconnection issues for energy storage systems, and published an energy storage study, which found that 700 to 1,000 MW of utility-scale battery storage could be cost-effectively deployed by 2030.
Hawaii’s investor-owned utilities filed their integrated grid planning report in 2018, proposing a new planning procedure that merges separate processes. The utilities also requested approval of their Phase 1 grid modernization projects, focusing on AMI, as well as multiple energy storage projects. Hawaii lawmakers enacted bills requiring a transition to performance-based ratemaking and directing the Public Utilities Commission to create a microgrid services tariff.
New Jersey lawmakers adopted an energy storage target of 2,000 MW by 2030 and initiated an energy storage study in 2018. Meanwhile, Atlantic City Electric, Jersey Central Power & Light, and PSE&G New Jersey proposed a variety of grid modernization investments and incentive programs. New Jersey is also developing its 2019 Energy Master Plan, which will incorporate several aspects of grid modernization.
California utilities requested approval for several energy storage and demand response projects in 2018. State lawmakers also enacted a bill to establish microgrid interconnection and compensation rules, and regulators considered distribution system planning, default timevarying rates, utility energy storage rebates for low-income customers, modifications to the Self-Generation Incentive Program, and more.
The Public Utilities Commission of Ohio (PUCO) concluded its PowerForward grid modernization investigation in 2018, opening three new dockets that relate to ongoing stakeholder efforts (the PowerForward Collaborative), distribution system planning, and data access. PUCO also considered smart grid and energy storage investment proposals from Ohio Power Company, Duke Energy Ohio, and Dayton Power & Light.
The Massachusetts General Court adopted the country’s first clean peak standard in 2018, while also expanding the state’s energy storage target from 200 MWh by 2020 to 1,000 MWh by 2025. The Department of Public Utilities issued a decision on grid modernization investment plans from the state’s three investor-owned utilities and considered performance-based incentive mechanisms for Eversource and National Grid.
The Michigan Public Service Commission (PSC) published a report on performance-based regulation and also considered distribution system planning rules and customer data access standards during 2018. Consumers Energy and DTE filed distribution investment and maintenance plans, and Upper Peninsula Power Company filed an AMI deployment proposal. The PSC is also investigating interconnection and demand response aggregation issues.
The Minnesota Public Utilities Commission approved interconnection standards for energy storage systems, as well as integrated distribution planning requirements. The Commission is also working to develop performance incentive mechanisms and issued a decision on proposed grid modernization investments from Xcel Energy. State lawmakers considered several bills related to energy storage during 2018.
The Arizona Corporation Commission considered a broad Energy Modernization Plan put forward by Commissioner Tobin in 2018, later opening a rulemaking docket addressing several different energy modernization issues, including energy storage and blockchain technology. The Commission also worked to develop interconnection standards for energy storage and directed Tucson Electric Power and UNS Electric to file data access plans and rate tariffs for customers with multiple types of distributed energy resources.
TOP GRID MODERNIZATION TRENDS OF 2018
States and Utilities Undertaking Distribution System Planning Efforts Regulators in several states, including Michigan, Missouri, Nevada, and Washington, considered distribution system planning rules in 2018. The Public Utilities Commission of Nevada formally adopted rules, while the Minnesota Public Utilities Commission established integrated distribution planning requirements. Regulators in Delaware and Ohio initiated dockets on distribution system planning in 2018 as well.
States Studying the Value of Energy Storage and Policy Options
Three states – Maryland, Nevada, and North Carolina – completed studies focused on energy storage in 2018, while New York published an energy storage roadmap. Although each study has a different goal, they all consider policy options to encourage storage development. Legislation was enacted in New Jersey and Virginia in 2018 initiating energy storage studies.
Regulators Rejecting and Scaling Back Utility Grid Modernization Proposals
Many of the grid modernization investment plans put forward by utilities in 2018 were rejected or significantly scaled back by regulators. AMI proposals in Kentucky, Massachusetts, and New Mexico were rejected, while expansive grid modernization plans put forward by utilities in North Carolina, Rhode Island, and Virginia were scaled back substantially, with some regulators urging utilities to present revised plans and budgets for the rejected elements.
Growing Movement Toward Performance-Based Regulation
States are increasingly considering performance-based regulation as an alternative to traditional cost-of-service regulation. Massachusetts regulators evaluated performance incentive mechanisms put forward by Eversource and National Grid, and the Hawaii State Legislature enacted a bill requiring a transition to performance-based ratemaking. Michigan, Minnesota, Oklahoma, and Rhode Island also saw action related to performance-based regulation in 2018.
Utilities Requesting Special Ratemaking Treatment for Grid Investments
Several utilities requested special ratemaking treatment for grid modernization investments in 2018. Duke Energy Carolinas requested approval for a new grid rider for its PowerForward grid investment plan in North Carolina, which regulators rejected in 2018. Three New Jersey utilities – Atlantic City Electric, Jersey Central Power & Light, & PSE&G New Jersey – all proposed new riders in 2018 as well, which are currently under consideration.
States Concluding Grid Modernization Investigations, Identifying Next Steps
Ohio and Oregon concluded their grid modernization investigations in 2018, publishing final reports with findings and recommended next steps. The Illinois Commerce Commission also published a draft final report on its NextGrid initiative in 2018. Proceedings in Colorado and Connecticut are also ending, and rulemakings and decisions have been coming out of Maryland’s PC 44 proceeding.
States Establishing Clear Standards for Energy Storage Interconnection
Several states are reexamining interconnection rules in order to create clear requirements for energy storage systems. The Minnesota Public Utilities Commission approved revised rules including energy storage provisions in 2018, and the Public Utilities Commission of Nevada resolved certain energy storage interconnection issues. Rulemaking proceedings are also open in Arizona and Maryland, where energy storage interconnection standards are under consideration.
Regulators Considering Rules for Access to Customer Usage Data
Rules governing access to customer energy usage data are coming under consideration in several states, especially as AMI is more fully deployed. The Michigan Public Service Commission required utilities to file data privacy tariffs, and the Public Utilities Commission of Ohio opened a new proceeding on data access in 2018. A proceeding is also open in Maryland, and Arizona regulators directed certain utilities to develop a data access process for customers.
Utilities Proposing AMI Opt-Out Tariffs and Fees
As utilities continue to deploy AMI, the issue of opt-out options for customers is being addressed more frequently. In 2018, regulators considered opt-out tariffs for at least 11 utilities, with upfront opt-out fees ranging from $0 to $170 and monthly fees ranging from $5.00 to $25.89. Some utilities are also proposing additional provisions, such as requiring customers to provide meter readings or requiring statements from medical physicians.
Wholesale Market Operators Revising Rules to Expand Energy Storage Participation
The Federal Energy Regulatory Commission issued Order 841 in February 2018, directing wholesale market operators (Independent System Operators and Regional Transmission Organizations) to establish rules that enable energy storage resources to participate in energy, capacity, and ancillary services markets. ISOs and RTOs filed their plans to comply with the order in December 2018, and the changes will need to be implemented by December 3, 2019.
IN COMPARISON: 2017 VS. 2018
Total grid modernization action increased by 60% over the past year, with states and utilities taking approximately 288 actions in 2017 and 460 actions in 2018. In 2018, activity increased in every category tracked by this report by the following amounts: Studies & Investigations: 70%, Planning & Market Access: 73%, Utility Business Model & Rate Reform: 68%, Policies: 85%, Incentives: 31%, and Deployment: 29%. The number of states taking actions in each grid modernization category also increased from 2017 to 2018.
Q4 2018 GRID MODERNIZATION ACTION
In the fourth quarter of 2018, 39 states plus DC took a total of 280 policy and deployment actions related to grid modernization, utility business model and rate reform, energy storage, microgrids, and demand response. Table 2 provides a summary of state and utility actions on these topics. Of the 280 actions catalogued, the most common were related to policies (58), followed by deployment (52), and planning and market access (52).
TOP 5 GRID MODERNIZATION DEVELOPMENTS OF Q4 2018…MOST ACTIVE STATES AND SUBTOPICS OF Q4 2018…