In strengthening grid, Maryland task force calls for performance-based ratemaking structure

As a means to strengthen the state’s electric distribution system, a Maryland task force has recommended that state regulators implement a performance-based ratemaking structure, with a focus on increased reliability as a priority, to align the motivation of the investor-owned utility and its customers.

Gov. Martin O’Malley on Oct. 3 released the task force’s report, which contains 11 recommendations, including a four-step implementation plan that would accelerate investment designed to strengthen the electric distribution grid, according to a statement from the governor.

The report stems from an executive order that O’Malley issued in July to look into how to strengthen the electric distribution system.

The governor directed Abigail Hopper, the administration’s energy advisor, to mobilize certain government agencies to solicit input and recommendations from experts throughout Maryland to strengthen the state’s utility infrastructure.

According to the executive order, the state has experienced severe weather events in the past several years, including hurricanes, blizzards and derechos, which have caused prolonged electricity outages, posing a threat to public health and safety.

According to the Oct. 3 statement, the task force evaluated the effectiveness and feasibility of undergrounding supply and distribution lines in selected areas, and the effectiveness of infrastructure investments, utility staffing levels, emergency procedures and options for cost recovery for capital investments to improve the resiliency and reliability of the electric distribution system.

According to the report, several recommendations were made to build upon the foundation of the Rule Making 43 (RM43) regulations – RM43 is the state Public Service Commission’s recent regulatory process to implement changes to the reliability metrics.

Changes included holding utilities responsible for reliability standards inclusive of major storm outages, tightening the poorest performance feeder standard and providing a simplified major outage event report for public consumption.

The task force recommended accelerating several years’ worth of RM43 investments into a condensed timeframe. “While the task force was intentionally not proscriptive regarding which specific remediation measures should be implemented by the utilities, data collected through the working groups demonstrates that selective undergrounding is an effective way to harden the grid,” the report added.

The task force also suggested that utilities advance investment to provide Marylanders with a kickstart on the path of improved resiliency, recommending that the PSC authorize a tracker cost recovery mechanism for accelerated and incremental investments.

Furthermore, the task force recommended that joint exercises be performed between the state and utilities. “The task force recognizes these emergency management processes can be improved with more collaboration between the utilities and state and local government, and will lead to improved situational awareness that will help all concerned identify, prioritize and respond to customer needs,” the report added.

With regard to special needs customers, the task force recommended that utilities work with emergency managers to expand customer registration and share data during outages.

Another recommendation called for an evaluation of statewide vegetation management regulations and practices beyond RM43. “While the task force is cognizant of the critical and positive role that Maryland’s tree canopy plays throughout the state, the task force is convinced that improved vegetation management is a highly effective way to improve the resiliency of the grid,” the report added.

Other recommendations included for the PSC to determine the cost of outages to different customer classes and the state economy in general to determine what level of investment in resiliency improvements is warranted, and for the PSC to conduct an inquiry into the graying of the utility workforce.

Noting that the industry is transforming, the task force recommended that the governor charge the “Energy Future Coalition” with scoping out a “Utility 2.0” pilot proposal and reporting back to the governor and task force by March 15, 2013, on a viable method to explore the contours of the utility of the future.

“This report provides a blueprint to help us strengthen the resiliency of our electric grid,” O’Malley said in the statement. “We must make the investments needed to support a 21st century utility infrastructure.”

About Corina Rivera-Linares 3058 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at clinares@endeavorb2b.com.