NewEnergyNews: Monday Study – The Debate On How To Build A Modern Power System Right Now /


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    Monday, December 19, 2022

    Monday Study – The Debate On How To Build A Modern Power System Right Now

    The 50 States of Grid Modernization: Q3 2022

    October 2022 (North Carolina Clean Energy Technology Center)

    Executive Summary


    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.


    In the third quarter of 2022, 48 states plus DC took a total of 441 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 441 actions catalogued, the most common were related to deployment (111), policies (78), and business model and rate reform (76).


    Five of the quarter’s top policy developments are highlighted below. Massachusetts Lawmakers Establish Electric Sector Modernization Planning Requirements

    Massachusetts lawmakers enacted H. 5060 in August 2022, which requires utilities to develop electric sector modernization plans. The plans are to focus on transmission and distribution system upgrades to improve grid reliability, resiliency, and adoption of renewable energy and distributed resources, among other goals. The bill also established a grid modernization advisory council, which will provide input on the modernization plans.

    First Energy Files Grid Mod II Investment Plan in Ohio

    In Ohio, First Energy filed an application for approval of the second phase of its distribution grid modernization plan (“Grid Mod II”) in July 2022. The $626.4 million plan includes investments in advanced metering infrastructure, distribution automation, an advanced distribution management system, and a distributed energy resource management system, among other investments.

    Illinois Commerce Commission Approves Utility Performance Metrics

    The Illinois Commerce Commission (ICC) approved eight performance metrics each for Ameren Illinois and Commonwealth Edison, which will be used in a multi-year performancebased ratemaking framework for the utilities. The metrics differ for each utility, but include enhancing reliability, improving interconnection timelines, reducing load, strengthening grid performance, and expanding diverse contractor participation.

    New Jersey Regulators Issue Storage Incentive Program Straw Proposal

    The New Jersey Board of Public Utilities filed a straw proposal for the New Jersey Storage Incentive Program in late September 2022. The straw proposal includes incentives for both grid supply and distributed projects, with 30% of the incentive being structured as an annual per-kWh incentive. Grid supply projects would be paid based on abated carbon emissions, and distributed projects would be paid for contributions to certain performance hours.

    California Regulators Open Rulemaking to Advance Demand Flexibility Through Rates

    In July 2022, the California Public Utilities Commission opened a new rulemaking to advance demand flexibility through electric rates. Among the proceeding’s objectives are to enhance reliability, improve affordability and equity, reduce curtailment of renewable energy, reduce greenhouse gas emissions, and enable electrification. The Commission will consider updates to its rate design principles and guidance principles for demand flexibility, and may authorize new pilots rates, programs, studies, or tools.


    The most common types of actions across the country related to energy storage deployment (66), utility business model reforms (45), smart grid deployment (39), distribution system planning (27), and advanced metering infrastructure deployment (26).

    The states taking the greatest number of actions related to grid modernization in Q3 2022 can be seen in Figure 4. California, New York, Massachusetts, Michigan, and Illinois saw the most action during the quarter, followed by Connecticut, Hawaii, New Jersey, Minnesota, Colorado, and New Mexico. Overall, 48 states, plus DC, took actions related to grid modernization in Q3 2022.


    States Moving Toward Performance-Based Regulation

    A number of states took steps moving toward performance-based regulation during the quarter, with activity particularly focused around performance metrics. In Illinois, regulators approved eight performance metrics each for Ameren Illinois and Commonwealth Edison, which will be used as a part of their multi-year performance-based ratemaking framework. The Vermont Public Utility Commission approved new performance metrics for Green Mountain Power during the quarter as well, with the metrics focused on fleet electrification, battery backup during outages, and access to renewable or innovative energy services in low-income communities. United Illuminating filed a general rate case application with Connecticut regulators in September 2022, including a demonstration program for performance-based metrics. The proposed tracking metrics include distributed energy resource interconnection, electric vehicle managed charging, electric storage adoption, and customer e-bill adoption. Duke Energy Progress also filed proposed performance incentive mechanisms in North Carolina in early October, following a technical conference in July.

    States and Utilities Examining Rate Designs for Energy Storage Facilities

    Some states are beginning to examine potential rate designs specifically aimed at customers with battery storage systems. In Massachusetts, lawmakers enacted legislation directing each distribution company to file at least one rate tariff applicable to distribution-connected energy storage systems by October 31, 2023. The Maine Public Utilities Commission approved new rate schedules for battery storage facilities in September 2022. Several of the rates approved for Central Maine Power and Versant Power will be applicable to both battery storage and electric vehicle charging. In Michigan, Consumers Energy requested approval for a new large wholesale electric storage tariff for customers with batteries of at least 100 kW that are interested in participating in the wholesale capacity, energy, and ancillary services market.

    States Moving Toward Competitive Procurement of Resources

    States and utilities are increasingly using competitive procurement mechanisms, and particularly all-source competitive procurements, for new resources. These mechanisms can open the door for energy storage and other less traditional resources to compete to meet system needs. New Mexico regulators approved new integrated resource planning (IRP) rules in September 2022, which require utilities to issue RFPs for new resources following approval of IRPs. The rules do allow the Commission to grant a variance request if an RFP process is not the best option for obtaining a resource. Proposed IRP rules currently pending in Arizona would require the use of all-source RFPs. Idaho Power filed an application for approval of an all-source RFP in Oregon to meet the utility’s 2026 capacity resource need; the utility is seeking up to 1,100 MW of variable energy resources and at least 800 MW of peak capacity.


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