Massachusetts regulators call for electric distribution companies to submit 10-year modernization plans

The Massachusetts Department of Public Utilities (DPU) is seeking comments by Jan. 17 on a straw proposal that includes requiring each electric distribution company to develop and submit a 10-year strategic grid modernization plan (GMP) within six months of a final order in the proceeding involving the DPU’s electric grid modernization efforts (D.P.U. 12-76-A).

The DPU said it anticipates holding hearings during the week of Feb. 24-28, with reply comments due by March 21, the DPU added in its order issued last month.

The DPU in October 2012 issued a notice of investigation into the modernization of the grid. Last July, a stakeholder working group submitted a report to the DPU containing information, principles and recommendations on various grid modernization issues.

The DPU establishes four grid modernization objectives: to reduce the effects of outages; to optimize demand, which includes reducing system and customer costs; to integrate distributed resources; and to improve workforce and asset management.

Each GMP must lay out plans to make measurable progress towards all of those objectives, the DPU added, noting that in its first GMP, an electric distribution company must include a comprehensive advanced metering plan as advanced metering functionality will serve as the basic platform for grid modernization and provide significant benefits. Each company must achieve such functionality no later than three years from the DPU approving its GMP, assuming that the benefits of so doing justify the costs.

The advanced metering plan is to include a technology proposal and implementation plan and a business case with a benefit-cost analysis, among other things.

The DPU said it recognizes that numerous factors could influence the optimal timing for each company to achieve advanced metering functionality, including how much time the company requires to upgrade its meters and systems, its other capital expenditure plans, and the remaining useful lives of current meters, billing systems and customer information systems.

“Accordingly, we will consider a company’s proposal to implement an advanced metering functionality plan over a longer term if the proposal includes: (1) a statement of the reasons with a supporting analysis; and (2) an alternative timeline for achieving advanced metering functionality.”

Successful implementation of grid modernization will require fundamental changes in the relationship between the companies and their customers because customer participation is necessary to realize many of the benefits of grid modernization.

Accordingly, the DPU added, each electric distribution company is to include a proposed marketing, education and outreach plan in its advanced metering plan with its timeline, strategies and budget for educating customers and motivating them to become full participants in grid modernization.

Also, the company must submit a benefit-cost analysis to support its request for preauthorization of advanced metering investments, the DPU said, noting that the business case must specify a deployment timeline and determine the total net present value of the associated benefits and costs. In order to calculate benefits and costs, companies must use baseline and projected data, the DPU said.

Furthermore, companies should base their cost estimates on various sources, including company-specific plant and operational considerations and estimates, publicly available data and vendor quotes.

At a minimum, the DPU added, a company’s total benefits must include its “best effort” estimates of such quantifiable benefits as reduced meter-related operations and maintenance expenses and reduced capital expenditures.

The DPU also said that each electric distribution company may seek, within its advanced metering plan, a capital expenditure tracking mechanism for advanced metering investments.
“Even with a capital expenditure tracking mechanism, an electric distribution company may only recover costs associated with the [advanced metering plan] after they have been incurred and been demonstrated to be prudent, incremental to costs recovered in base rates, and ‘used and useful,’” the DPU said.

The DPU also noted that targeted, well-designed metrics will allow it and other stakeholders to evaluate an electric distribution company’s implementation of its GMP and advanced metering plan, as well as progress towards the grid modernization objectives.

In its GMP, an electric distribution company must propose infrastructure metrics that track its implementation of grid modernization technologies or systems, as well as performance metrics that measure progress towards the objectives of grid modernization. For example, in designing its metrics, a company could begin to report on the number and percentage of customers who have accessed energy usage information using an Internet portal or enrolled in energy information programs.

Companies must also include within their GMPs a model tariff for customers who would like to opt out of advanced metering functionality.

The DPU said it welcomes comments on any aspect of the straw proposal, as well as on such specific questions as:

  • Which aspects of the benefit-cost analysis should include industry-wide figures?
  • What cost recovery filing requirements should the DPU impose upon companies?
  • What information or standards on cyber security, if any, should apply to GMPs?

Among other things, the DPU also said that it proposes to address in separate upcoming proceedings time-varying rates; cyber security, privacy and access to meter data; and electric vehicles (EVs).

Indeed, in a separate order issued last month, the DPU opened an investigation into DPU policies and regulations that will help facilitate and accommodate the widespread adoption of EVs.

About Corina Rivera-Linares 3160 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.