May 6, 2002 — Commissioner William Massey of the Federal Energy Regulatory Commission told a distributed generation conference that FERC plans to continue crafting policies to remove transmission and distribution barriers for distributed resources, both at the wholesale and retail levels.
Speaking at EPRI’s 7th Annual Distributed Resources Conference and Exposition in Dallas in March, Massey said that a proposal being made this year will ultimately ease access by DG resources to large regional and national grids.
Massey ticked off five reasons why federal regulators should support DG, starting with the fact that it saves money by substituting for transmission and distribution system investment while providing capacity. It also improves reliability and power quality by relieving highly stressed transmission and distribution systems. Some of the new technologies can also reduce pollution. Plus, DG provides customer choice. “This is, after all,” said Massey, “the philosophical underpinning of the entire movement toward electricity markets – the fairly simple notion of choice. What better way to offer choice than provide an opportunity for the customer to generate his own power?” And finally, he added, distributed resources provide an important check to the exercise of market power by incumbent utilities.
“For all these reasons,” said Massey, “the commission has a growing awareness of the value of distributed resources in a market-driven policy environment. We want our policy choices to reflect this awareness.”
Noting that the Supreme Court has recently affirmed FERC authority to exercise jurisdictional authority over all transmission issues, he said it was clear that transmission is ultimately going to be regulated at the federal level, whether it is transmission underlying wholesale transactions, unbundled or bundled retail transactions. He said eventually there must be a standard market design implemented in all regions. “Under the standard market design we are proposing, all load, all transmission uses, would take transmission service under a single tariff. This will apply to wholesale and to bundled and unbundled transmission services,” he said.
He said the commission will define a new open access tariff that will update the now somewhat dated six-year old Order 888 tariff and based on a new network transmission service available to all transmission customers. He told the EPRI conference that the commission will require better planning that will include both supply and demand resources and require they be treated equally in the planning process. “We know you don’t always have to build transmission to relieve congestion. You can relieve it by siting generation and you can relieve it by reducing demand. All of these options should be available under a neutral planning process that does not favor any resource. We will insist that market rules be neutral with respect to technology, fuel and size.”
He said the movement to a standardized market design at the federal level is an extraordinarily positive development for distributed resources by establishing a single set of rules for producing distributed resources and selling them in the marketplace, with the rules the same everywhere. He said FERC will also issue a proposed rule to make it much easier for generation resources to connect to the grid. “Any sort of interconnection barrier that exists out there, we want to stop it. And we want to streamline the process (of obtaining grid access). We should have tackled this issue years ago.”
This article is scheduled to appear in Power Engineering Magazine, May 2002.