Tag Archives: electricity

Will Independent Audit Cool California Smart Meter Controversy?

The caution displayed by the Maryland Public Service Commission over BG&E’s smart meter proposal can be explained, in part, by the debate over Advanced Metering Infrastructure (AMI) installation in California.

Some Californians are even taking to the streets:

Thursday morning, about a dozen people launched a demonstration against the SmartMeters at a Pleasure Point vehicle yard where a contractor for PG&E has been staging for the installations. The demonstrators claimed success in keeping installation trucks from leaving the facility and vowed to return daily until the county’s SmartMeter moratorium becomes official.

Elected officials in Santa Cruz County have taken up the challenge and are confronting the state’s Public Utilities Commission:

“It’s hard to feel like we can wait and let the PUC do its job,” county Supervisor John Leopold told PUC supervisor Marzia Zafar. “We’re going to take any action we can to ensure citizens of this community have protection.”

Health concerns have grabbed the public’s attention.  The smart meters being installed by PG&E send data by emitting the same kind of radiation as cell phones do.

San Francisco petitioned the PUC to halt installations pending an independent review of the accuracy of the meters.  PG&E has installed over six million smart meters (both gas and electric) and is on target to install 10 million by 2012.  The utility is struggling to overcome a major lack of public trust.  The Mercury News continues:

But after months of insisting that there were no problems with the meters and that high bills could be traced to rate increases or air conditioning use during hot summer months, PG&E acknowledged some technical glitches with the program in April, including 23,000 gas meters that were installed improperly, 11,376 electric meters that failed to retain consumer usage information, and 9,000 electric meters that had trouble connecting with the wireless network.

The results of an independent review are now in and support the position of the utilities and the PUC.  The report can be found here.  USA Today reports:

The Structure Consulting Group of Houston, selected by the California Public Utilities Commission to review PG&E’s meters, found the meters more accurate than old ones. It also backed up PG&E’s claims that a 2009 heat wave and rate increases, one up to 23%, combined to radically boost bills.

According to the Mercury News, the reported noted the bad relations between the utility and its customers:

The 400-page report, released Thursday, blasted PG&E’s customer service culture, finding that customers were “consistently treated by PG&E as wrong, until the customer proved to PG&E that they were right.”

The dispute is centered in northern California — the state PUC has received many fewer complaints in the southern half of the state where a different utility operates.  The report did not address the health concerns about EMF radiation that is the latest topic to take off.

Smart meter deployment across the country is fueled by federal funding and involves major corporate players:

The SmartMeters are made by General Electric and the Swiss company Landis+Gyr. Redwood City-based Silver Spring Networks, a venture-backed company that counts several of the nation’s leading utility companies as clients, provides the communications software.

One can only hope that Maryland’s utilities will take advantage of the opportunity to learn from California’s mistakes.

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Climate and Dereg With Your Fish and Chips?

Britain is the fatherland of deregulated power markets.  So it was a bit of suprise to read this in The Economist:

Climate change, a looming shortage of electricity and worries about the risks of relying on imported energy are causing many to doubt whether Britain’s vaunted liberalised energy markets are up to the job.

Recently, some U.S. proponents have tried to argue that deregulated markets are promoting renewables.  (Frankly, neither regulated nor deregulated states are doing what needs to be done; it’s proper policy that makes the difference in either case.   Stupefying ideological debates about “markets versus regulations” seem only to slow things down.)

Left to its deregulated devices, the U.K’s private sector hasn’t delivered the goods in terms of new investment in low-carbon power:

…doubts about the wisdom of the markets are to be found throughout the energy sector, from academics and analysts to managers at some of its biggest companies. Lord Browne, a former boss of BP, an oil firm, opined publicly this year that state-owned banks should be forced to lend money to renewable-energy projects. Sam Laidlaw, head of Centrica, a big generating company, has admitted that nuclear and renewable power will struggle under the current arrangements.

Not only does Britain need substantial new generation capacity but also needs to replace a large amount of current capacity that is scheduled to go out of service.  Thanks to the magic of the market, neither is happening.

Such tardiness lends strength to an alternative reading of the past 15 years: that low prices were as much a result of firms sweating their assets as of competition and ingenuity.

Just let the dirty, old coal-fired power plants crank out the cash.  We know that feeling on this side of the pond.  We call it: “Take the money and run!”

The Economist astutely acknowledges the unspoken political deal that underlies deregulation:

A deregulated industry is useful: ministers can bask in the benefit of low prices while deflecting blame for price rises on to rapacious energy giants. Reimposing central control at a time when bills are rising to pay for new power stations and other infrastructure risks attracting the odium of a hard-pressed public.

That, too, has an all-to-familiar ring.

The United States (29.3) and the United Kingdom (6.3) together have contributed 35.6 percent of the cumulative greenhouse gas emissions that have accumulated in the atmosphere since 1850.  Can the politicians of our two countries meet the challenge?

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Maryland Needs A Better Definition of Reliability

American Electric Power and PJM Interconnection want Maryland, West Virginia and Virginia to approve construction of their brainchild, the Potomac Appalachian Transmission Highline (PATH).

The Federal Energy Regulatory Commission has ordered that all 50 million customers in the PJM network can be “taxed” to pay for this project for one reason, and one reason only: The construction of PATH will enhance the “reliability” of the entire PJM network.  (Reliability should not be confused with “congestion” which is a different problem.)

So, what is this thing called “reliability” and how do we measure it?

Because transmission have come before Congress this year, the Congressional Research Service (CRS) issued a new background report. CRS provides non-partisan research to Congress; though its reports are not officially made public, they are widely available on the Internet.

The report, Electric Power Transmission: Background and Policy Issues, includes a section on transmission reliability. Here’s the summary:

Transmission System Reliability: it is not clear whether Congress and the executive branch have the information needed to evaluate the reliability of the transmission system. Congress may also want to review whether the power industry is striking the right balance between modernization and new construction as a means of enhancing transmission reliability, and whether the reliability standards being developed for the transmission system are appropriate for a rapidly changing power system.

Let’s begin with the information problem:

It is currently impossible to judge the reliability of the national transmission system by either criteria because the data does not exist to make an assessment. (p. 28)

Kaplan, the report’s author, underscores our ignorance about reliability:

In contrast to the wealth of information on power plant operations, minimal data has been collected by government or industry on transmission system reliability.  (pp. 28-29)

A new data system that will help fill this gap only began collecting data in 2008.  It’s called the Transmission Availability Data System (TADS) and has been developed by the North American Electric Reliability Corporation (NERC).  Both NERC and FERC have been promulgating new standards aimed at improving reliability in response to the Energy Policy Act of 2005.  CRS notes:

Until a useful data collection and analysis system are in place, it will be difficult to judge whether these standards and other actions are actually improving the reliability of the transmission system.

In other words, when it comes to transmission reliability, we’re pretty much in the dark.  Or so says the Congressional Research Service.

But wait!  There’s more!  Kaplan concludes that while there is need for “modernization” it is not at all clear to what extent, if any, this requires building new transmission lines.  Although advocates of new transmission lines constantly refer to the danger of blackouts, it remains the case that:

as discussed in the official blackout report and other analyses, the 2003 blackout was not caused by a utility having built too few transmission lines, or because power line towers and substations were falling apart. The blackout was apparently due to such factors as malfunctioning if not obsolete computer and monitoring systems, human errors that compounded the equipment failures, mis-calibrated automatic protection systems on power plants, and FirstEnergy’s failure to adequately trim trees.  (p. 31, emphasis added.)

What does Kaplan conclude?

depending on the case, building new transmission lines is not the only or best approach to enhancing power system reliability.  In some instances investments in new monitoring and control technology may be the better solution.  (p. 32)

Kaplan goes on to explain that the world of electricity is changing rapidly away from a system based on the one-way flow of power from large, centralized generating stations to consumers.  Increased reliance on variable renewable sources, demand response and distributed generation will put new and different demands on the grid.  Simply adding major new transmission lines may not be the best way to adjust to this new world.

So we don’t yet have data to measure reliability.  We have put in place many new systems and procedures to improve reliability but haven’t had time to determine whether they are working.  The power system is evolving away from dependence on centralized power systems.  Our most recent major blackout turns out not to have been caused by a lack of transmission capacity.

At least we now have an answer to one question: Why are American Electric Power and Allegheny Energy — along with their enablers at PJM Interconnection and FERC — in such a hurry to win approval to build PATH?  Could it be that they know that their single strongest rationale — improving reliability — is build on sand?

It would be foolish, wasteful, and potentially counter-productive for Maryland, West Virginia or Virginia to approve the construction of PATH without a data-based, well-informed, national consensus on whether building new transmission is the most cost-effective way to improve the reliability of the electrical grid.  To rely only on the “say-so” of PJM, a private organization with members who will benefit financially from the construction of PATH, is irresponsible and short-sighted.

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Electricity Restructuring and Climate Change

Have you ever wondered whether restructured (“deregulated”) electricity markets or regulated public utilities will do a better job at getting us on the road to a low-carbon economy?

You might have hoped that a new report from Navigant Consulting and spnsored by the Compete Coalition would help answer that question.  

Readers of the report know, going in, that it’s produced as an advocacy job, to shed the best light on proponents of restructuring who would like to advertise their model as “greener” than the alternative.  One would expect, the report, while slanted, to marshall the best and strongest sources and data for their persepctive.  After all, that’s precisely what the Compete Coalition was paying for.

The result, “Price Signals and Greenhouse Gas Reductions in the Electricity Sector,” is quite revealing — for what it doesn’t say.  

Firstly, consider the citations.  They mention only a single, recent statement from one environmental organization favoring re-structured markets as part of climate policy — not exactly a ringing endorsement.  Second, there are a very small number of academic or independent sources referenced in support of their contention.  And finally, there is only a single publication, from any RTO/ISO (each of who produce PLENTY of reports) that references climate policies.  The fact is that RTO/ISOs, like their godfather FERC, have had relatively little to say about reducing carbon emissions until very recently.

Perhaps if the debate remains at the abstract level of markets, deregulation and monopolies, combined with understandable confusion of electricity markets and carbon markets, the contention that “cap and trade” works better under deregulation can be sustained.  However, one would hope that, after the meltdown of California’s electricity markets, not to mention last year’s meltdown of deregulated financial markets, that the American public would appreciate that real-world outcomes have more to do with nitty-gritty details of who and how than with abstract sloganeering.

When we consider the actual data in the report, it’s extremely thin.  The main data set displays the performance of coal and nuclear generation under deregulation.  One of the arguments for that policy is that it encourages generators to operate plants, especially coal and nuclear, more efficiently.  And yes, their graphs (Figures 3 and 4) do show that, although in the case of both coal and nuclear the biggest efficiency gains happened earlier (in the 1990s mainly) and have flattened out recently.  This would suggest that further gains of this type in markets already restructured are likely to be limited.

Because they used plant-specific data, presumably it would have been possible to show that these efficiency gains also resulted in aggregate reductions of carbon-dioxide emissions in the respective RTO/ISOs.  Unfortunately, that data was not forthcoming.  One suspects that although coal generators became a bit more efficient, the actual functioning of the administered wholesale markets favored coal generation over other fuel sources, at least in some of the RTO/ISOs, resulting in an upward trend in emissions.  

Once again, the dog did not bark.  The report contains no information whatsoever about the actual performance of restructured markets with respect to carbon emissions.  It would be easy enough to divide the states into deregulated and not, presenting trends in electricity-related emissions for both groups, if it could be shown that deregulation, to date, would do a better job reducing carbon emissions.

The Compete Coalition report cites an NREL technical report: Facilitating Wind Development: The Importance of Electric Industry Structure.  Kirby and Milligan emphasize the point that integrating wind projects over a larger geographical area increases the capacity value of wind development (because the wind fluctuations become less correlated).  Restructured markets, in theory reveal this value and make wind more attractive to investors for that reason.  For the most part, they rely on the current distribution of wind capacity that is concentrated in RTO/ISO states.  It’s a leap however to say that this variation was caused by the changed market structure.  The sample, after all is dominated by California and Texas, which have had very aggressive state-level policies to promote wind.  

A report from the Carnegie Mellon Electricity Industry Center: Do RTOs Promote Renewables? A Study of State-Level Data over Time found no strong association between the growth of renewables and the shift towards restructured markets in many states.  This study, by Spees and Lave, is perhaps most useful to showing just how difficult it would be demonstrate a strong association.

In many states, renewable portfolio standards — state laws requiring utilities to source a fixed portion of their power from renewables — were included in  the original legislative deals that launched deregulation out of concern that restructured markets might favor excessively the use of fossil fuels.  (See the recent report on state RPS programs from the Clean Energy States Alliance.)  To the extent that RPS have contributed to the growth of renewables (a legitimate research question in itself), it hardly seems fair to give RTOs and ISOs the credit!

And everyone would agree (probably) that federal tax incentives dominate all other factors in driving annual construction of wind capacity.

Instead of cherry-picked data and speculation about the possible impacts of possible future policies, what’s needed is an actual assessment of how restructured markets have actually performed with respect to reigning in carbon emissions.  It’s not a new issue and many in the power industry started taking appropriate steps many years ago.  Others have suppressed discussion of the problem, hoping to prolong the profits of dirty power for as long as possible.We need to ask hard questions about the environmental performance of the RTO/ISOs and FERC itself and not be distracted by the green smokescreen being drawn across their carbon-promoting practices.  

And the same touogh questions should be asked of the power industry in the regulated states as well.

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