Overview and requirements of the 2005 Energy Policy Act and PURPA Standards

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Overview and requirementsof the

2005 Energy Policy Actand PURPA Standards

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•Restructured States•Regional Transmission Organizations•Renewable Portfolio Standards•Demand Response Programs•EPACT Proceedings

Where We Are Today in the United StatesWhere We Are Today in the United States


Source: Scott Potter, After the Freeze: Issues Facing Some State Regulators as Electric Restructuring Transition Periods End, NRRI Report No. 03-18. (Columbus:NRRI, 2003),updated to December 2005

States and Restructured Energy MarketsStates and Restructured Energy Markets

http://site-controls.com Source: PEW Center on Global Climate Change/ www.pewclimate.org

States With RPSStates With RPS


PURPA key provisions for retail electric utilities & regulatory commissionsPURPA key provisions for retail electric utilities & regulatory commissions

Sec. 111(a) & (c) – require a determination of whether or not it is appropriate to implement each standard

Sec. 111(d) – suggest standardsSec. 112 – outlines the obligations for consideration

and the required determinations by state regulatory commissions and non-regulated utilites

Sec. 115 – outline special rules for standards and has new provisions relating to time-based metering and communications


EPAct and PURPA – 5 new standards to be considered for electric utilitiesEPAct and PURPA – 5 new standards to be considered for electric utilities

EPAct Sec. 1251 – Net Metering1. PURPA Sec. 111(d)(11) Net Metering2. PURPA Sec. 111(d)(12) Fuel Sources/Diversity3. PURPA Sec. 111(d)(13) Fossil Fuel Generation

Efficiency

EPAct Sec. 1252 – Smart Metering4. PURPA Sec. 111(d)(14) Time-Based Metering and

Communications

EPAct Sec. 1254 – Interconnection5. PURPA Sec. 111(d)(15) Interconnection


PURPA Procedural RequirementsPURPA Procedural Requirements

PURPA specifies the procedure requirements for considersation of the standards. Consideration is to be made after public notice and hearing and the determination is to be made (1) in writing, (2) based upon findings and on evidence presented in the hearing, and (3) available to the public (PURPA sec. 111(b)).


EPAct deadlines for Consideration and Determination of New PURPA StandardsEPAct deadlines for Consideration and Determination of New PURPA Standards

By 8/8/06 By 8/8/07 By 8/8/08

Smart MeteringPURPA Sec. 111(d)(14)

Commence considerationPURPA Sec. 112(b)(4)(A)

*Complete determinationPURPA Sec. 112(b)(4)(B)

InterconnectionPURPA Sec. 111(d)(15)


Complete determinationPURPA Sec. 112(b)(5)(B)

Net MeteringPURPA Sec. 111(d)(11)



Fuel DiversityPURPA Sec. 111(d)(12)



Fossil Fuel EfficiencyPURPA Sec. 111(d)(13)



*There is a discrepancy in PURPA sec. 111(d)(14)(F) requiring state commissions to issue a decision regarding implementation by 2/8/07


Failure to ComplyFailure to Comply

Sec. 112(c)

– If the determination deadline for any of the new standrds is not met, consideration and determination regading that standard shall be addressed in the first rate proceeding commenced after August 8, 2008.


Shall utilities be required to

1. Offer each of its customer classes certain time-based rate schedules, AND

2. Provide individual customers, upon request, with a time-based meter capable of enabling time-based service and rates?

Section 115(i) . . . And enable other demand response programs

PURPA Sec. 111(d)(14)Time-Based Metering and CommunicationsPURPA Sec. 111(d)(14)Time-Based Metering and Communications


PURPA Sec. 111(d)(14)Time-Based Metering and CommunicationsPURPA Sec. 111(d)(14)Time-Based Metering and Communications

IF YES

1. Some examples of time-based rates schedules that may be offered are:

– Time-of-use pricing– Critical peak pricing– Real-time pricing– Credits for consumers with significant loads

2. The time-based rates shall be determined to be cost-effective. (Boils down to a belief that the long-term value proposition is there to justify or exceed the costs incurred to deploy.)


Shall utilities be required, upon request, to connect on-site customer generation to their distribution systems?

IF YESService, procedures and agreements shall

1. Promote current best practices of interconnection for distributed generationAND

2. Be just and reasonable, and not be unduly discriminatory or preferential.

PURPA Sec. 111(d)(15)InterconnectionPURPA Sec. 111(d)(15)Interconnection


Shall utilities be required to make available, upon request, net metering services?

Allowing energy to be delivered to the utility’s systemFrom eligible on-site customer generationTo offset the energy the utility provides to that customer

PURPA Sec. 111(d)(11)Net MeteringPURPA Sec. 111(d)(11)Net Metering


Shall utilities be required to develop a plan

To minimize dependence on one fuel source,

AND

To ensure that the electric energy it sells is generated using a diverse range of fuels and technologies including renewables?

PURPA Sec. 111(d)(12)Fuel Sources (Fuel Diversity)PURPA Sec. 111(d)(12)Fuel Sources (Fuel Diversity)


Shall utilities be required to develop and implement a 10-year plan to increase the efficiency of its fossil fuel generation?

PURPA Sec. 111(d)(13)Fossil Fuel Generation EfficiencyPURPA Sec. 111(d)(13)Fossil Fuel Generation Efficiency


1. The State has implemented a comparable standard,

2. The State commission or relevant non-regulated electric utility has conducted a proceeding to consider implementation of a comparable standard, ORThe state legislature has voted on the implementation of a comparable standard.

However, the prior state action relative to Sec 111(d)(14), Time-based metering is to have been within the previous 3 years.

PURPA Sec. 111(d), (e) and (f)Exemptions for prior state actions, IFPURPA Sec. 111(d), (e) and (f)Exemptions for prior state actions, IF


Sec 111(a) Consideration and Determination

Each State regulatory authority (with respect to each electric utility for which it has rate-making authority) and each non-regulated electric utility shall consider each standard established by subsection (d) and make a determination concerning whether or not it is appropriate to implement such standard to carry out the purposes of this title. … Nothing in this subsection prohibits any state regulatory authority or non-regulated electric utility from making any determination that it is not appropriate to implement any such standard, pursuant to its authority under otherwise applicable State law.

PURPA Procedural Requirementsbeyond just deadlinesPURPA Procedural Requirementsbeyond just deadlines


Sec 111(b) Procedural requirements for consideration and determination

(1) The consideration referred to in subsection (a) shall be made after public notices and hearing. The determination referred to in subsection (a) shall be

(1) In writing(2)Based upon findings included in such determination

and upon the evidence presented at the hearing and(3)Available to the public



Sec 111(c) Implementation

(2) If a State regulatory authority (with respect to each electric utility for which it has ratemaking authority) or non-regulated electric utility declines to implement any standard established by subsection (d) which is determined under subsection (a) to be appropriate to carry out the purposes of this title, such authority or non-regulated electric utility shall state in writing the reasons therefore. Such statement of reasons shall be available to the public.



Sec 112(a) Request for consideration and determination

In undertaking such consideration and making such determination in any such proceeding . . ., a State regulatory authority (with respect to an electric utility for which it has ratemaking authority) or non-regulated electric utility may take into account in such proceeding

1. Any appropriate prior determination with respect to such standard,AND

2. The evidence upon which such prior determination was based (if such evidence is referenced in such proceeding).



What is Epact 2005?What is Epact 2005?

Epact 2005 is . . .

A National Energy PolicyA Philosophy

An Opportunity

What we make of it.


Messages for RegulatorsMessages for Regulators

EPAct is about infrastructure investment with technology advancement

– Therefore AMI (technology advancement) must be incrementally recovered or infrastructure will suffer.

Regulators define the ‘what’, utilities define the ‘how’

– Policy makers cannot become involved in the technology choice. Set the policy. Define the ‘What’, Utilities define the ‘How’.

AMI is the enabler of the future ‘smart grid’

– AMI isn’t just meter reading. It’s vision into the network at the lowest level that will change the way utilities do virtually everything over time.

Market transformation will take time

– It will take at least 10 years for a major portion of the market to fully implement. Realistic expectations and requirements must be maintained as the industry begins this transition.


Messages for RegulatorsMessages for Regulators

We’re here to help


State ProgressState Progress

39 States have active or complete EPAct 2005 section 1252 docketed proceedings at this time.

Regulatory1 Negative – Virginia (no need for smart metering)7 Positive – California, Texas both official support for incremental

cost recovery. Arkansas, Ohio (prelim), Oregon (prelim), Louisiana, Connecticut (prelim).

LegislativeNo negative2 Positive – California and Texas19 states have pending legislation (Over 6000 pages of state

legislation proposed for energy) Majority include positive AMI support.


Key New Federal EventsKey New Federal Events

Senate & House Democratic MajoritySenate Finance Committee forms new energy

subcommittee to be led by Sen. Jeff Bingaman (D) that is also the majority leader of the Senate Energy Committee

FERC reports and subsequent statements fully support DR and Smart Metering. Governmental building mandate could be expedited (2011 to 2009)

All top tier presidential candidates have placed energy as top issue, with at least half referencing efficiency, DR or smart metering specifically.


Key Federal EventsKey Federal Events

A short “placeholder” bill (S.6) was filed and addressed by both Energy Committee Chairman Jeff Bingaman and Senate Majority Leader Harry Reid. Bingaman made a floor statement saying that the Senate had five goal areas: (1) Transportation efficiency (2) Global Warming (3) Energy Efficiency and Technologies (4) Reduce price burdens on consumers and (5) eliminate tax giveaways and price gouging. Number 3 is notable for its inclusion of energy distribution; the full text of Bingaman’s statement on this goal is as follows:“The third goal in the bill is to diversify and expand our use of secure, efficient and environmentally friendly energy supplies and technologies. Efficiency is a key element in our energy policy that deserves more attention in this Congress than we have been able to give it before. There are outstanding opportunities to reduce the demands of our future energy system by being more efficient and effective in the ways we distribute and use energy. I will not go into those at this point except to say that this is going to be a major focus of our work in the first few months.”(Emphasis added)


Key Federal EventsKey Federal Events

Bingaman also stated his prediction that instead of seeing just one big energy bill that the Senate would address these issues “through multiple bills that move through the Senate as issues and proposals for addressing these issues become ripe for action”.

Reid echoed Bingman’s remarks about multiple bills instead of one big energy bill.

Senator Cantwell (other leading voice in energy issues) supported concept of multiple, specific, smaller bills for energy legislation rather than one big bill.

New Speaker of the House, Nancy Pelosi, also addressed substance and renewed her commitment to include energy in the “First 100 Hours” activities of the House.

Overview and requirements of the 2005 Energy Policy Act and PURPA Standards

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