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Entries in Smart Grid (4)


“The Rate Is What It Is”: Supreme Court Upholds FERC’s Demand Response Rule 

At oral argument in FERC v. Electric Power Supply Association, the Government argued that the retail rate or price of electricity “is what it is”—exactly the amount charged to the customer, without considering any foregone benefits. On Monday, the Supreme Court agreed with that characterization and upheld FERC’s Demand Response rule, rejecting arguments that the rule exceeded FERC’s authority by regulating retail electric rates that are exclusively the domain of state regulators. But before we get to the merits, some background is in order.

What is Demand Response?

Demand Response (DR) refers to the practice of incenting electricity consumers to reduce their demand for power during times of peak power usage. During these peak times, electricity becomes very expensive to generate as older and more inefficient generators are required to run to meet the high demand.

Grid operators throughout the country are tasked with precisely balancing electricity demand and supply at all times. Historically, these grid operators focused on the supply side of the equation—overseeing markets to ensure there is an adequate supply of generation to meet forecasted demand. Over the last 10-15 years, however, FERC and regional grid operators have learned that by lowering demand, they can reduce wholesale power costs and improve grid reliability.


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Washington Post on Electric Vehicles: Coal Generates Electricity

Last week the Washington Post exposed electric cars’ dirty secret: they use electricity! The piece makes the astute point an electric vehicle (EV) is only as clean as the electricity that is used to power it. It is true that in many parts of the world that still heavily rely on coal, such as China, the climate benefit from an EV charging from the grid may be slim or even slightly negative. While it is important to remember that EVs do have a climate impact, EVs offer other advantages over gasoline-powered cars that need to be part of the discussion when evaluating the technology:

1)    EVs shift pollution from many mobile sources to a manageable number of point sources. It is much easier to regulate a handful of coal power plants than it is to regulate a million cars. You don’t have to worry about implementing vehicle emissions tests or removing older, heavier-polluting vehicles from the road. Instead, you can require these specific point sources to employ the best pollution control technology available and easily confirm that the plants are in fact using that technology. In the U.S., for example, stricter pollution regulations and competition from other sources of electricity has encouraged the rapid demise of coal-fired power plants.

2)    EVs shift pollution from population centers to less-populated areas. In addition to carbon dioxide, cars emit other pollutants that are harmful to human health. When most people walk outside their front door, they do not see a coal-fired power plant. Almost everyone sees cars. Moving pollution outside of city centers can improve air quality and bring corresponding health benefits to city residents. The Chinese government apparently recognized the benefits of reducing pollution from cars in 2008 when it banned diesel trucks from driving in Beijing and required city residents to alternate their driving days during the Olympics.

3)    EVs can be integrated into the smart grid to store electricity when it is cheap and sell it back to the grid when it is expensive. As Tesla understands, EVs are really made up of two new useful technologies: (1) an electric motor and (2) a battery. The EV battery can be charged at times when electricity is typically cheaper to produce (i.e., at night). During the hottest days of the year, when electricity demand is at its highest, EV owners could sell some of the electricity stored in the EV battery back to the grid. This could help reduce the need to build additional power plants to meet those high demand periods and reduce the cost of electricity for all customers.

4)    Electric grids are getting cleaner in most parts of the world. The electric vehicle industry is still a fledgling industry. EVs are not likely to substantially reduce global greenhouse gas emissions in the next ten years. However, as electric grids across the world are transformed into cleaner, smarter systems, EVs could play a key role in reducing both greenhouse gas emissions and conventional pollution around the world.

As the Post piece suggests, it may be the case that in some parts of the world, EVs do not currently make sense as a climate solution.  It is difficult to accept, however, that widespread EV adoption would make climate change a more difficult problem.   


MPUC Will Investigate CMP’s Smart Meter Program 

During today’s deliberations, the three MPUC Commissioners agreed to investigate an “opt-out” option for Central Maine Power Company customers who would prefer not to have smart meters installed in their homes and businesses.  The investigation was prompted by several CMP customers who expressed health and privacy concerns related to the use of wireless smart meters.  The Commission made clear that its investigation would be limited to the issue of whether CMP’s alleged practice of not providing an opt-out option for customers is “unreasonable, insufficient or unjustly discriminatory” in the context of the Commission’s February 2010 order in Docket No. 2007-215 approving CMP’s Automated Metering Infrastructure (AMI) program, which incorporates the use of smart meters.

The AMI program seeks to improve CMP’s customer service, enhance storm restoration efforts, reduce costs, and ultimately provide customers with tools to use electricity more efficiently.  The subsequent installation of smart meters in accordance with the AMI program prompted concerns by some CMP customers, which were not necessarily raised or addressed in the AMI proceeding.  The Commission’s new investigation will “examine the possibility of local opt-outs to the program already being implemented and installed by CMP; the possible effect of such an opt-out on the original federal Department of Energy grant that helped fund approximately half the cost of the program; the availability of hard-wire alternatives from CMP; and cost implications for any alternatives to the current program.” The Commission will also investigate whether there are technically feasible, cost-effective alternatives to smart meters that do not undermine the overall smart grid goals.


Maine Public Utilities Commission Investigates Need for Smart Grid Operator

In response to Maine legislation enacted last spring, the Smart Grid Policy Act and the MPUC Order approving CMP’s Maine Power Reliability Program (“MPRP”) the MPUC has initiated a formal investigation to determine whether it is in the public interest to have one or more smart grid coordinators in Maine to help achieve the policy objectives set forth in the Smart Grid Policy Act.  Under the Act, the smart grid coordinator will manage access to smart grid functions and associated infrastructure, technology and applications.  The Order approving MPRP provides for two smart grid pilot projects to be set up as non-transmission alternatives and administered by a smart grid coordinator.  The MPUC investigation will define “smart grid” technologies, systems and functions; the potential role of a smart grid coordinator in furthering the reliability, efficiency and environmental policies embodied in the Smart Grid Policy Act; and the overall costs and benefits to ratepayers.