ORIGINAL REPORTING: The Costs Of A Modern Power System

Duke, SCE, other grid modernization proposals faced big cost questions, more regulator scrutiny in 2021

Herman K. Trabish, January 4, 2022 (Utility Dive)

Editor’s note: Regulatory scrutiny is always good but regulators are realizing that a modern power system will come at a big – but necessary – cost.

To meet the energy transition’s urgency and complexity, utilities have proposed big modernization investments in their distribution systems, but regulators and customers want to know if the spending is necessary.

There were 498 grid modernization-related policy and deployment actions in 48 states in Q3 2021, but regulators approved only $904.4 million of the $14.7 billion in proposed utility investments, according to the most recent North Carolina Clean Energy Technology Center (NCCETC) “50 States of Grid Modernization” report. Some $12.7 billion was held for closer scrutiny, with $1.1 billion rejected.

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Of approximately $432 million in capital expenditures proposed by Southern California Edison (SCE) for grid modernization from 2019 to 2021, the California Public Utilities Commission approved about $426 million in August 2021 (21-08-036), according to SCE spokesperson Jeffrey Monford. The ruling showed regulatory support for the proposal, he added. But the commission held the utility’s proposed $360.9 million in 2022-2023 spending for review in its next general rate case, consistent with the stepwise approach to grid modernization approvals identified by NCCETC.

SCE’s investment plans for a Grid Management System (GMS), software, and automation capabilities complied with commission “directives” for integrating distributed energy resources (DER) to defer “infrastructure investment,” the commission acknowledged. But despite “compelling” SCE arguments, the decision limited spending for unproven automation technologies.

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SCE’s “technology advancement and deployment” to improve reliability and enable higher DER penetrations began with 2014 commission directives, SCE Vice President, Asset Strategy and Planning Erik Takayesu responded. SCE will expand “foundational capabilities” and work with what was approved toward greater “system automation” with its GMS and a distributed energy resource management system (DERMS), he added.

A “private sector ecosystem” of DER providers is “putting smart devices and distributed generation in customers’ homes,” Generac Grid Services President Bud Vos said. Advanced grid management and communications systems are needed “to bring that ecosystem of devices to utilities” and allow it to capture full value for “their systems and their customers.” But that technology is costly and will take time to deploy. “Stepwise” spending on system modernization is the better regulatory approach because previous smart meter deployments did not pay off, some stakeholders said… click here for more

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