Electricity Markets

At the federal policymaking table

Meetings held by the U.S. Department of Energy across the country in April and May gave the public power community a unique opportunity to weigh in on a number of key energy policy matters of importance to public power.

More than 10 public power executives took full advantage of that opportunity to, among other things, detail how public power is proactively working to address the growth of distributed energy resources and rapidly changing customer expectations in a digital age.

At the same time, public power executives questioned the effectiveness of wholesale mandatory capacity markets, while emphasizing the need for self-supply, and highlighted the importance of keeping nuclear power in the mix for U.S. power supplies.

The regional meetings were tied to the second installment of the DOE's Quadrennial Energy Review, or QER 1.2. QER 1.2 is an integrated study of the U.S. electricity system from generation through end use.

Among the participants at the initial meeting for QER 1.2 in Washington, D.C., earlier this year was Sue Kelly, president and CEO of the American Public Power Association.

Among other things, Kelly said at the Feb. 4 meeting that regional transmission organization-operated markets "are increasingly showing that they are unable to support the development and maintenance of a lower carbon resource portfolio at a reasonable price."

The Washington, D.C., meeting was followed by two regional meetings in Boston, Mass., and Salt Lake City, Utah, in April, and four regional meetings in May in Des Moines, Iowa, Austin, Texas, Los Angeles, Calif., and Atlanta, Ga. Public power was represented at all of the meetings. Along with officials from public power entities, QER meeting participants included officials from investor-owned utilities, environmental groups, electric cooperatives and grid operators, among others.

Challenges and opportunities related to distributed energy resources was a topic addressed at the meetings.

Arlen Orchard, CEO and general manager at California's Sacramento Municipal Utility District, noted at a May 10 QER meeting in Los Angeles that SMUD is engaged in a comprehensive examination of distributed energy including, among other things, energy efficiency opportunities, support for electric vehicles and consideration of a variety of storage options.

Orchard said that SMUD is interested in distributed storage "as an important solution not only to integrating variable resources like rooftop solar, but also to meet new challenges associated with electric vehicles."

Orchard also detailed how SMUD has worked over several years to reduce greenhouse gas emissions.

At San Antonio, Texas-based CPS Energy, the utility has seen "a very large demand for distributed generation resources — rooftop solar, community solar — so there's clearly a strong, strong demand for that type of product and service," noted Cris Eugster, group executive vice president and chief generation and strategy officer at CPS.

"For us, the penetration level is still low — it's very manageable from a grid perspective, but we do need to think carefully in how we integrate those resources within our distribution system, what kind of technologies we need to deploy there," Eugster said at the May 9 QER meeting in Austin, Texas.

At a late April QER meeting in Salt Lake City, Doug Hunter, CEO and general manager at Utah Associated Municipal Power Systems, explained how communities are best positioned to implement distributed generation, energy efficiency and demand response. Hunter also serves as chairman of the board of directors at the American Public Power Association.

The QER meetings also illustrate how customer engagement is clearly on public power's radar.

For example, Deborah Kimberly, vice president for customer energy solutions at Austin Energy, told the May 9 meeting that the utility's customers are increasingly engaged, which means that those customers are seeking more choice and energy management "that is seamless to them and their lifestyle."

She said that the utility's customers are digitally engaged, noting that Austin Energy has partnered with entities such as Nest. "We have got to make it easy and simple to do business with the utility and be aware that there are new players and new actors on the scene and that's a complex problem and we can't solve it on our own," Kimberly said.

SMUD's Orchard pointed out that over the past few years, SMUD has made a significant investment in smart grid technology that is paying dividends in many ways, "including allowing us to segment and understand our customers, cost effectively market our energy efficiency and energy solution programs and implement rates which better reflect the cost of energy and influence customer behavior," he said.

Smart grid technology can also pay off in the area of transmission, noted Gil Quiniones, president and CEO of the New York Power Authority, at an April 15 QER meeting.

Along with investing more than $730 million in life extension and modernization of the grid,

NYPA has also been in the process of installing smart grid technology on a 345-kV NYPA transmission line. "By not changing the line at all — just applying smart grid technology — we are going to increase the transfer capability by 440 megawatts and bring more power from upstate to downstate," Quiniones noted.

In addition, in northern New York, NYPA is building the "first ever, one of its kind" large transmission substation in the U.S., the NYPA president and CEO said. "It will give us better situational awareness and better integration of renewables as most of the wind farms in New York are located upstate and connected to the NYPA transmission system," he noted.

On the generation side of the coin, James Fuller, president and CEO of MEAG Power in Georgia, emphasized the importance of keeping nuclear power as a viable option, and said the federal government has helped with this.

At the May 24 meeting in Atlanta, Fuller said MEAG, a joint action agency that supplies wholesale power to 49 public power communities, has invested in four nuclear units, including two new ones that are being built at the Vogtle plant in Georgia.

Loan guarantees provided by the federal government for those new nuclear units have been very important, helping the nuclear energy industry to compete in today's changing electricity landscape, he said.

Meanwhile, ongoing concerns about mandatory capacity markets in organized electricity markets were voiced at the regional meetings.

MEAG's Fuller said the mandatory capacity markets that exist in some parts of the country are not working well. Capacity markets "do not exhibit the features of a competitive market," he added.

Ed Tatum, vice-president, transmission, at American Municipal Power, said at the April 15 meeting that there must be a place for self-supply in wholesale power markets.

Tatum noted that he refers to capacity markets as "administrative resource adequacy constructs" and said that from his perspective, "they've never worked well." These constructs are "needlessly complex. They take us further away from competitive markets, and what was once intended to be a backstop residual temporary construct has morphed into a primary revenue source for supply."

As for hydro licensing, Tom Heller, CEO of joint action agency Missouri River Energy Services, and SMUD's Orchard cited the need for reform and streamlining of that process, with both noting that their respective utilities had hydro projects that faced lengthy delays.

Phil Williams, general manager at Denton Municipal Electric, and Michelle Bertolino, electric utility director for the city of Roseville, California, participated on panels in Austin and Los Angeles, respectively, which focused on the implications of a broad array of existing and emerging technologies, as well as new uses on the distribution grid and "grid-edge."

"We have never had as much data as we have today. Our challenge is to turn that raw data into useful information," Williams said.

Bertolino, who also serves as president of the California Municipal Utilities Association, said that "I don't think there's a one size fits all. We really need to embrace the idea of implementing and using diverse resources and not favoring one technology over the other."

Challenges related to a rapidly changing workforce and worker training were discussed by Marcie Edwards, general manager of the Los Angeles Department of Water and Power, and other panelists at the Los Angeles QER meeting.

She noted that LADWP has an apprentice training program that trains lineworkers to be ready to dive into the job. "One of the things we have been working on in conjunction with our labor partners is something called utility pre-craft training," she said. "We migrate them around for up to two years and in the interim teach them how to pass a civil service exam. We've been having a lot of good luck with that program and we're looking to expand it."