BOSTON — An overflow crowd of more than 200 people attended Raab Associates’ 164th New England Electricity Restructuring Roundtable on Friday to discuss state and federal policy around wholesale electricity markets and distributed energy resources.

Here is some of what we heard.

The 164th New England Electricity Restructuring Roundtable took place in Boston on Dec. 13. | © RTO Insider

Public Policy Mix

Climate change “is playing a role in almost all our decision-making” and has contributed to making discussion at FERC “a little more contentious than it has been,” said Commissioner Richard Glick, the sole Democrat on the commission.

“But I don’t know if we’re going to put the genie back in the bottle … in large part because these are important issues that people have strong feelings about on all sides of the topics, and a lot is at stake,” Glick said.

Generators are contending that states’ renewable energy policies are having a negative effect on capacity markets, Glick said, adding that issues come up frequently in the regions with mandatory capacity markets, such as New England, New York and PJM.

Generators argue that state-sponsored resources are suppressing energy prices, but the states counter that the market is seeing low prices for a variety of reasons, principally low natural gas prices and the increasing penetration of zero-marginal-cost energy resources, he said.

“States have a legitimate interest in pursuing the resources they want, particularly in this time, when we don’t have a federal government very active on greenhouse gas emissions,” he said.

FERC Commissioner Richard Glick | © RTO Insider

“I’m not sure FERC has a role in the debate,” Glick said.

“If you look at the Federal Power Act, it’s very clear … the law says that FERC doesn’t have authority over generator resource decision-making; it’s up to the states,” Glick said. “Whether it’s promoting renewable energy, or nuclear power, or coal, whatever it is, it doesn’t matter to me.

“Secondly, we’re drawing the line around subsidies when we have these debates about wholesale markets and state policies, and they were looking at more recent subsidies, whether it be nuclear [zero-emission credit] programs or state renewable energy programs,” he said. “If you’re going to address subsidies, where do you draw the line?”

Regarding New England and its concern about natural gas supply constraints on very cold days, Glick said, “We’re going back to the issue of attributes, of saying, ‘Let’s pay this generating plant because it has these attributes.’ I would prefer that the commission and the various RTOs around the country would say … ‘Why don’t we pay the generating plants for the value of the services or benefit they actually provide, not just for sitting around?’”

Tom Michelman, senior director of Sustainable Energy Advantage, asked who can push if there is a delay at the commission in dealing with a docket: “How much power does an individual commissioner have?”

“The chair has enormous authority,” Glick said. “First of all, the chair controls the agenda, so Chairman [Neil] Chatterjee doesn’t have to bring up anything that he doesn’t want to bring up, unless there are certain matters that have to be dealt with statutorily within 60 days, but that’s a relatively small number of issues.”

Peter Fuller of Autumn Lane Energy asked about a hypothetical case of states agreeing on regional carbon pricing: How would FERC respond?

Glick declined to speculate, but he did say that RTOs would have a stronger chance of succeeding if they made a filing under FPA Section 205 rather than Section 206, because under the former, the commission must only determine that the new scheme is just and reasonable, while under the latter it must determine that the existing set-up is unjust and unreasonable.

DER Policy and Regulation

Speaking on her last day as commissioner of the Massachusetts Department of Energy Resources (DOER) after four years in office, Judith Judson highlighted the growth in solar, from practically zero in the state a decade ago to 2,537 MW installed and operating today, with another 1,029 MW approved.

Solar’s success has bred interconnection woes, with developers in many parts of the state facing costly transmission and distribution infrastructure upgrades in order to connect their projects to the grid, Judson said.

Judson also touted the state’s Clean Peak Standard, the first in the nation. The law, passed in September last year (H4857), requires DOER to set a baseline minimum percentage of retail electricity sales to be met with clean generation resources or load reductions during seasonal peak periods. (See Mass. Inaugurates Clean Peak Standard.)

“The Clean Peak Standard really is designed to be able to utilize clean energy that’s generated during times of less demand and move those into the peak hours,” Judson said. “And that is how we’re going to be able to integrate and reliably depend on more and more renewables on our system.”

Jonathan Raab, Raab Associates | © RTO Insider

“The Clean Peak program is about addressing peak demand, but what’s exciting about it is it creates a financing model and monetizes the benefits of flexibility,” she said.

Raab Associates’ Jonathan Raab, who conducted the roundtable, asked, “How can states better align investments in the grid of the future with our clean energy goals? What are the types of T&D upgrades that we should be socializing?”

“The question comes to me as what is a customer,” Judson said. “It used to be that a customer was load; it was very clear. Now, a customer may be load, it may be generating, it could have all different uses of the system but still be a customer. … Certainly when we think about socializing costs, we have to make sure that it’s fair and equitable for all customers.”

Power is Information

Raab asked whether dynamic pricing should be part of the solution to integrating DERs, such as with advanced metering infrastructure (AMI) or other technologies.

Penni McLean-Conner, Eversource | © RTO Insider

“AMI is an expensive endeavor,” said Penni McLean-Conner, chief customer officer for Eversource Energy. “Advanced metering functionality is needed surgically, no doubt about it. As we think about distributed energy resources, we need visibility into the edge of the grid, and we need capability in understanding the power flows.”

She noted that most AMI installations do not have time-varying rates associated with them because New England customers don’t have enough discretionary load to have a “meaningful impact” on those rates.

“At Eversource, we’re also having discussions about the latency of time-varying rates, meaning that we will see pretty rapid dynamic shifts in the peak hours as we put in more resources at the edge of the grid, such as storage combined with PV,” McLean-Conner said.

She suggested that incentives based on rebates that can be readily changed might be a more dynamic solution.

“Because when you build it into rates, they’re going to be latent. And we’re already seeing this in California, that they will be incenting the behaviors at the wrong time,” she said.

Henry Yoshimura, ISO-NE | © RTO Insider

Henry Yoshimura, director of demand resource strategy at ISO-NE, said that increasing penetration of DERs means the bulk power system becomes less predictable and power flows more variable.

“If we operated DERs in the distribution system in the same way we operate resources generally, we would model the system so that we know exactly what available capacity is on the system at any moment, which includes knowing what the loads are and what the other resources are doing on each segment of the system,” Yoshimura said. “We do that in transmission, [and] we would need to do that in the distribution system, which is way bigger in terms of length and complexity. It’s designed differently, as well.”

Yoshimura called the effort a “daunting” but “solvable” task.

Janet Gail Besser, SEPA | © RTO Insider

“It is critical that policymakers identify the entity responsible to solve this problem,” he said. “I struggle with dispatch … but what is essential, whether we’re in the dispatch regime or accounting for customer behavior, is that we have time-based prices that follow the marginal cost of service in real time. Otherwise, there’s no signal to the customer to know when it’s best to charge or discharge their battery, and the same holds for demand response.”

Janet Gail Besser, managing director of regulatory innovation and utility business models at the Smart Electric Power Alliance, said her two areas of responsibility are closely linked.

Christopher Rauscher, Sunrun | © RTO Insider

“You can’t expect utilities to make investment in new technologies and operating practices without evolution in the regulatory framework, which has to drive where we want them to be making that investment,” Besser said. Massachusetts has been leading in some areas, such as performance-based ratemaking, she said.

Christopher Rauscher, Sunrun’s director of policy and storage market strategy, agreed.

“The bring-your-own device program here, we are proposing that now in California,” Rauscher said of Sunrun’s programs with Green Mountain Power and National Grid in which it works with customer-sited solar and storage resources. “It’s really amazing that California is one to two years behind Massachusetts in DER policy, so it’s an exciting time to be here.”

– Michael Kuser