New Jersey regulator: Hurricane Sandy creates a paradigm shift in evaluating distributed resources

The pre-NARUC FERC-NARUC Collaborative met in Baltimore, Md., on Nov. 11, to discuss non-transmission alternatives in planning and the benefits of locally based resources. 

The two topics were co-chaired by FERC Commissioner John Norris and Phyllis Reha, commissioner with the Minnesota Public Utilities Commission and FERC Chair Jon Wellinghoff and Orjiakor Isiogu, commissioner with the Michigan Public Service Commission, respectively.

Regarding the use of non-transmission alternatives, Doug Hurley of Synapse kicked off the discussion saying non-transmission alternatives include generation, demand response, distributed generation and a hybrid approach. He stressed that a good load forecast was essential to good planning.

Heather Hunt of the New England Committee on Electricity said non-transmission alternatives should be done earlier in the planning process – a theme echoed by Josh Binus of BPA. Binus said BPA had learned that internal and utility stakeholders must be engaged early enough to have time to consider non-transmission alternatives.

Jeff Burleson of Southern (NYSE:SO) said $400m in new transmission was avoided by siting 2,500 MW of combined cycle in Atlanta where load exceeds generation. He also said that a vertically integrated utility doing IRP is able to integrate planning and consider all of the options.

Alison Clements of the Natural Resources Defense Council said there was no place in PJM Interconnection’s planning process to consider non-transmission alternatives and noted that there were already $2bn in PJM’s transmission plans that would be coming to customers.

Also discussed were the benefits of locally based resources. Commissioner Jeanne Fox of the New Jersey Board of Public Utilities said that two-thirds of the state had been without power due to Hurricane Sandy, noting that widespread use of distributed generation could have hastened power restoration.

“Sandy changed where we are heading,” she said, adding, “Distributed generation is more efficient, cost effective and makes sense.”

Fox said solar power needs to be located near the load in New Jersey. She praised the 200,000 solar panels on poles that provide two-way communication with the utility – allowing for faster service restoration. 

PJM’s Terry Boston attributed the growth of demand response in PJM to institution of its capacity market.  Boston said he likes the idea of using water heaters as storage and is a fan of Dow’s new PowerHouse Solar Shingles.

He said PJM already has plenty of proposed solar and noted that FERC recently approved PJM’s price responsive demand program. However, Boston warned that a smart grid without smart prices won’t provide a smart response. He noted that he had a plug-in electric hybrid vehicle but was not on a time-of-use rate and had no incentive to charge the car off-peak. 

Commissioner Mike Chambley with the Hawaii Public Utilities Commission likened wind and solar to “digital resources.” He called for a paradigm shift where load fits the available generation and not the other way around. 

Wellinghoff acknowledged that distributed generation imposes costs and asked about Virginia Power‘s stand by charge. He said there is a $40 fee for charging in Virginia. 

Virginia Power’s Ken Barker said that firm data is needed to evaluate distributed generation and that it is unfair to use the utility as a back-up power source. He also said standby charges were a first attempt to recover such costs.

Miriam Horn of the Environmental Defense Fund (EDF) argued that demand response is the preferred alternative to re-powering coal with natural gas to meet EPA regulations. She said this was especially true in the Midwest, which has a lot of such impacted coal plants. 

According to EDF, mobilizing demand response in Texas could help it meet a looming drop in reserve margins. For example, using distributed generation in Austin, Texas, by putting solar on rooftops could allow it to meet 28% of its load.

Among other things, Hurley said standard cost-effectiveness analysis may be biased against non-transmission alternatives. For example, in Boston, you could replace the chillers on high rises to achieve peak savings. Boston’s peak load is driven by air conditioning used only 10 days per year, he added. 

NARUC and NASUCA continue through Nov. 14 in Baltimore.