Buried Lines and Microgrids

Downed power lines in Puerto Rico. Photo credit: ABC News.

Virginia has enjoyed a welcome respite from meteorological history, having dodged full-fledged hurricanes since Hurricane Isabel struck the Old Dominion in 2003 and Hurricane Gaston in 2004. But sooner or later, we’ll get hammered again. After surveying the devastation of Puerto Rico by Hurricane Maria, made worse by the total collapse of the territory’s electric grid, we Virginians should be asking ourselves how well our electric grid would stand up to a Category 4 hurricane — and what can we do to make it more resilient.

Two potential actions come immediately to mind: burying distribution lines and decentralizing the grid.

Last year Dominion Virginia Power advanced a $2 billion plan to bury the utility’s most outage-prone and difficult-to-repair electric distribution lines to limit the loss of electricity during severe weather events and speed the restoration of electric power. The company said the improvements would cut disruption of service to customers in half after a major hurricane. While the State Corporation Commission approved a small-scale version of the plan, it rejected the full-scale proposal as not worth the cost to rate payers.

There are alternatives to burying electric lines, such as hardening sub-stations, installing sensors that provide early-warning detection of damage, and aggressively pruning trees along right of way. But with the example of a prostrate Puerto Rico before our eyes, one might be more inclined to err on the side of caution. The wisdom of the line-burial policy depends upon the numbers — the cost of burying the lines, the cost of the alternatives, the number of people affected, the likelihood of a major hurricane or other natural disaster, and the economic value lost due to disrupted electric service. I don’t know if anyone has assembled all those numbers, but the topic is serious enough that someone — Dominion, perhaps, or state government — should pull them together for the public to digest.

Others have suggested that Virginia should move toward a distributed electrical grid, less dependent upon central power stations and endless miles of transmission and distribution lines. A distributed grid would rely instead upon wind and solar, batteries, and microgrid technology that allows local circuits to operate independently of the larger system. In theory, local islands of electric power would function even if the larger system were thrown into disarray.

Slate magazine describes Higashi Matsushima, Japan, in the aftermath of the earthquake that knocked out the Fukushima nuclear power plant:

After losing three-quarters of its homes and 1,100 people in the March 2011 tremblor and tsunami … The city of 40,000 chose to construct micro-grids and de-centralized renewable power generation to create a self-sustaining system capable of producing an average of 25 percent of its electricity without the need of the region’s local power utility.

The city’s steps illustrate a massive yet little known effort to take dozens of Japan’s towns and communities off the power grid and make them partly self-sufficient in generating electricity.

Sounds great. But questions arise. How well would Americans function with only 25% of their electricity supply? Also, how well do solar panels hold up in 120 mile-per-hour winds? Some pro-solar sources on the Web say that panels are designed to withstand up to 140 m.p.h. Do those claims withstand scrutiny?

Another issue is what happens when a massive weather system blots out the sun for days at a time. Batteries might be able to store power for a day, but solar + batteries could leave leave owners of rooftop solar bereft of electricity until the storm front passes and the sun reappears. On the other hand, Inside Climate News reports that, while Hurricane Irma cut power to 6.7 million Floridians, homeowners with rooftop solar arrays did just fine.

If unbiased reporting and analysis backs up such claims, perhaps Virginia needs to discuss how to move more expeditiously towards a distributed grid. That would mean solving tricky issues like net metering — whether to charge rooftop solar owners for access to backup power from the larger grid. A mediation initiative is trying to work through that question now. Perhaps Puerto Rico’s plight will provide the stakeholders with a heightened sense of urgency.

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47 responses to “Buried Lines and Microgrids

  1. Actually – if we can get past the political blame game with respect to Puerto Rico and see the necessary rebuilding of the grid as an opportunity ….on what a more modern grid should be in terms of technology and sustainability – it might not be a bad thing.

    Even though it was 90 years before another major hurricane actually did hit Puerto Rico – perhaps now is the time to think about how you’d build a grid today – to not only withstand a hurricane but have some mix of wind/solar and micro-grids.

    I’m quite sure they’e going to be looking not only at the power lines, but wind turbines and solar – in terms of their wind survivability as well as how they might be inputs to an island grid and perhaps micro-grids.

    In 2016, 47% of Puerto Rico’s electricity came from petroleum, 34% from natural gas, 17% from coal, and 2% from renewable energy.

    On the other hand – more likely , will be a rush to stand up a replacement grid – quick and “dirty” – pun intended.

  2. Distributed energy resources (DERs) and microgrids make sense, hurricanes or not. Using microgrids to island police and fire stations, hospitals, other essential services, as well as manufacturing facilities and office complexes, even densely populated neighborhoods makes sense.

    In New York City, the need to build a new $1 billion substation is being avoided by creating a microgrids using solar, batteries and other types of distributed generation at a far lower cost and greater benefits.

    These microgrids can include natural gas-fired microturbines to provide heating and cooling as well as electricity.

    Net metering is a contentious and relatively poor method of dealing with customer-sited solar generation. A cost-of-solar tariff gives regulators and utilities more control over how to incentivize more local generation in areas where it has the most benefit, while recognizing the true value of the local generation to the reliability and resiliency of the grid.

    Undergrounding wires make them safer from wind damage but more susceptible to water damage, so the costs and locations where this occurs must be studied thoroughly.

    Relying more on a network of microgrids can reduce transmission congestion and the need for new transmission. This reduces costs to ratepayers but also reduces revenues for utilities.

    We need a comprehensive plan for a new energy system, not a patchwork of policy band-aids that create a less efficient system.

    • These are potentially interesting and useful gadgets. Hopefully they and other gadgets will work to break up wind and solar farms into much smaller solar units ancillary to single residential and commercial uses that do not desecrate and despoil our nation’s open ground because that is precisely what Wind and Solar Farms do despite all our ongoing efforts to put Lipstick on the Pigs.

      If the ancillary solar panels hold the potential to offload internally generated power beyond its site so much the better. Wind, however, I consider hopeless from an environmental perspective, save for 1/ small sculptural machines that likely can serve only its primary use, and 2/ perhaps carefully selected offshore farms, although there or anywhere I would have concern for the Empire State Building heights now being studied under Obama era grants by our resident genius professors at UVA and their ilk. The kind of professors who wrote the 2009 Scientific American magazine article titled:

      A Plan to Power 100% of Planet with Renewables – Wind, Water and Solar Technologies can provide 100% of the world’s energy, eliminating all Fossil Fuels. Here How?

      The Article’s second paragraph starts off: ” A year ago former President Al Gore threw down a gauntlet: to repower America with 100 percent carbon-free electricity within 10 years. As the two of us started to evaluate the feasibility of such a change, we took on an even larger challenge: to determine how 100 percent of the world’s energy for ALL purposes could be supplied by wind, water and solar resources by as early as 2030. ”

      This “scientific study” prepared by a professors at Stanford University and the University of California at Davis, was completed in time for the December 2009 Copenhagen International Global Warming Conference. And taken very seriously at the time.

      To avoid all Scientific American paywall but read the full text, and see all the pretty pictures and charts go to

      http://www.angelfire.com/folk/thegrieves/transfer/200911.pdf

      Otherwise see:

      https://www.scientificamerican.com/article/a-path-to-sustainable-energy-by-2030

    • These are potentially interesting and useful gadgets. Hopefully they and other gadgets will work to break up wind and solar farms into much smaller solar units ancillary to single residential and commercial uses that do not desecrate and despoil our nation’s open ground because that is precisely what Wind and Solar Farms do despite all our ongoing efforts to put Lipstick on the Pigs.

      If the ancillary solar panels hold the potential to offload internally generated power beyond its site so much the better. Wind, however, I consider hopeless from an environmental perspective, save for 1/ small sculptural machines that likely can serve only its primary use, and 2/ perhaps carefully selected offshore farms, although there or anywhere I would have concern for the Empire State Building heights now being studied under Obama era grants by our resident genius professors at UVA and their ilk. The kind of professors who wrote the 2009 Scientific American magazine article titled:

      A Plan to Power 100% of Planet with Renewables – Wind, Water and Solar Technologies can provide 100% of the world’s energy, eliminating all Fossil Fuels. Here How?

      The Article’s second paragraph starts off: ” A year ago former President Al Gore threw down a gauntlet: to repower America with 100 percent carbon-free electricity within 10 years. As the two of us started to evaluate the feasibility of such a change, we took on an even larger challenge: to determine how 100 percent of the world’s energy for ALL purposes could be supplied by wind, water and solar resources by as early as 2030. ”

      This “scientific study” prepared by a professors at Stanford University and the University of California at Davis, was completed in time for the December 2009 Copenhagen International Global Warming Conference. And taken very seriously at the time.

      To avoid all Scientific American paywall but read the full text, and see all the pretty pictures and charts go to

      http://www.angelfire.com/folk/thegrieves/transfer/200911.pdf

  3. If Dominion is willing to bury power lines, making a proposal that the SCC delares “not worth the cost to rate payers,” then Dominion should propose to bury the transmission line it wants to build on I-66 to service the Amazon data center in Haymarket…

  4. re: ” Undergrounding wires make them safer from wind damage but more susceptible to water damage, so the costs and locations where this occurs must be studied thoroughly.”

    re: ” the SCC delares “not worth the cost to rate payers,”

    is this an example of unelected bureaucrats , perhaps without the necessary backgrounds to know, making decisions ..that are not in the best interests of ratepayers – longer term?

    said that badly but basically the question is – is the SCC looking at the ROI – over the longer term? Are the people on the SCC who are making these judgement qualified to make them beyond a pure money now – benefit now basis ?

    With respect to Puerto Rico – that situation brings to the fore what people believe about the future of weather and climate. If you don’t believe that we are going to see more powerful hurricanes then perhaps you’d rebuild cheap but if you do believe that weather will become more intense and more damaging.. would you spend more money now on rebuilding to build a grid more resilient and durable?

    • “Based on the record developed in this case, we agree with Consumer Counsel that Phase Two is not cost beneficial. Consumer Counsel also notes that, for the costs proposed herein, fewer than one percent (i.e., 0.27%) of the Company’s customers are directly served by the tap lines Dominion proposes to underground in Phase Two. The Commission concludes that it is not reasonable and prudent for Dominion to invest approximately $110 million, which could ultimately cost customers $270 million during the life of the facilities, for Phase Two of the SUP as proposed by the Company. The Commission further finds, however, that a more targeted, limited-scale
      Phase Two — for the purpose of extending the pilot-type program approved for Phase One — is reasonable and prudent as discussed below.”

      That’s a quote from the Commission’s order of September 1, Larry. Yes, it considered the long term costs of the proposed investment. “Consumer Counsel,” incidentally is the Attorney General’s office. Here are some other excerpts:

      “In applying the statute, the Commission finds there is substantial evidence in the record to rebut these statutory presumptions regarding Dominion’s proposal for Phase Two of the SUP. The evidence supporting this finding includes the following facts regarding the details of the Company’s request:
      • Cost is not a factor in determining what facilities should be undergrounded; under Dominion’s proposal for Phase Two, no underground project is too expensive.
      • Under the Company’s plan for Phase Two, no potential project is rejected based on cost.

      “Dominion’s proposal requires customers to pay $476,076 over the life of the project to fund the total expense of undergrounding the facilities needed to serve a single customer.

      “• Dominion’s plan for Phase Two includes a group of 19 customers that, even without considering financing costs over the life of the projects, would cost ratepayers approximately $120,000 on average per
      customer undergrounded.

      “• Phase Two is part of Dominion’s plan to spend $2 billion in capital investment over the next 10 years for the SUP, which could eventually cost customers almost $6 billion when financing costs are included.

      “• There is no evidence that any other electric utility in the country has implemented an undergrounding plan at such a high level of cost to its customers.”

  5. Every now and then, Larry, I suspect that attacking the SCC is your pet agenda. You should make some effort to understand. The SCC is a court, and decisions it makes on utility petitions involve a process where all stakeholders come to the table and offer testimony, etc. The parties can do discovery. If the utility makes a proposal and nobody objects, all the stakeholders say that’s a fine idea, then odds are it will be approved. I believe it was more than just some SCC staffer who was skeptical of the economics of those underground projects – and especially skeptical of the profits that the utility sought over decades on those investments. In one of the cases in particular the SCC stopped just short of using the word greed.

    That said, the utility ran back to the Assembly and changed the rules again, and the project is underway on a more limited basis and we’ll see how it works out – and it may justify further efforts. It may not.

    The issues around distributed generation and micro grids are interesting. I can envision a scenario where repairing a hundred micro grids might be harder than two or three major circuits. The market is forcing the hand of utilities and ways will be found to integrate home-based or facility-sized solar and wind.

    And when those rules are written, I want them reviewed and then enforced by the SCC rather than by a political body that takes campaign contributions, enjoys free access to sky boxes and never hears testimony under oath.

    • I agree with Steve. The SCC is the only body that conducts evidentiary hearings related to our energy system.

      I have not seen Dominion’s proposal regarding undergrounding, but it is quite possible that it did not include sufficient information to make their business case or show that it was a benefit to ratepayers. After review by technical and accounting experts who are on the SCC staff, the commissioners probably decided they did not have sufficient evidence to approve it.

      I attended this year’s IRP hearings, a few days ago. Dominion is predicting far greater load growth than PJM is predicting for the DOM zone. The growth in data centers is the primary source of load growth in Virginia. Dominion said the addition of new data centers would peak in 2023 then grow at the rate of economic expansion (0.7%) after that. PJM assumed that growth would peak in 2021 and be level after that because Dominion failed to provide any evidence for supporting growth after that date. The SCC has not issued a ruling yet, but you can see that judges are likely to make their ruling based on the evidence. When the evidence is lacking they are unlikely to issue a positive decision for the applicant.

      The case for the pipeline is similar. The report that shows that the ACP will save everyone money was based on a price differential that occurred during the polar vortex that was assumed to last for 20 years and did not include the cost of actually using the new pipeline. When transportation costs for the ACP are included the new pipeline adds costs to ratepayers instead of lowering them (billions in unnecessary costs).

      FERC does not have an evidentiary process that allows for cross-examination of witnesses. They have not even asked a question about the flawed study. They want to approve the project without proper evaluation. The SCC has recently said, in an Affiliates Act case, that they will rule on the pass-through of the $200 million per year charge for the ACP (whether it is fully used or not) in each year’s fuel factor case.

      For the first five years, the ACP has absolutely no value to ratepayers. Long-term agreements for capacity are in place with with existing pipelines that can deliver the gas at prices that are 3-8 times cheaper than the ACP. If a new plant is needed in 2025, the ACP claims that the only way to fuel it is by using the ACP, but the facts don’t support that either.

      I suspect that it is for the lack of compelling evidence that will not hold up in court, that Dominion is often seeking approval from the GA rather than the proper regulatory authority.

      I want them to succeed in being part of a modern energy system, but the current tactics are not the way to do it.

      • “The SCC is the only body that conducts evidentiary hearings related to our energy system.”

        Riddle me this Batman, what good is an evidentiary hearing if both the SCC Hearing Examiner and Judges dismiss the evidence provided during the hearing. That is exactly what happened in the Haymarket case. The Hearing Examiner arrogantly dismissed testimony by those qualified to provide evidence of need, easements, existing and long range uses in Prince William County, most notably, the County’s Planning Director. Instead, they elected to accept the testimony of Dominion witnesses Gill and Potter, both of whom admitted under oath that they were not land use experts.

        Sort of blew up in their face given that the routes they ultimately selected were deemed unbuildable for the very reasons previously dismissed by the clown appointed the Hearing Examiner. Now they are back to ground zero.

        • Here’s the thing, Mom. If the “clown” Hearing Examiner and the Commission itself disregarded critical evidence supplied during the hearing or issued a decision not sufficiently based in the evidence, the losing party can appeal that decision directly to the Virginia Supreme Court. The issuance of a construction certificate is a legislative function. If the legislature gives out the certificate itself (which it has done at times), who does a disgruntled party appeal to?

          I don’t know if you attended the hearings in that Haymarket case, but I expect that plenty of persons other than the County’s Planning Director testified. And, by the way, why did the County Planning department allow Amazon to build that facility way out in that end of the county in the first place? Did they fail to plan on how to get the power out there to it?

          • Despite the submission of hundreds of bits of testimony, emails, etc., there was precious little submitted regarding existing and planned land use in the area. The Hearing Examiner elected to accept the testimony of Dominion’s two “experts”, who both subsequently acknowledged they had no expertise in land use or planning. Their testimony was based on stale data and highly questionable analytical techniques. Similarly, as recent events have underscored (the selected routes have been deemed unbuildable by Dominion) the vetting of the proposed routes was cursory at best, ignoring easements and vacant properties encumbered by rezonings and proffers.

            Most if not all of those issues were identified by the Planning Director and others, all eminently more qualified to speak to the local conditions than Dominion experts Potter and Gill. The Hearing Examiner, pompous bastard that he is, dismissed their testimony as uncredible. I guess he will have some ‘splaining to do now.

            With regard to what’s next, you nailed it, Hi Ho, Hi Ho, Its Off To Court We Go, that was of course until the selected routes were deemed unbuildable. Now it is wait and see what the SCC does next. Do they select new routes, reopen the hearings or deny the application, only time will tell.

            As to Amazon being allowed by the County to build its complex way out at that end of the county in an area without adequate infrastructure, don’t look to the Planning Office, look the County’s Economic Development Office which negotiated the deal in secret, so secretly in fact that most of the Board of County Supervisors were unaware of it until it was far too late.

            Even at this late a date, it is damn near impossible to get any information on the project from County staff as Economic Development signed off on an NDA that prevents the disclosure of virtually everything. What information has been obtained has been obtained came as a result of reviewing every scrap of public information available, building permits, waivers, DEQ filings, etc.

    • geeze Steve.. I can’t satisfy you!

      Let me re-phrase…

      Are SCC Staff looking at longer term ROI when they analyze the cost-benefit of something like buried cables?

      Does Dominion provide or the SCC develop an amortized investment verses recovery of investment – analysis?

      I understand that the process is a “proceeding” with participants…but doesn’t the SCC have staff people that develop the position and “evidence”that the SCC “presents” at these proceedings?

    • re: criticism of the SCC…

      so let me ask .. if Dominion proposed Micro-grids….with a 20-40 year pay back…. how would the SCC process it? Would it summarily shot down or would some kind of detailed analyses be performed that would substantiate their position?

      Is the SCC qualified, prepared to do that level of analyses?

      The problem with a monopoly like DOM is that they are clearly going to pursue things that are in their best interest – short term but who represents the ratepayer over the longer term if not DOM?

  6. America is schizophrenic on electric power. On one hand we want to conserve our way out of building more big power plants and transmission lines. We want local generation and smaller distribution networks.

    On the other hand, we are pushing to replace the internal combustion engine with electric motors and continue to grow the information age.

    I think we failed to recognize 1) that, even with improvements in efficiency, a nation of electric vehicles and cloud networks will need more reliable and cheap electricity; 2) a world of terrorists and natural disasters requires additional distribution capacity and redundancy; and 3) people will not want these mini- or -micro generation plants in their neighborhoods. Have you ever watched a proposal for a new cell tower or electric substation to be built in a community?

    And what Puerto Rico does about power is up to Puerto Rico in my view.

    • Overall I could not agree with you more. And why is this happening? I guess it is because the special interests and press control so much of “the nation’s information grid” that they can get themselves and many of their uninformed and impressionable readers way out in front of their skis, ready to take the big fall, on many of these fad issues.

      But when the Pig (here solar and wind farms) show up in quantity in their back yards then I am confident that all hell will break loose. And it should. The two solar farms in my otherwise beautiful neighborhood are abominable. It’s remarkable too that the people who have built them make no effort to dress them up or to hide them from folks passing down the road. I guess they think that covering and otherwise messing up good farm land or equally wonderful natural places in between with row upon row of hot shimmering panels of glass, carbon and steel is cool and trendy and that it signals their own hip preening virtue, destroying the planet to save it.

      • My wife and I went to Oahu in August. We drove around much of the island, including the North Shore. There was a very large wind farm set up in the hills. It was observable for miles. Also observable were a significant number of anti-windmill signs.

        • When I was advising the utility on Kaua’i we decided that despite the abundant wind resource, most of the good wind sites were in the most scenic areas. With the island economy nearly totally dependent on tourism (more so than Oahu), we felt that solar facilities on homes, hotels, and large installations tucked away on abandoned sugar-cane fields would be better.

        • so the obvious question is – what would you power Hawaii with – instead?

          I think those who say that wind and solar are not pretty – perhaps also would not like the “scenic” parts of a Nuke or Coal Plant – maybe not even a gas turbine.

          ON Islands like Hawaii – how would you like to power them?
          right now , they’re importing fuel oil and burning it to generae electricity- and that’s apparently the least cost way of doing it.

          Most of us that don’t live right next door to a Nuke or Coal plant … and then see a solar or wind farm.. are going to complain about the wind/solar because we’ll see more of them because the Nukes/Coal are much more concentrated energy , and intensity, and either pollution or stored waste – neither of which you’d want in your own neighborhood – either, right?

      • Reed,
        What I am recommending, distributed solar systems on commercial, government and industrial buildings, is intended to avoid just what you are decrying – utility-scale solar on greenfield sites.

        These are typically hidden from view, or are already on disturbed land uses. They use the distribution system and avoid costly and unsightly new transmission lines.

        Invisible, low-cost energy efficiency avoids all of it.

        • Tom H –

          Your comment immediately above is quite helpful. Namely finding ways to avoid utility scale solar or wind on what you call green field sites, near to or far or far from users. Solutions here demand clever techniques (whether by technology or site specific applications) to hide or disguise projects from view,and simultaneously generate and deliver electric power in most efficient and cost effective way possible.

          This is a complicated business. It requires exceptional talent and will. Done right it can be very cost effective, in many different ways. This is critical. The alternative is not acceptable, given the great downside of wind and solar projects improperly executed.

        • TomH –

          19th and 20th century coal mining extracted enormous wealth from West Virginia. In so doing this coal mining left enormous long term desolation in its wake. This desolation particularly engulfed and overwhelmed many of those people (and their families) who did the hard and dangerous work of physically extracting that coal. In stark contrast their hard work enriched the relative few who own the mines?

          Why did this gross inequity happen? Why is the devastation so long term? What steps might of been taken to spread the wealth around? How best might this coal mining have been done to better preserve the land, and at the same time invest in and leave the seeds of long term prosperity behind for all the benefit of all people in West Virginia, or at least far more of them. And most particularly those whose dangerous back breaking work was primarily responsible for the extraction of this wealth that directly benefited a relative few, and indirectly benefited all of us given the vast amounts of American energy that coal as has produced over the past two centuries?

          These questions are pertinent today.

          Thus, for example, Mr. Moret, head of Virginia’s Economic development Authority, should devise an independent plan that outlines how the people in SW Va. might benefit in the long term from Dominion’s proposed SW Va. pump water storage project.

          Such an economic development plan should tell Virginians what concrete steps they should undertake to have the best chance to generate the maximum maximum long term benefits that this pump water project might spawn, if the stage is properly set. And it should include a realistic assessment of the risks inherent in such a plan.

          In addition, given that solar and wind power projects must (given today’s best estimates), it they are to generate 80% of America electric power by 2050, consume vast swaths of American land. Estimate range on the low side to land the size of South Carolina, and on the high side land double the size of California. Very few people seem willing to talk in any kind of serious way about this prospect, and what is might mean to all Americans.

          Why Not?

          • Reed Fawell 3rd

            Correction to last paragraph above.

            “In addition, it is said that solar and wind power projects, it they are to generate 80% of America electric power by 2050, must consume vast swaths of American land. Estimates range on the low side to land the size of South Carolina. And on the high side, to land double the size of California. Despite this vast disruption of the land, very few people seem willing to talk in any kind of serious way about this prospect, and what is might mean to all Americans.

            Why Not?

          • Reed Fawell 3rd

            And shouldn’t we now plan to make every effort to counter and minimize this potential threat while also maximizing the benefit that we might gain from solar and wind power?

            If we do not, then might we well end up like West Virginia after its rape by the coal industry in the 19th and 20th century?

    • TMT,

      I think you are right about many issues. Although I believe that we will develop more robust two-way flows of energy and information in our distribution networks, instead of smaller ones.

      Electric vehicles will add to flexibility and resiliency by being a dispersed, cheap source of storage and re-injection of energy into the grid. Greater energy efficiency and avoiding over-reliance on natural gas are the only ways to reduce costs instead of increasing them.

      A network of distributed energy resources that provide multiple paths for energy is a much more difficult target for terrorists than a system dependent on a few large sources of energy, transmitting power over a few large transmission lines. We will continue to need both, of course. But it is a question of what we build in the future. Should we continue to build a more expensive, more vulnerable extension of our 20th century system? Or should we begin to use modern techniques that will reduce cost and increase reliability?

      If the mini- or micro-generation units (micro-turbines) are used at all, they will be located in the basement or on the roof top of commercial and industrial buildings (looking like air-conditioning equipment). They will avoid the need to build more substations and transmission lines (DERs and microgrids are being considered “virtual Transmission”).

  7. The “scenic” thing is a curious thing to me.

    I don’t see wind/solar much different than I do a cell tower or a high voltage electric transmission line.. or a sewage treatment plant – a power plant… etc…

    Whenever we go to NC – we go by two big solar farms. One sits next to a Hog processing plant – the other one next to a poultry processing plant.. If I had to choose which was more “offensive”.. I’d pick the animal processing plants – but at the same time I’d have to admit .. I’m one who eats chicken and pork… and for that matter ..uses electricity… and though I’d like all of them to be “invisible”… they’re not… they are the “scenery” in some people’s lives… everyday.

    I wonder how urban dwellers like Reed would feel if the hog and poultry processing plants were next door to his favorite super market where he bought his chicken and pork! 😉 How would ALL of us feel about that?

    Well the point is that we all consume these things – and my apologies to those who don’t eat chickens or pork) … and the things we consume – including electricity – are really not “invisible” but most of us are fine if they are not invisible …as long as we don’t have to see them near us!!

    I sort of got taught that myself – as a paddler of rivers… all over Virginia.. and the one thing in common on most rivers… that paddlers who seek “scenic vistas” see… is sewage treatment plants.

    When I first started paddling.. when I saw them.. I’d recoil and disgust that “we” would dump that stuff in our rivers… It didn’t take long for me to realize I was one of the ones who was responsible for putting “crap” in our rivers… and that made me realize that we all are responsible for sewage, electricity, chicken, pigs.. storm water runoff.. all the icky things that mar the “scenery”…

    I just don’t see wind/solar any different than I do high-voltage powerlines, substations.. and poultry plants.. wastewater plants..etc… they are necessary components of civilization.

  8. Interesting article:

    ” Renewable energy investors see opportunity in Puerto Rico’s demolished grid”

    https://goo.gl/PKfyUd

    • Good article. Points out how inefficient the PR system has become through lack of modernization investment + how expensive it is to import fossil fuels of any kind, let alone oil; so it’s easy for new low-cost solar to do better. Plus, low nighttime consumption for heating year-round means solar plus batteries is a better fit with PR’s daily load curve than would be the case Stateside. Of course the solar industry should be interested, especially if someone with deep pockets will pay the bills.

  9. LG, the SCC, like any State utility regulatory body I am aware of, makes most decisions on the basis of a life-cycle economic (cost-benefit) analysis of the relevant factors to determine whether the proposal is in the “public interest.” That leaves plenty of room for disagreement over methodology, how to measure those relevant facts and make the relevant forecasts, and how to weigh political and environmental factors that can’t be cost-quantified. But basically, undergrounding of distribution facilities is something utilities have lots of experience with and the costs and benefits can be estimated pretty well. Yes there’s a payback when there’s a major storm — both in terms of restoration time/ customer satisfaction and in terms of cost benefit. But major storms are episodic — it’s like insurance, you make the investment up front to put things underground and you pay the carrying cost of that investment for its entire lifetime; and you thereby avoid the damage caused by anywhere between zero and several above-ground storms. So everything is calculated based on average damage to the typical above ground facility over its lifetime, versus underground.

    Undergrounding is not cheap. Yes, you’re just putting a wire in a trench, which doesn’t sound like much — but in order to protect it, and replace or add to it as needed, you usually lay conduit to draw the wire through, with room for spares, and build manholes for access every so far. And this means digging up the streets for weeks, streets which may already be filled with other buried stuff. You can’t go burying wires across back yards just because there’s an overhead line there already. And then you have to establish new transformer pads at sidewalk level and new underground service cables into every customer’s premises currently served overhead, cutting through established tree roots and gardens and driveways. This can be very disruptive and unpopular. And if you put the transformers underground also, you may have to build large chambers under the sidewalks and ventilate them with fans to prevent heat build up, and all these chambers have to be pumped out if flooded. And this technology only takes care of low voltage distribution equipment — undergrounding power lines of 34 kV or up may entail placing each cable inside a pipe through which liquid coolant from an above-ground cooling coil is pumped constantly to carry off the accumulating heat during use; undergrounding 230 kV and up can be prohibitively difficult and/or expensive for longer distances. All this because these facilities MIGHT be more vulnerable at some point to storm damage if located overhead, where they are already in place on cheap poles.

    So yes, the utility will present its own cost benefit analysis, and yes the regulator may reject that and say, “No way.” Remember, the utility gets blamed if that storm does come and the recovery is slow; whereas, the utility earns a return on its extra investment if it places its distribution system underground. It has every incentive to push for as much undergrounding as the regulator will approve. The regulator has to be the one to apply the brakes to this process.

  10. re: ” Of course the solar industry should be interested, especially if someone with deep pockets will pay the bills.”

    Well the article says the Corps of Engineers has the lead role and the obvious question is – where will the money come from to buy equipment and labor since the destroyed grid was already financially insolvent. I really don’t see much choice than the US paying for it … the question is how do they get their money back and will there be a Public Private Grid approach where the govt gets some level of payback.

    For ANY area of disaster when parts of the Grid are destroyed -doesn’t FEMA/Govt pick up those costs – at whatever level the destruction occurs? Or did/does DOM essentially write off storm damage even from hurricanes as it’s own cost of business?

    • Two quick answers.

      Normally, a utility has no expectation of a government handout in the form of FEMA assistance with storm damage repair. FEMA will help with emergency repair to roads, canals, pumps etc, and with emergency generators and fuel for them, but not repairs to permanent infrastructure; FEMA’s mission is helping people through the emergency. But, the payback of any federal moneys to PR’s electric utility from FEMA is a pipe dream. When I mentioned deep pockets it’s because vendors simply won’t sell to equipment to a near-bankrupt. FEMA is being asked to go way beyond its mission to help PR rebuild its permanent grid at federal taxpayer expense.

      • re: ” FEMA is being asked to go way beyond its mission to help PR rebuild its permanent grid at federal taxpayer expense.”

        If a CAT 4-5 of the intensity of Maria had hit Florida and wiped out most of the grid – would the investor-owned utilities be required to stand it back up without FEMA/FED help, pay for it and pass that cost on to the rate-payers without any taxpayer help?

        Are the electricity consumers / ratepayers in Florida going to see increased charges in their bills to pay for the disaster repair?

        • Yes, yes, yes; and yes. Except that, first responders working for the State or FEMA may help initially to get wires/poles out of the way of rescuers and maybe even to get some rudimentary supply system going. I don’t know whether the local utility reimburses in such instances. But basically every US electric utility has a contingency fund to take care of storm damage, and is allowed to amortize expenses beyond that (over several years usually). The incremental cost of any one hurricane in excess of the average annual expense for storm damage may not be that great; and also there’s aid from other utilities to abate the crisis. Remember, if this had happened in the States you would have seen more of those lines of bucket trucks with emergency help from other utilities. That sort of mutual help between utilities is very difficult on an island. Other utilities undoubtedly have flown some of their folks down there to help in PR, but the heavy equipment and repair supplies aren’t easy to transport.

  11. re: undergrounding and other longer-term investments and ROI calculation.

    I hear what you are saying Acbar but still remain a little bit skeptical because modernizing the grid as well as making it more resistant to storm damage are examples things that don’t seem to be part of the SCC/DOM process…

    How would DOM, for instance, justify modernizing the grid so that it employed microgrids, solar/gas hybrids, etc.. that require substantial up front investment but a positive ROI over 30-40 years?

    Strategic Planning… how much of the current ratepayer bill – is allocated strategic modernization of the grid?

    In my view… which I admit may well not be a full understanding – it appears that DOM is in the position of not being able to do the things that competitors are doing and because of that seek legislation to keep competitors from poaching off it’s current business model – a model which is constrained from .. competing … and having to be a better competitor with regard to both solar and Demand-side technology.

    I see an electric cooperative in Hawaii that ENCOURAGES their customers to install roof-top solar – WILL not only buy the excess but low cost loans to build it … they also give $1000 rebates for those that install solar water heating systems.

    My own cooperative provides lower cost water heaters and programmable thermostats in exchange for letting the Cooperative adjust individual home consumption at high demand periods. Other companies actually use Smart Metering which is similar to Congesting Pricing for highways in that when demand is high – the price of electricity is high.

    When DOM built new gas plants – why didn’t they surround them with solar farms and harvest the solar instead of burning gas – when solar was available?

    If DOM does not make a proposal that is in the longer term interests .. things other electric companies ARE doing.. if DOM chooses not to.. what does the SCC do?

    • “How would DOM, for instance, justify modernizing the grid so that it employed microgrids, solar/gas hybrids, etc.. that require substantial up front investment but a positive ROI over 30-40 years? Strategic Planning… how much of the current ratepayer bill – is allocated strategic modernization of the grid?” These are related questions. Dominion and the SCC are both charged with looking ahead strategically and modernizing the grid in a long-term cost-effective manner. That includes modernization even with a steep up-front cost. The best example would be building those big nuclear units back when they promised bountiful cheap energy once built. But there are limits to the scope of that obligation. An electric utility is not in the gas pipeline business (a corporate affiliate may be, but the regulator has to watch out for conflicts of interest). An electric utility is not in the business of building private microgrids (it is in the business of making its own grid reliable, but this has to be in the interests of its electric customers broadly). An electric utility SHOULD promote customer activity that helps lower other customers’ bills (for example, promoting customer energy savings that lower the utility peak demand enough to avoid new generation construction or purchases thus paying for the cost of the promotion). The gray area is where the payback is not obviously positive for others but “for a good purpose” like promoting customer-owned distributed solar. That’s an example where some say distributed solar IS in other customers’ best economic interest and the utility just won’t promote it out of fear of the competition; others say no, the utility should accommodate customer activity of all kinds but not promote anything, just stay neutral, unless it’s a positive benefit for all customers. That’s where the SCC is supposed to come in and sort the competing claims and make a decision on what’s best for all rate payers — which may include taking into account political as well as economic considerations.

  12. “I see an electric cooperative in Hawaii that ENCOURAGES their customers to install roof-top solar – WILL not only buy the excess but low cost loans to build it … ” — That is another example of promoting individual customer behavior that saves all customers money. On an island, with no larger grid and its diversity of generation types to tap into, you meet demand with what you’ve got, which is probably heavily oil based and expensive to run. So if customers reduce their daytime load by self generating with rooftop solar, it reduces the need for the utility to build new peaker generation in the short run. That still leaves the utility providing the evening and night power supply. In the long run the utility has an incentive to want to build up generating resources including its own utility-scale solar, in order to earn on that investment, but customers may be better off if that investment is made by hundreds of individuals and the utility rate base remains lower. At some point the utility and its regulators may disagree about what’s best going forward for customers.

  13. The Hawaiian Utility .. COULD see the profit it makes from it’s own generation as more profitable than if they encouraged customers to do things that would help the customers individually, as well as collectively that would not benefit the utility.

    Correct?

    What differentiates the behavior of the Hawaiian utility from DOM in that each of them can choose a path that best serves their own corporate interests or they can choose a path that benefits customers – individually and collectively – but at the expense of their own corporate interests?

    I note that the Hawaiian utility is a non-profit cooperative and DOM is a for-profit investor owned utility.

    I note than my own cooperative REC seems to be much more interested in reducing demand through a variety of ways – much more so than DOM seems to be doing.

    Is the fact that DOM is an investor-owned , for-profit utility- at odds with the best interests of the ratepayers – both short term and long term?

    DOM, compared to other utilities in the country – is not exactly a leader in solar nor demand-side technologies and the SCC seems to be okay with it.

    The “innovation”so far seems to be to ask for and get from the SCC approval to make rate-payers pay for Nuke Planning.. a PR effort at pump-storage and anemic … foot-dragging efforts at solar .. itself then using the power of it’s monopoly to try to discourage 3rd party efforts.

    I don’t see this as in the best interests of ratepayers, neither short-term nor long-term as much as it seems to be in the best interests of it’s investors.

    Yes.. utilities on islands do have a responsibility to minimize the costs of using fuel oil to generate electricity – but so does DOM in Virginia in using conventional fossil fuels and Nukes – instead of moving to modernize the grid to be able to be able to use solar and wind – instead of fossil fuels – when those “fuels” are available to use… just as on the islands – you use the solar/wind when you can then at night you use the fuel oil. The same should be the goal in Virginia in that we seek to use wind/solar when we can and then fall back to fossil fuels and nukes when we must.

    that’s the path forward that we should be doing and it appears that neither DOM nor the SCC has that vision….

    • Larry, it’s my understanding that only the island of Kaui is served by a cooperative electric company. The rest of the state is served by the NYSE-listed Hawaiian Electric or one of its subsidiaries.

      While state law likely varies considerably between Hawaii and Virginia, both HE and DOM have a primary duty to their shareowners. I suspect the differences can be found in state statutes or regulations.

    • LG, you have never asked better questions than these. They go to the fundamental underlying question: whether a regulated private investor-owned utility is a better way to perform a monopoly public-service function to get an essential job done than a government agency. Or some sort of hybrid, like a co-op.

      In short: with a private utility you get shareholder governance and an intense incentive to control costs. And, the potential for a conflict of interest between shareholders and ratepayers. The regulator is supposed to reconcile any such conflict. With a public utility you get bureaucratic “CYA” style governance, often more responsive to politics than business management, but fewer conflicts of purpose. Neither model is perfect. Of the two (and I have seen both up close), personally I strongly prefer the private model. But what makes it work, IMHO, is the public service spirit that pervades most employees of well-run private utilities (why they would volunteer their own time to drive down to Florida to climb poles), and on the other hand, knowledgeable regulation that respects the need for private fund-raising of debt and equity on Wall Street to get the public service facilities built and the job done. Investors are happy with this because a privately-owned public utility, while never glamorous as an investment, is a steady performer, particularly in downturns, that provides the shareholder with something of the benefit of owning bonds without getting out of the equities market. If it engaged in more speculative business ventures its stock could lose the very attribute that makes it attractive.

      A utility should not be allowed by regulators to abuse its legal monopoly — any more than the anti-trust laws and their regulators should let companies off the hook that attempt to form an illegal monopoly. But most utilities would not think of doing so. There may be some carping around the edges as to what is, in fact, in the best long-term interests of ratepayers, but most utilities realize that keeping ratepayers happy in the long run is what leads to happy regulators and that contributes to happy shareholders. Ultimately the regulators’ wish is the utilities’ command. Ultimately there can be no conflict between what is in the ratepayers best interest and the shareholders best interest because happy ratepayers means happy regulators means happy shareholders.

      You add, “DOM, compared to other utilities in the country – is not exactly a leader in solar nor demand-side technologies and the SCC seems to be okay with it.” That seems to me to be a true statement with a false implication. The implication is that DOM is deliberately missing or scuttling the boat and that the SCC is complicit because it has not overridden DOM’s management on this. I think Dominion has done pretty well (by the standards of its peers) with its experimentation in the utility solar business and its tenaciousness with off-shore wind power in the face of a lot of [excuse the pun] headwinds. On energy conservation and demand side resources there are areas of the country where such things are much better supported politically. I’d like to see DOM get out there much more aggressively with customers: for example, invest in re-insulating poorly-built, poorly insulate homes; go after the new home builders and their customers by promoting the heck out of high efficiency appliances and better insulation; attack local building codes that obstruct or unduly complicate homeowner solar installations; promote energy management services and DSM program participation for small businesses. Influencing what the customer does behind-the-meter is difficult for a traditional electric utility. But I continue to say, Dominion is not hostile to this, just not as aggressive as you or I might like them to be.

      Last point — you mention demand abatement programs under REC. REC has a very different financial perspective. They buy all their power from others, and so they don’t have to build new generation or balance generation with load growth over time; on the other hand, they have some cheap sources of power (like REA hydro) and the more they buy from newer, more expensive sources the more they dilute the cheap stuff. And they have all the rapid customer growth in the outer burbs they can handle; anything that reduces the rate of load growth helps them keep their heads above water. Maybe, for REC, demand reduction actually saves all customers money. I doubt that’s the case for DOM, but that’s for the SCC to determine (and they should — people like TomH insist on it!).

      • “[W]hether a regulated private investor-owned utility is a better way to perform a monopoly public-service function to get an essential job done than a government agency.”

        Both private investor- and government-owned entities provide electric power in the United States. Both types of entities have generally done a reasonable job of providing reliable power at reasonable rates. Especially since the big inflation times of the 1970s and early 80s ended.

        There is a risk that investor-owned utilities can capture their regulators. There is also a risk government-owned utilities can be captured by other-agenda activists. Both risks must be dealt with assertively.

        There is a need for a consumer advocate arm of a state AG’s office or PUC. And there needs to be means for private parties to intervene in utility proceedings before a PUC.

        I’m not sure there is a good way to check the other-agenda people in a government-run utility. While I think both alternative energy sources and conservation make good sense, I don’t trust environmentalists to represent the public interest any more than I trust management of an investor-owned utility. And the Obama administration showed us how easy it is to allow radical environmentalists to gain significant power in government.

        • Very well said indeed.

          And I would add to your last paragraph:

          And the Obama administration, now infected with unrestrained environmentalism, showed how easy it is to gain control of the nation’s publicly funded scientific research, whether it be public or private, and gain control of private corporate decisions and ambitions, using public funds and power as a weapon to achieve, maintain and enhance the political and policy ambitions of the federal administration then in office.

          This is the lasting legacy of the Obama Presidency.

          • what blather! It’s _not_ “environmentalists” that are wanting to install solar unless you want to put that label on the likes of Amazon and WalMart and others.

            Its not “environmentalists” that want to install more demand-side technology to not only use less energy but pay less for the energy they use.

            I’m perfectly fine with the free market determining the demand for solar and conservation … not “environmentalists” which are a made-up boogeyman for some folks… who themselves actually are opposed to solar as de-facto NIMBYs .

            TMT refers to “govt-owned” utilities… who are they? And you do not mention member-owned utilities … which also exist and are, in my mind , preferably to investor-owned utilities who seem to own or have significant influence over their regulators as well as the General Assembly.

            For those who say they are “concerned” about environmentalists – go to VPAP and see where the money is… the energy sector including DOM outspend the enviros more than 10 to 1… and the enviros are not the ones who got the GA to remove the cap on profits… for DOM…

            I’ll take the folks who don’t play boogeyman with the enviros… any day… such BLATHER!

          • Reed Fawell 3rd

            I suspect you react harshly because you fail to understand what I said. Try to connect the dots, Larry. Like your man Obama did.

      • good.. intelligent dialogue Acbar – thank you!

        re: ” In short: with a private utility you get shareholder governance and an intense incentive to control costs.”

        well not exactly.. You get that “intense incentive” when there is competition. With a monopoly the energy goes to make as much or more profit as the regulators will allow and we see clearly that DOM is not above going over the heads of the SCC straight to the GA to overrule the SCC and make more profit.

        ……
        ” But what makes it work, IMHO, is the public service spirit that pervades most employees of well-run private utilities (why they would volunteer their own time to drive down to Florida to climb poles), ”

        I’m pretty sure there is money involved.. and besides you see the Fairfax Fire Dept send folks to help also… both kinds do similar things..

        …..
        “Ultimately the regulators’ wish is the utilities’ command. Ultimately there can be no conflict between what is in the ratepayers best interest and the shareholders best interest because happy ratepayers means happy regulators means happy shareholders.”

        except when they donate millions to elected and get the elected to change the rules so they can make more profit….

        ‘ The implication is that DOM is deliberately missing or scuttling the boat and that the SCC is complicit because it has not overridden DOM’s management on this. I think Dominion has done pretty well (by the standards of its peers) with its experimentation in the utility solar business and its tenaciousness with off-shore wind power in the face of a lot of [excuse the pun] headwinds.”

        well.. geeze.. they’re doing pilot programs and experimenting ..with stuff that other utilities have built and are using as an integral part of their business while DOM is still screwing around and basically digging it’s heels in and refusing to do anything more than “testing”.

        ” I’d like to see DOM get out there much more aggressively with customers: ”

        so here’s the fundamental thing.. why are other utilities already doing this to a huge extent… incentivizing their customers to adopt technology and DOM is really not doing it? Even in Virginia the COOPs do a wide range of this while DOM does not.

        ” Influencing what the customer does behind-the-meter is difficult for a traditional electric utility. But I continue to say, Dominion is not hostile to this, just not as aggressive as you or I might like them to be.”

        well they don’t do what other utilities do… and that goes beyond that to things like Smart Meters that charge dynamic rates for time of day which would strongly incentivize people adopting technologies like they that would inhibit things like water heaters operating during high demand periods.

        these are reasonable – current technology things – that would save customers money directly and save customers money on the cost of electricity when DOM has to go to PJM to buy power when demand exceeds it’s own generating capacity. What don’t they? My view is that it’s more profitable for them to sell more electricity even if they have to buy it and re-sell it.. they just add those costs to everyone so that those that are actually trying to save – end up essentially subsidizing those they don’t.

        “Last point — you mention demand abatement programs under REC. REC has a very different financial perspective. …… Maybe, for REC, demand reduction actually saves all customers money. I doubt that’s the case for DOM, but that’s for the SCC to determine (and they should — people like TomH insist on it!).”

        same point as above with DOM – it benefits ALL ratepayers to reduce demand especially at high demand periods. The thing is when REC buys power at high demand periods, they pay more for it – and in turn they allocate that higher cost to all ratepayers. The more that customers utilize demand-side technologies to reduce demand especially during high demand periods – the lower the costs for all rate-payers. What you want ideally is a system where people that employ conservation – are rewarded.. and without charging customers for the actual cost when REC itself has to pay more – essentially disincentivizes those that would save and actually converts their individual conservation into a de-facto subsidy for those that don’t conserve.

        A public service utility would much more likely go to smart meter technology so that the price and cost of electricity would be directly related to each customers own conservation efforts. And to get away from the “enviro” thing here.. change the word “conservation” to “money saving” so that what we really are talking about is empowering each user of electricity to personally benefit by their own behaviors to “save money”. RIght now during high demand periods , everyone pays the same rate ..regardless if they are the reason for the high demand or not.

        I think DOM is fixated, not on keeping costs down – there is no direct incentive to do that – as if they were actually competing against other providers. Instead, their goal is to maximize profits and dividends to their investors and they do that by navigating through the regulations and are clearly not above going around the regulators to people they give influence money to – to in-turn provide them with the means to make more profit.

        That’s NOT in the public interest. That does not benefit ratepayers and it actually ends up penalizing those that would employ demand-side technology as well as solar.

        We only need to look at what other utilities are actually doing and what DOM is not to know this… If you compare DOM to other utilities, it’s pretty clear what DOM is not doing that others are.

        • You make a number of good points but let me focus on two:

          “I think DOM is fixated, not on keeping costs down – there is no direct incentive to do that – as if they were actually competing against other providers. Instead, their goal is to maximize profits and dividends to their investors. . . .”

          Not true. There is intense competition at the shareholder-earnings level between the electric utility and its energy competitors — e.g., gas, propane, self-generation — and between electric utilities (in conjunction with local governments and chambers-of-commerce) to attract the most, most profitable customers to their service territories. Why else would DOM work so hard to keep rates low (and they ARE low)? As for maximum profits, the usual path for an electric utility is to keep the regulator happy, and since regulators are political creatures, they want (relatively) happy customers with few complaints. The one place where the regulator OUGHT to diverge from keep-the-customer-happy is when it comes to insisting on investments now (and providing the utility with rates that pay for that investment) to address future problems. The SCC’s IRP process is there for that purpose; but they have not acted on those annual filings like they should — partly because the GA is gridlocked over some of the big issues the IRP addresses; the SCC should show more leadership here. I agree the Virginia GA has allowed DOM to bypass the SCC in too many instances; frankly the SCC provides political cover for the GA and it runs unnecessary political risks from its open interference. But as others have said here, that’s part of the Virginia Way, a larger pattern of GA micromanagement of Virginia affairs (compared to other States). Halting that is not up to DOM, which only “plays the game” as it finds it.

          “The thing is when REC buys power at high demand periods, they pay more for it – and in turn they allocate that higher cost to all ratepayers. The more that customers utilize demand-side technologies to reduce demand especially during high demand periods – the lower the costs for all rate-payers. What you want ideally is a system where people that employ conservation – are rewarded.. and without charging customers for the actual cost when REC itself has to pay more – essentially disincentivizes those that would save and actually converts their individual conservation into a de-facto subsidy for those that don’t conserve.”

          You are touching on several ratemaking issues here. First, what is a “demand side technology”? It’s a way for INDIVIDUAL customers to cut demand and be rewarded for it — and this reward happens in a couple of ways: The obvious reward, of course, is a lower customer bill for energy. As you note, this rewards the customer for the average price of energy at retail, whereas the cost to Dominion varies and is the sum of both energy and demand charges, so the customer who reduces consumption on peak but receives only a reduction in his average-priced energy bill may save the utility more than the benefit he receives. Larger DOM customers pay a bill which separates the energy and demand charges, and the largest customers may pay a bill which passes through the time-varying PJM wholesale rate with a retail markup; these customers receive a pass through of the entire benefit to DOM of their demand reduction. If a residential customer with an average-price rate does something to lower the utility’s demand, the utility MAY offer compensation to the customer if the utility can identify the savings; but even if not, the utility won’t get to keep it; any reduction in the utility’s costs will be reflected in future rates so all customers will get it eventually. Your point is that the individual customer has no incentive to reduce if he individually doesn’t receive the full benefit of his reduction in demand. For REC its demand charge from ODEC is on ODECs bill and the REC demand charge avoided by any reduction in its customer’s consumption on peak can be calculated easily and paid out to customers who participate. For DOM it’s a more subtle calculation that attempts to figure what system demand charges including the cost of its own generation and purchases would have been, versus what they actually were, if that consumption had not been avoided at the moment of monthly or annual peak demand. This is harder to reimburse to customers paying an average cost based bill, like residential customers, but it can be done by supplemental payments (or bill credits) such as those for participating in programs where DOM installs a radio controlled switch on your water heater and can turn off your water heater for a few critical hours a month. In recent years the availability of PJM’s wholesale energy market has allowed utilities to expand such “partial right to interrupt service” programs and sell the interruptible demand as an asset to PJM alongside generation resources, for PJM to dispatch in lieu of more generation when demand is very high. This allows the utility to turn around and buy such interruption rights from individual retail customers (usually commercial customers) who can turn off air conditioning and other such loads for a short time without too much discomfort; they get an averaged price per interruption based on what the utility thinks it can get on average from PJM. Moreover, the retail utility does not have an exclusive right to approach its retail customers about this — third party entrepreneurs can go out and sign up customers to participate in “DSM” (demand side management) programs. Such programs are more common in urban areas where there are lots of large commercial or industrial customers with their own energy managers to evaluate the payments and handle the interruptions; but eventually, if DOM doesn’t offer such payments, 3rd parties can and someday will. So, when you say the current system “essentially disincentivizes those that would save” I think they do already fully incentivize larger customers, and smaller customers get the reduction in their energy bill, but utilities have a ways to go with promoting ways to pass through the benefit of a demand reduction to an individual customer if the demand charge is not individually metered and separately stated on that customer’s bill.

  14. HE and DOM have a primary duty to their shareholders but they are providing a service to customers who are represented by Govt. It is the duty of the govt in regulating monopolies to balance the interests of the investor-owned utilities against the interests of ratepayers.

    so how does Hawaii get it’s electrical power?

    In 2008 Hawaii’s primary energy consumption by source was:
    85.0% petroleum, down from 99.7% in 1960
    7.1% coal
    0.1% natural gas
    7.8% renewable energy

    In other words – they burn fuel oil to generate electricity – and that electricity is the most expensive in the United States.

    How would you reduce the need to import fuel oil to burn for electricity?

    Turns out that Hawaii Electric say this to their customers:

    ” Going Solar
    Solar energy is a clean and renewable resource that can be used to heat water or produce electricity with the installation of a solar water heater or photovoltaic (PV) system. It can help save money on your monthly electric bill, contribute to a cleaner environment by reducing the amount of fuel used to make electricity, and can increase the value of your home. Solar water heating systems can last 15 years or longer and PV systems can last for 30 years or longer.

    Solar Water Heating
    Consider installing a solar water heater first. Heating water is one of the biggest uses of electricity for many households in Hawaii. Installing a solar water heating system is a smart first step that could reduce your monthly electric usage by up to one-third.”

    https://www.hawaiianelectric.com/clean-energy-hawaii/going-solar

    and they go on to encourage both residential rooftop solar as well as community solar.

    Sounds like a responsible electric utility to me… balancing the interests of their investors with the interests of their customers.

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