NewEnergyNews: The Policy Fight For A Modern Grid Gets Bigger

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    Monday, November 16, 2020

    The Policy Fight For A Modern Grid Gets Bigger

    Q3 2020 50 States of Grid Modernization

    October 2020 (North Carolina Clean Energy Technology Center)

    Executive Summary

    WHAT IS GRID MODERNIZATION?

    Grid modernization is a broad term, lacking a universally accepted definition. In this report, the authors use the term grid modernization broadly to refer to actions making the electricity system more resilient, responsive, and interactive. Specifically, in this report grid modernization includes legislative and regulatory actions addressing: (1) smart grid and advanced metering infrastructure, (2) utility business model reform, (3) regulatory reform, (4) utility rate reform, (5) energy storage, (6) microgrids, and (7) demand response.

    Q3 2020 GRID MODERNIZATION ACTION

    In the third quarter of 2020, 45 states plus DC took a total of 382 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 382 actions catalogued, the most common were related to policies (89), deployment (83), and planning and market access (66).

    TOP 5 GRID MODERNIZATION DEVELOPMENTS OF Q3 2020

    Five of the quarter’s top policy developments are highlighted below.

    Maryland Public Service Commission Authorizes Multi-Year Rate Plans and Performance Incentive Mechanisms

    The Maryland Public Service Commission issued a decision in September 2020, authorizing, but not requiring, utilities to file multi-year rate plans. The order also authorizes utilities to propose performance incentive mechanisms that support recognized state policy goals that go beyond historic baseline standards. The Commission plans to initiate a rulemaking on performance incentive mechanisms once it has greater information and experience.

    Massachusetts Regulators Open Phase II Grid Modernization Investigation

    In July 2020, Massachusetts regulators opened a new proceeding for Phase II of its investigation into electric grid modernization. The investigation is currently focusing on advanced metering functionality and time-varying rate design options for electric vehicle customers, as well as the current status of utility metering and billing systems and meter replacement strategies.

    Connecticut and New Jersey Utilities File Advanced Metering Infrastructure Proposals

    Eversource and United Illuminating in Connecticut, as well as Atlantic City Electric and Jersey Central Power & Light in New Jersey, filed advanced metering infrastructure (AMI) deployment proposals during Q3 2020. Each utility plans to deploy AMI throughout its service territory. Eversource’s proposal also includes a data privacy and customer engagement plan, and United Illuminating’s proposal includes a pilot to identify high-potential energy savings opportunities leveraging AMI interval data.

    South Carolina Lawmakers Initiate Electricity Market Reform Study

    In September 2020, the South Carolina Legislature enacted a bill establishing an Electricity Market Reform Measures Study Committee and directing the committee to prepare a study examining several different market reform options, such as creating a South Carolina Regional Transmission Organization (RTO), joining an existing RTO, implementing an energy imbalance market, and authorizing community choice aggregation.

    New York Public Service Commission Approves Demand Response Program Rules

    The New York Public Service Commission approved demand response program rules in September 2020 that implement two new dynamic load management program options. These options will provide incentives to participants for at least three years and will allow energy storage resources to participate in these programs. The new program rules are intended to help utilities meet the state’s energy storage target.

    MOST ACTIVE STATES AND SUBTOPICS OF Q3 2020

    The most common types of actions across the country related to energy storage deployment (53), distribution system planning (27), smart grid deployment (25), utility business model reforms (24), AMI deployment (23), and data access policies (23). In Q3 2020, grid modernization activity decreased in all categories except deployment, due to most state legislatures adjourning earlier in the year.

    The states taking the greatest number of actions related to grid modernization in Q3 2020 can be seen in Figure 4. New York, California, New Jersey, Hawaii, and Massachusetts saw the most action during the quarter, followed by Connecticut, Michigan, and North Carolina. Overall, 45 states, plus DC, took actions related to grid modernization in Q3 2020.

    TOP GRID MODERNIZATION TRENDS OF Q3 2020

    Utilities Proposing Customer Demand Response Incentive Programs

    A growing number of utilities are proposing demand response incentive programs utilizing smart thermostats or battery storage systems. Duke Energy Florida proposed the use of controlled thermostats to reduce peak demand and respond to emergency peak events, in exchange for a $50 prepaid credit card. Also in Florida, regulators approved Tampa Electric’s proposed smart thermostat programs, which provide rebates to residential and commercial customers. Madison Gas & Electric requested approval for a Bring Your Own Device smart thermostat program in Wisconsin, including upfront and annual incentives in exchange for allowing the utility to control the thermostat during peak events. In Utah, Rocky Mountain Power also proposed a new demand response incentive program using customer-owned battery storage systems for grid management.

    States Studying Specific Elements of Grid Modernization

    While numerous states have undertaken broad investigations covering many different aspects of grid modernization in recent years, several of these proceedings have since concluded, with states now focusing on studying specific elements of grid modernization. The New Hampshire Public Utilities Commission will be studying ways to enable storage projects to receive compensation for avoided transmission and distribution costs, and a South Carolina study committee will be specifically examining electricity market reform measures. The Connecticut Public Utilities Regulatory Authority has several proceedings related to grid modernization open, which are considering specific topics like energy storage, non-wires alternatives, resilience, and advanced metering infrastructure. Maryland’s broad grid modernization proceeding has also led to several specific rulemakings, working groups, and program proposals related to energy storage, data access, and interconnection.

    Regulators Establishing Terms for Energy Storage Qualifying Facilities

    Regulators in some states have been considering the treatment of energy storage qualifying facilities or facilities paired with energy storage under the Public Utility Regulatory Policies Act (PURPA). In August 2020, the South Carolina Public Service Commission approved Dominion Energy’s tariff for storage qualifying facilities. The tariff, which will be available to battery storage projects of at least 5 MW, includes compensation for capacity and energy shifting. The Idaho Public Service Commission recently issued a decision establishing a separate category for energy storage qualifying facilities, with projects up to 100 kW eligible for 20-year contracts and projects over 100 kW eligible for 2-year contracts. The Commission also established methods for calculating avoided energy and avoided capacity rates for both categories of storage projects. North Carolina regulators have also been examining treatment of energy storage resources under PURPA.

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