EPAct pushing states – and utilities – closer to decisions on AMI
The Energy Policy Act of 2005 (EPAct) has been instrumental in starting dialogue throughout the country on the benefits of demand response and advanced metering. While few states are meeting the legislation’s aggressive timelines, all are making progress in determining the need for implementing smart metering on a large scale.
Section 1252 of EPAct mandates that each electric utility shall offer each customer class (1) time-based rates and (2) a time-based meter capable of enabling the utility and customer to offer and receive such rates. State regulatory commissions are directed to determine whether it is appropriate for regulated utilities to implement EPAct standards following the timeline below:
8/8/05 Enactment of EPAct 2005
8/8/06 Start proceeding on time-based metering and associated
technology standards
2/8/07 Determinations made for time-based rate schedules. If
adopted, utilities would be required to offer these
schedules by 2/8/07
8/8/07 Determinations made for deployment of smart meters
On the national level, EPAct requires the Department of Energy (DOE) to educate consumers, work with states to remove barriers and report annually on state adoption status. On February 4, the DOE published “Benefits of Demand Response in Electricity Markets and Recommendations for Achieving Them.” The report concludes that it is impossible to quantify national demand response benefits and that benefits are best estimated by service territory or region because the magnitude of potential benefits are directly tied to local conditions, such as market design, demand growth and resource balance. Nevertheless, the report recommends several steps for enhancing demand response programs and the attractiveness of enabling technologies.
States vary on AMI direction
Despite federal timelines, only eight states have filed formal conclusions ahead of the EPAct. Nevada formally determined that the state is already in compliance. Tennessee decided one of its utilities is already in compliance and another should not be required to adopt EPAct standards. Six other states decided against adopting EPAct standards – at least for now (see chart).
Other regulators, however, are at various stages of evaluating advanced metering. Most states have hosted workshops, held hearings and collected comments, though few have formally established firm timelines for utilities to make decisions. Some states, such as Florida, have just started to formally solicit comments from stakeholders while other states have open dockets for filings but with little activity.
Eight other states are either already in compliance or had already opened dockets on various metering-related issues before EPAct. These issues include items such as Time-of-Use (TOU) rates, real-time pricing, and metering with larger Demand-Side Management, or Integrated Resource Planning processes. In addition, both major utilities in Nebraska – the only state consisting of only public utilities – are separately considering EPAct compliance.
Although, in general, all states support the idea of time-based pricing and smart metering, most decided not to adopt the EPAct standards based on the lack of demand in existing programs, the universality of the EPAct requirement, or the scarcity of cost-benefit analyses. Most commissions have directed regulated utilities to further consider time-based rates and products in general rate cases.
Some states still determining compliance
At this time, most states are conducting investigations on Section 1252 compliance. Regulators in the following states are reviewing whether states are already in compliance with the EPAct standards, whether additional standards should be adopted, and whether it is cost-effective in the long-run to implement such standards.
Colorado: the Public Utility Commission (PUC) recently authorized Public Service of Colorado’s (PSCo) Residential Price Response pilot program that will last until the end of 2007. As a result, the PUC concluded that it is not appropriate to implement the EPAct Smart Metering standards until the Commission has had adequate time to evaluate PSCo’s Report on its pilot program. Therefore, the consideration for implementation of the Smart Metering Standard is formally deferred until March 31, 2008.
District of Columbia: the Public Service Commission (PSC) solicited comments under an EPAct docket. It also authorized Pepco to hire a technical consultant in December to research, review and analyze issues relating to implementing EPAct standards. In a separate initiative, Pepco is running a two-year SmartPowerDC pilot program.
Delaware: Delmarva Power filed on Feb. 6, 2007, a "Blueprint for the Future," a comprehensive plan for demand-side management, advanced metering and energy efficiency plan in which it proposes to install "smart meters" for all Delaware customers over the next three to four years. However, The Delaware PSC has not separately mandated advanced metering initiatives.
Florida: The PSC just opened a docket last month to solicit recommendations on Commission action regarding adoption of Smart Metering provisions of EPAct. On February 1, staff submitted a recommendation not to adopt the new standard. An order regarding this issue was scheduled for March 5, 2007.
New York: The PSC has a proceeding dedicated to addressing EPAct issues and is currently reviewing comments that were submitted to the proceeding. Before the EPAct proceeding is in place, the PSC has already been considering metering cases. On August 1, 2006, the NY PSC under competitive metering cases, issued an order directing all state utilities to “develop and deploy, to the extent feasible and cost effective, advanced metering systems for the benefit of all customers.” In the week of February 3, investor-owned utilities in the state, filed a plan with New York regulators that calls for some utilities to rollout the new meters starting in 2008.
Texas: Texas initiated Project #32854 to consider EPAct Section 1252. Similar to New York, Texas already has a different Project (#31418) in place to investigate advanced metering in response to HB 2129 passed in 2005. In August 2006, issued a strawman proposal for comments, which are being accepted at this time. Public Utility Commission of Texas (PUCT) expects to adopt modified rules in March 2007.
Some states have no formal proceedings
Nine states have no formal proceedings to determine EPAct compliance: California, Connecticut, Maine, Massachusetts, Michigan, Oklahoma, Oregon, Pennsylvania and Wisconsin. However, most of these states already have dockets opened to explore TOU rates, real-time pricing, and metering with larger Demand Side Management, or Integrated Resource Planning processes.
According to EPAct Section 1252, electric utilities shall not apply the standard if before enactment of this subsection, the state regulator or legislature has:
Implemented the actual standard or one that is comparable;
Conducted a proceeding to consider implementation of the standard concerned for such utility within the previous three years; or
Voted on the implementation of such standard for such utility within the previous three years
Other states are also moving forward
Californiaalready has proceedings that direct utilities to address demand response and advanced metering issues. All three California investor-owned utilities, PG&E, SDG&E and SCE, have submitted AMI deployment strategies for all customers starting over the next several years.
Michigan’s governor issued an executive directive for the PSC to develop a comprehensive plan for meeting the state's electric power needs. As part of the Plan, the Energy Efficiency Working Group extensively analyzes Statewide Utility Load Response Programs and smart metering implementation as resource options. In a report issued on Jan. 31, 2007, it recommended that the Commission be authorized to require the immediate use of active load management by utilities. Pilot programs, designed to assist customers in managing the electric load and reducing the costs, are also recommended. These pilot programs will employ advanced metering infrastructure to provide real time price information to customers.
Oklahomadoes not have a formal proceeding to investigate Section 1252. However, the Oklahoma Corporation Commission (OCC) held a few technical conferences to explore the issues.
Oregonopened Docket UM 1188 to investigate smart metering prior to EPAct 2005 and conducted six months of workshops. No EPAct-specific issues have been addressed. In the meantime, Portland General Electric applied for full AMI infrastructure deployment in a rate case.
Pennsylvania’s governor released his Energy Independence Strategy on February 1. The plan would require utilities to prove they have aggressively pursued smart metering strategies before getting approval to build new generating plants.
Wisconsin Public Service Commission staff recommendation has informally determined that the state is already in compliance and therefore no formal proceeding is necessary.
While states are moving in different directions and at varying speeds, it appears that EPAct 2005 has begun to have the results it intended: to spur utilities to make decisions on their AMI strategies.
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