Advanced Energy Perspectives

New England Energy Leaders Talk Finance, Business Models for a Modern Grid, and Vow to Grapple Further With Rate Design

Posted by Lisa Frantzis and Ryan Katofsky

Dec 17, 2015 12:54:19 PM

    

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Top energy leaders from the six New England states met with utility and advanced energy industry leaders last month to explore common efforts to modernize the electric power grid to maximize the benefits of distributed energy resources like solar, battery storage, energy efficiency, demand response, and microgrids for reliability and customer choice. In a daylong session led by the AEE Institute, Northeast Clean Energy Council, and the Boston Green Ribbon Commission, and held in the Boston offices of law firm Mintz Levin, government officials, utility executives, and business leaders took a regional look at creating a 21st century electricity system in New England – and pledged to continue working together on the question of rate design for distributed energy resources, including the increasingly contentious subject of net metering.

Although utility regulation is done state by state, the basis for dialogue on a regional basis is clear. The New England states have similar commitments to energy efficiency, renewable energy, and reduction of greenhouse gas emissions. Electric distribution utilities in the region are currently participating in a large-scale competitive solicitation for clean energy overseen by regulators, which is expected to deliver a large supply of energy from wind and/or hydropower sources to Southern New England. The states are all part of the region-wide power grid, the wholesale electricity market of which is managed by Independent System Operator New England (ISO New England), and they are all members of the nine-state Regional Greenhouse Gas Initiative. Several states have begun or are set to begin efforts to modernize their grid infrastructure.

Massachusetts Energy and Environmental Affairs Secretary Matthew Beaton, Rhode Island Commissioner of Energy Resources Marion Gold, and Deputy Commissioner Katie Scharf Dykes of the Connecticut Department of Energy and Environmental Protection kicked off the New England 21st Century Electricity System Executive Forum, a convening of 50 state officials, utility leaders, and executives of advanced energy companies, held November 17. The New England forum is part of the series held around the country under AEE and AEE Institute’s 21st Century Electricity System initiative.

Participants in the New England forum included utility executives from Eversource Energy, National Grid, Central Maine Power, and Green Mountain Power, as well as corporate leaders from Ambri, CLEAResult, EnergySavvy, EnerNOC, GE, GridCo Systems, Intel, KeyBanc Capital Markets, Landis+Gyr, Opower, SunEdison, Veolia North America, and Walmart. Representatives of a number of other companies, utilities from around the New England region, and nonprofit organizations attended as observers.

The focus of the forum was on developing a common vision for the region’s electric power system that embraces clean, innovative technologies; increases customer control over energy options; improves system reliability, and reduces customer costs for the future. Topics discussed during the forum included new utility business models, regulatory concepts, financing structures, technology innovation, rate designs, and partnerships that can make this vision a reality.

One breakout session focused on the challenge of financing the infrastructure upgrades needed to make the power grid more flexible, more resilient, and capable of two-way communication and power flow, as well as how to restructure utility business models to make system upgrades work from a business perspective. The breakout group agreed on the shortcomings of the current system, and discussed several ways of obtaining lower cost capital and leveraging partnerships to help drive down costs. The conversation also focused on managing the risk of new renewable projects – whether it should be borne by third parties or utilities – and new procurements through PPAs within New England’s restructured market.

The other breakout session – on rate design – spilled over into final plenary discussion. A topic central to aligning utility business models and regulatory structures for a rapidly changing electricity system, rate design involves not only the increasingly contentious question of net metering – how much to let it grow, and what comes after – but also how to send appropriate market signals to customers more broadly. To do so, rates need to properly value all distributed energy resources (DER) – reflecting their value to customers, to the grid, and to public policy goals – in order to facilitate continued DER growth while also ensuring the fair allocation of costs for maintaining the power grid we rely on.

By bringing together government and industry leaders, the forum sought to develop a means for advancing the ideas and concepts discussed into concrete action. Given the discussion, the obvious topic in need of further dialogue was rate design for DER, with a focus on net metering – which, in Massachusetts, in particular, has become so problematic that the state legislature could not reach a compromise on raising the cap this year. The group agreed to work together to take this conversation further, with the aim of getting past traditional obstacles to agreement on rate design for DER.

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Topics: 21st Century Electricity System

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