Navigating public policy

Northeastern states face homegrown issues

Published In: Intelligent Utility Magazine January/February 2010

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''PUBLIC AWARENESS IS ALWAYS THE FIRST STEP IN winning a political battle in the United States,'' said Theodore Roosevelt in his gubernatorial efforts to promote conservation to the largely indifferent citizenry of New York state.

To move smart grid initiatives forward in the Northeast United States, keeping the public aware of what a more intelligent utility can mean to their lives is critical. The benefits of a smarter, more robust grid and the consequences of not having one must be clearly communicated to garner broad public support.

FEDS HAVE MONEY ROLE

Our federal ship of state set a new course for a national energy policy fueled by the $36.7 billion allocated to the U.S. Department of Energy under stimulus spending. The $3.4 billion for 100 smart grid grants is a major indication of money influencing public policy.

Branko Terzic, former commissioner for the Federal Energy Regulatory Commission, state utility regulator and CEO of a Connecticut utility - and now a policy leader in energy resources at Deloitte - had this to say about federal versus state funding: ''Currently, the only role federal has is the stimulus funding. All the other decisions as to acquisition of assets, expansions of transmission and smart meter implementations are exclusively under the states.''

STEERED BY STATE + LOCAL NEEDS

The Northeast faces smart grid investment and technological challenges that are similar to those faced in other parts of the country, but also has homegrown issues. Rates are generally higher than in many other parts of the country, and pressure to avoid increases is heavier now due to the slowing economy. ''Many citizens there already feel they are paying high rates and are not particularly interested in supporting new investments that may add to costs even though there may be longterm benefits,'' said Terzic. Because of denser population, new construction for generation, particularly siting transmission lines, is controversial, costly and time consuming.

Local influence also steers public policy. An example is the New York Regional Interconnect (NYRI), a private effort to build a 190-mile high-voltage direct current line through New York state, primarily over existing corridors. In April, after a five-year effort, multiple local public hearings and an investment of more than $20 million, NYRI suspended its participation in the New York State Public Service Commission's Article VII process, stating that a recent decision by federal regulators made the $2.1 billion project uncertain. ''Certainly, local pressure [not in my backyard] was a factor, but also existing transmission owners were against us,'' said Chris Thompson, president of NYRI.

LAGGING IN SMART METER INVESTMENTS

Also, demand is weak. ISO New England recently issued a 10-year power plan for its six states. The plan noted: ''Consumer demand is expected to grow slowly over the next decade, reflecting the impacts of the economic turndown as well as the implementation of energy efficiency standards for appliances…Energy consumption is projected to grow by 0.9 percent annually over the next 10 years.'' This is largely a reflection of slow and flat-line population growth and losses in business and industrial consumption.

Some of these factors indicate why the Northeast is lagging in smart grid and smart meter investments. ''There has to be a finding of public benefit. Many of these proposals result in short-term cost increases and very long-return benefits and some state commissions are reluctant to make that call today,'' said Terzic.

Public policy is often affected by the unexpected. A major outage caused by infrastructure failure or a cyber attack could have significant impact. Just as the 2003 Northeast blackout led in part to the 2005 U.S. Energy Policy Act, another major event or series of minor events could spur smart grid programs.

''Utilities need to identity where the investments need to be made, identify the technologies they want to introduce and make the case for the benefits accruing from these technologies. We know there is a tremendous amount of efficiency that can be gained in the system with the introduction of smart grid offerings,'' Terzic concluded.

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