Kelly outlines impact of greenhouse gas regulations, grid security, and distributed generation on public power
Originally published April 9, 2014
Sue Kelly, president and CEO of the American Public Power Association (APPA), outlined three key issues affecting the delivery of affordable, reliable electric service — greenhouse gas regulations, cyber and physical security, and distributed generation. She was speaking at APPA’s national Engineering and Operations Technical Conference in Oklahoma City on April 7.
The Obama administration has asked the Environmental Protection Agency to put rules in place to limit greenhouse gas emissions from both new and existing plants before the conclusion of the president’s second term. There are concerns over this expedited timetable and confusion over the role of the states in setting standards and developing compliance plans for new units, Kelly said.
As the EPA develops its carbon regulations under Section 111(d) of the Clean Air Act, APPA is working to convince the agency that it must comport with proper legal standards under the clean air law, she said.
There is an assumption that plants can just use natural gas for the time being. However, "recent price jumps from the polar vortex and other hiccups illustrate just how volatile natural gas prices are. We have to be aware of this before we put all of our chips in natural gas," she cautioned.
On cyber and physical security, Kelly highlighted recent collaborative work between industry coalitions and the government to keep the grid and utility facilities safe from outside threats.
"This was going along beautifully until earlier this year when The Wall Street Journal ran a series of articles on the Metcalf Substation, which was subject to a systematic nighttime attack," she said. The media coverage has heightened regulatory and legislative interest in grid security. This includes the reintroduction of the Grid Act, which would allow the Federal Energy Regulatory Commission to impose new reliability standards. "Our goal for physical security standards is to limit the rulemaking to the truly critical facilities and to provide utilities that have such facilities the flexibility to decide how to protect those facilities rather than have prescriptive standards," she said.
On distributed generation, Kelly warned those in attendance that it’s "likely coming to a utility near you." The increased focus on distributed generation is coming from state and local tax and ratemaking subsidies, she said. "We’re seeing new technological leaps and strong consumer interest, especially with solar [photovoltaics]. High degrees of distributed generation penetration will obviously have an impact on utility operations, revenue recovery, retail customer relationships, and resource portfolios."
Kelly advised utilities to look for ways to make distributed generation work. "You have to work with your customers as you implement this new suite of technology and tools, balancing the interests of the customers who are doing it, those who have no interest in doing it, and your bond holders affected by the impact on revenue recovery."
"We should be doing all of this proactively to have distributed generation options that are cost-effective and work for everyone," she said, noting that community solar, in particular, is more cost-effective than rooftop solar and easier to work with for a utility.
Public power utilities are poised to face all these pressing issues and APPA is standing by to advocate and lead the way, Kelly said.
"We stand ready to assist," she concluded. "And I really look forward to working with all of you in my new role."
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