CAPE NEDDICK, Maine — The future of the grid, electric vehicles, high costs, and the tension between state and federal jurisdiction were among the topics discussed at the New England Conference of Public Utilities Commissioners’ (NECPUC) 71st annual symposium last week.
New England faces “some of the highest costs in the country, resource constraints, reliability concerns, retirement concerns, storm costs, increasing resiliency needs — and that’s just right now,” said Elin Katz, Connecticut consumer counsel and president of the National Association of State Utility Consumer Advocates.
“I get really frustrated when people dismiss the advocate perspective and say all you care about is cost, because I love technology,” Katz said. “But I’m really worried about the cost.”
Katz serves on a scholarship board for the University of Hartford, where she said this season’s applicants are poorer, needier and have higher needs than the year before.
“That’s happening all over the country … so I worry about the consumer and what is happening with respect to our consumers and what they can afford,” Katz said.
Maine Wants Lower Prices
Cost was also on the mind of Maine Gov. Paul LePage, who told NECPUC on May 22 that he is looking to Canada to help supply his state with natural gas because his state has so far been unable to access the plentiful Marcellus gas in Pennsylvania because of environmentalists’ opposition to pipelines.
“You can live in Montreal, have a flat in the most expensive part of town and heat with electricity” because of low-cost Canadian hydropower, LePage said.
Maine enjoys the cheapest electricity prices in New England, but the region has the highest prices in the country, so the distinction means nothing when the state competes against Alabama for a new manufacturing plant, he said.
LePage brought up the case of an aircraft manufacturer looking to site a new plant. The $600 million cost of building in Alabama beat the $200 million cost in Maine because of the cheaper electricity rates in Alabama, he said.
LePage said high power prices are particularly challenging for the aging demographic in Maine, where many residents are retired and live on fixed incomes.
Resilience and the State/Federal Divide
The debate over grid resilience has highlighted new tensions in the line between state and federal jurisdiction, former FERC Commissioner and North Dakota PSC Chairman Tony Clark said.
“We thought [resilience] was basically about black start resources — the grid goes down and you have to have certain resources available that can bring the grid back up fast,” said Clark, now an adviser with law firm Wilkinson Barker Knauer.
Now regulators are asking about the value of fuel diversity, onsite fuel storage, dual-fuel units and the risk of gas generators with single-source pipelines.
“Some of those things begin to look an awful lot like resource adequacy, and once you start straddling that resource adequacy divide, you’re right in the middle of that state-federal jurisdictional pull,” Clark said.
Montana Public Service Commission Vice Chair Travis Kavulla said, “There’s no honest man in the conversation or debate about which jurisdiction is better, because utilities will opportunistically latch onto either side that’s perceived to maximize their profit, and the same goes for the rest of the stakeholders.
“This jurisdictional strife should probably be understood to be, as much it’s a function of law, as a function of rent-seeking or its first cousin, regulatory arbitrage,” Kavulla said.
In the absence of federal authority, there’s only so much states can do, said Kate Konschnik, director of the Climate & Energy Program at Duke University’s Nicholas Institute for Environmental Policy Solutions.
“One things states cannot do is reach into other states and dictate policy across state lines,” Konschnik said, referring to the Supreme Court’s 2016 Hughes v. Talen decision, which found that Maryland’s contract for differences with a generator could distort price signals in PJM.
Konschnik said the zero-emission credit cases in Illinois and New York are interesting because “in those two states alone, the state itself steps in and actually runs the [renewable energy credit] programs and now the ZEC programs, so there is this funny exception to the dormant Commerce Clause if the state itself is a market participant.
“So, if a state is building a public property and decides to only hire union workers from in-state, they can do that because they are acting as a purchaser or purveyor of goods rather than a regulator,” Konschnik said. “So, Illinois and New York may prevail, as they have so far in the lower courts.” (See 2nd Circuit Hears New York ZEC Appeal.)
Sen. King Calls for ‘Offensive’ on Cyberthreats
Speaking to NECPUC via video from D.C., U.S. Sen. Angus King (I-Maine) told regulators that the federal government needs to develop an “offensive response” to attacks on the grid and other critical infrastructure.
“I’m deeply concerned about the vulnerability of the grid to cyberattack either by malicious individuals, or more particularly, by international adversaries,” said King, a member of the Intelligence and Energy and Natural Resources committees. “We are not going to defeat this threat simply by defensive measures. As I’ve heard in numerous hearings, one of the great problems here in Washington is that we have no cyber doctrine. We have no cyber strategy that involves a response — an offensive response. … People that are taking advantage of those vulnerabilities essentially now pay no price. We are only trying to patch and defend.
“I believe until we develop an effective deterrent — and this is a federal responsibility — that these attacks are going to keep coming, they’re going to escalate and they’re going to become more and more serious. We have to communicate to the world that there is a price to be paid for attacking America, whether its cyber or kinetic.”
King said he is seeking to build bipartisan support “to push the administration … to form some kind of rational response so that our adversaries know there will be a price to be paid if they’re going to attack our critical infrastructure.”
Along with Sen. Jim Risch (R-Idaho), King is sponsoring a bill to partner the National Laboratories with industry to develop ways to “simplify and isolate automated systems” to holes in software systems that could be exploited by hackers.
Powelson Chides Region on Pipelines
FERC Commissioner Robert Powelson told regulators that New England’s pursuit of greenhouse gas reduction is being undermined by its aversion to adding natural gas pipelines.
“We have a lot of natural gas we’d like to share with you,” the former Pennsylvania regulator said. “During the recent bomb cyclone, this region, that’s very committed to GHG reductions, in order to keep the lights on … burned 2 million barrels of oil.”
Last year, he said, the U.S. put 763 miles of new gas pipeline into service, but only 20 miles of it, representing less than 3 Bcfd, were built in New England.
“That’s a problem,” Powelson said. “You can’t have it both ways in this conversation. The renewable portfolio standards are states’ rights, and you can … adopt those policies. But if you don’t want to deal with resource adequacy, that’s our problem. And we’re kind of hitting these little friction points that pretty soon we might as well just hand the keys over and go back to the integrated resource planning model.”
EVs and Psychology of Resistance
Matthew Stanberry, vice president of market development at Advanced Energy Economy, an organization of businesses promoting clean energy, said electric vehicles represent “a market that fuels vehicles differently than we have in the past and plugs into our electric system, so you have an increase in regulatory activity and examination across the country.”
Twelve states have set EV charging rates, and 13 states have opened proceedings for public feedback on the topic, he said.
Vermont Department of Public Service Commissioner June Tierney said regulators have to start thinking about what it means for every single American to be driving an EV: “Who bears the risk of bringing the supply to fuel those EVs? Who pays for the infrastructure? What do you do about the loss of [gasoline tax] revenues from the transportation fund?”
Michael Brown, manager of EV infrastructure for Nissan, said the key to EV adoption is lowering the total cost of ownership. “That includes not just the financial cost but also the customer experience, which in some ways, especially in the light-duty market, is almost the most important piece,” Brown said.
“We see in surveys that over 50% of people say they’re interested in buying an EV, and then 85% say they’re concerned about charging infrastructure not being there,” Brown said. “Just yesterday, one of our colleagues in the industry, a huge supporter, who really wanted to buy an EV, said ‘Well, it’s 100 miles to the place I go to take my vacation, and I can’t take the risk that I might not find a charging station.’”
Massachusetts Energy Secretary Matthew Beaton said regional coordination is important on an issue like EVs, which “doesn’t really know state boundaries,” to develop charging infrastructure efficiently and ease drivers’ range anxiety.
“We need to know that if we’re going from point A to point B, the infrastructure is there,” Beaton said. “That’s going to be an amazing thing and a switch that will get flipped in the psychology of the consumer … people just need to get over range anxiety.”
Choosing Technology
PowerOptions CEO Cynthia Arcate said her organization, an energy-buying consortium for nonprofits and the public sector in Massachusetts, Connecticut and Rhode Island, has learned to be selective in the technology it uses.
“When we talk about all these nifty things that we’re going to be able to do with all this technology, you really have to think about and make sure that a) the market’s not going to deliver it anyway for free; and b) that you don’t pick the wrong technology, which a lot of these companies are doing on the data analytics side,” Arcate said.
PowerOptions’ more than 400 members range from large universities and hospitals to churches and YMCAs.
Four years ago, billing analytics was the hot new thing, with everyone eager to put sensors on their circuits and know exactly what’s going on, she said.
“We spent a lot of time and money working with big sophisticated institutions, and uniformly they came back and said ‘we’re not interested,’” Arcate said.
She said customers told her, “‘I’m sick of getting reports. I don’t need another report to read. Don’t send me a report unless you’re going to tell me what it says, what I’m supposed do with it. And then do it for me.’”
PowerOptions offers customers several ways to pay for their electricity or gas service, including a fixed all-in contract, fixed price with capacity pass-through, or “two products that let the customer get visibility into the wholesale energy market without becoming a member of” New England Power Pool.
Gas customers can also purchase a “layering portfolio” to hedge prices.
“I have spent nine years … trying to get customers to move off the fixed all-in,” Arcate said. “They listen to me very patiently. They say, ‘I understand what you’re saying, but I’m going to go with the fixed price.’ That’s what customers want. They want predictability, they want certainty, they want to fix their budget and forget about it.”
— Michael Kuser and Rich Heidorn Jr.