Political and regulatory patchwork governs interconnection policies

There are many ways in which politics and regulation can affect the interconnection of distributed energy sources.

10/30/2012


As we approach Election Day, I’d like to point out myriad ways in which politics and regulation can affect the interconnection of distributed energy sources.

Interconnection issues typically fall under local jurisdictions such as state public utility commissions and siting commissions and their municipal counterparts. These regulatory agencies play a major role in project siting, cost recovery, and even the cost feasibility of interconnecting wholesale, bi-directional power sources to the electric grid. So understanding the vagaries of local jurisdictions will help consulting specifying engineers better understand their markets and prepare them to deal with variables affecting the success of their projects.

Given that there are 50 states, each with at least two pertinent agencies, no single approach works. The engineer must adapt his/her approach to whichever authority having jurisdiction they must answer to. And it gets more complex. In some states deregulation has been mandated. In some cases the deregulation is at different levels; for example, wholesale-level deregulation may be well-defined, but retail-level deregulation is not. And in some cases the states have yet to embark on deregulation. So there's kind of a patchwork quilt across the country of how these policies are implemented. The National Association of Regulatory Utility Commissioners (NARUC) may provide resources that could serve as a starting point for the consultant’s research.

One twist to the process of ascertaining likely regulations and conditions affecting a project is that, like the upcoming elections on Nov. 6, 2012, those regulations can change as new commissions are elected or appointed. Over the course of a multi-year project, for instance, will the state you’re working in elect a new governor who may appoint a new chairman to the public service commission, setting that commission in a new direction? A public service commission may have the power to establish the prices regulated utilities must pay for distributed energy and a siting commission can determine what sort of distributed energy facility can be installed and where. So the consultant must remain vigilant on factors such as elections that could signal potential changes in policy.

Headlines make my point, particularly with large-scale solar or wind farms. In the latter example, a recent state case revealed there was no consistent policy on the minimum distance that wind turbines should be sited away from a population center. The issue went to the state legislature, which ruled that no projects would go forward until or unless the issue was resolved. So the engineer also needs to be aware of gaps or inconsistencies in policy that could delay a project, affecting feasibility and costs. Of course, a large client may well have a legal department exploring these issues, but conversance with big pictures issues aids professional development.

Another variable is public sentiment. The general public sometimes is slow to react to even a well-publicized project, despite project outreach to stakeholders early in the process. Nongovernmental organizations and determined individuals leading ad hoc grassroots efforts may raise effective opposition to a project at any time during the process.

Renewable technologies, while technically sound, are not always perceived by neighbors as desirable. Wind turbines exhibit a number of phenomena, such as the sound of the blades turning or visual effects known as shadow flicker that nearby residents may object to, becoming the subject of zoning regulations. Even the possibility that turbine blades might throw off accumulated ice can become an issue. Grassroots opposition can pressure policy makers to stop or modify a project. 

Finally, large renewable projects in some locations may require modifications to the existing transmission system and it’s not uncommon for the onus (and costs) to fall on the project developer. Regulated electric utilities, municipalities, and co-ops have mechanisms such as eminent domain to build transmission lines even over public opposition. Private developers do not have such remedies available. Be aware that your project’s siting may be 90% approved by regulatory authorities only to be delayed or stopped by a single small landowner. That’s where foresight and diplomacy may become important.

Though the engineer has little control over these factors, awareness and contingency planning is very much in his/her control. Build those variables into how you price a job, structure payments, and achieve milestones.

Unfortunately, no IEEE standard will ever govern the behavior of public officials, regulatory bodies, or public sentiment. Awareness and contingency planning around all these issues will enable the consulting specifying engineer to deal effectively with them.  


Sam Sciacca is an active senior member in the IEEE and the International Electrotechnical Commission (IEC) in the area of utility automation. He has more than 25 years of experience in the domestic and international electrical utility industries. Sciacca serves as the chair of two IEEE working groups that focus on cyber security for electric utilities: the Substations Working Group C1 (P1686) and the Power System Relay Committee Working Group H13 (PC37.240). Sciacca also is president of SCS Consulting.



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