STATE GOVERNMENT GROUP LINKS GRID UPGRADES WITH EFFICIENCY
At its annual conference in Austin, Texas, earlier this month, the Council of State Governments passed a resolution supporting efforts to modernize the electric distribution system with advanced meters and other technologies, and encouraging states to count reductions in energy use associated with these grid technologies toward state energy efficiency requirements.
Often states and utilities see distribution system investments and energy efficiency initiatives as distinct and unrelated to each other. Distribution upgrades are performed principally to improve reliability, and investments justified on this basis add to the utilities’ rate base, making them money. Energy efficiency investments, though paid for through electric rates, reduce utilities’ electricity sales and therefore revenue, creating a clash of incentives best resolved through rate mechanisms like decoupling. Advanced meters have been a particular sticking point in some jurisdictions, where system-wide replacement of meters is a costly proposition but the savings from their use has been hard to justify to state regulators (especially where utilities have already put in meters that eliminate the need for meter readers, which reap substantial savings).
But the CSG resolution draws a direct link between grid technology upgrades and a variety of customer benefits. These include “significant savings through reduced utility operational costs, reduced energy theft, and more efficient use of the electric grid” as well as “improved outage prevention, detection and restoration services,” but also reduced energy use.
Advanced meters “provide consumers with more detailed information” on their energy use, enabling them to “better manage their electric consumption and budgets,” according to the CSG. The resolution also cites other grid improvements, such as voltage optimization, that “deliver substantial, immediate, highly predicable, cost-effective, and verifiable energy and demand reduction benefits” without investment or change in behavior on the customer’s part.
On the basis of this link between grid upgrades and efficiency, the CSG “encourages states to continue to evaluate the energy efficiency and demand reduction opportunities that can be achieved with electric utility grid modernization efforts,” subject to local conditions, and to “work with” authorities such as governor, legislature, and public utility commissions to “certify energy efficiency and demand reductions associated with electric utility grid modernization efforts . . . as qualified resources” under their state’s Energy Efficiency Resource Standards, including triggering any rate recovery mechanisms designed to ensure that utilities “are not financially burdened” by the resulting reduction in demand.
As one of two national organizations of state lawmakers (the other being the National Conference of State Legislatures), the CSG helps legislators share and benefit from best practices across states. Through resolutions like this one, the membership of CSG indicates a broad level of support for particular policy approaches and directs CSG staff to spread the word. Indeed, the resolution itself declares that CSG “intends to assist its members and states to take the actions above by creating educational forums on the use of electric utility grid modernization technologies to achieve energy efficiency and demand reduction benefits, and to convene meetings with the associations of governors, state electric utility commissioners, state energy officials, and other parties” to promote the requisite rules and policies to make grid technology an integral part of state energy efficiency efforts.