Last week the Federal Energy Regulatory Commission issued Order No. 676-H, adopting and incorporating into its regulations most of the latest version of a set public utility business practice standards and communications protocols developed by the North American Energy
Standards Board (NAESB). While most of the NAESB standards will now become mandatory and enforceable, to enable smart grid innovation the Commission posted NAESB's five Smart Grid standards as non-binding guidance.
Industry standards enable cooperation and communication, and can lead to more efficient and competitive markets. Formally known as Version 003
of the Standards for Business Practices and
Communication Protocols for Public Utilities adopted by NAESB's Wholesale Electric Quadrant
(WEQ), the newly adopted standards represent the latest evolution of NAESB's consensus-based standards for public utilities. NAESB is an ANSI-accredited non-profit
standards development organization formed to develop and promote business
practice standards that promote a seamless marketplace for wholesale and retail natural gas
and electricity. Since issuing Order No. 676 in 2006, the FERC has incorporated elements of NAESB's standards into its regulations.
While the FERC made most of the NAESB standards mandatory, it decided to include NAESB's smart grid standards only "informationally, as guidance." While FERC noted that the smart grid standards have value and should be adopted by public utilities, it ultimately agreed with utility trade group Edison Electric Institute and the ISO/RTO Council that NAESB's five Smart Grid standards should neither be incorporated into formal federal regulation nor be enforceable and mandatory. Notably, as prepared by NAESB the Smart Grid standards are meant to be optional and informative, not prescriptive or restrictive, and could prove difficult to enforce.
Thus to "encourage further
developments in
interoperability, technological innovation
and standardization", the FERC chose to include NAESB's five smart grid standards in Order No. 676-H as guidance, but not to incorporate them into its formal, enforceable regulations.
Through Order No. 676-H, the FERC hopes to improve business practices and interoperability among public utilities. The order also shows an intent to foster smart grid technologies, without stifling their development through overly prescriptive or unenforceable regulations. Will Order 676-H usher in a new era of smart grid and utility cooperation?
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Showing posts with label NAESB. Show all posts
Showing posts with label NAESB. Show all posts
FERC seeks demand response standards
Monday, April 23, 2012
Demand response, an innovative strategy to ensuring the integrity of electric grids, is growing in popularity, prompting federal regulators to consider standardizing how demand response performance is measured.
Managing an electric grid entails ensuring a constant balance between electric generation and customer demand for electricity. As customer demand rises, grid operators have traditionally called on more and more generating units. In most markets, grid operators dispatch the lowest-cost units first to keep overall costs down. As a result, generating units needed to meet peak demand tend to be more expensive than baseload generation. Many peaking units also emit more pollutants per unit of energy than baseload units.
In a demand response program, customers can volunteer to be available to reduce their load during times of peak demand. When done right, this reduction in customer demand can play much the same role as dispatching additional generation, but at a lower cost in dollars and environmental impacts. Energy efficiency resources can also play a similar role.
The U.S. Congress and the Federal Energy Regulatory Commission have both recognized that demand response can be a decentralized, crowd-sourced alternative to peaking power plants. Utilities and regional transmission organizations across the nation are implementing demand response programs.
As demand response grows in importance, the question of how to measure a customer's performance is important. Different utilities and regions have adopted varying standards for how performance is measured. In an attempt to standardize the measurement and verification of demand response and energy efficiency resources participating in organized wholesale electricity markets, the FERC has proposed to amend its regulations to incorporate by reference the demand-side management and energy efficiency business practice standards of the North American Energy Standards Board. NAESB describes itself as "an industry forum for the development and promotion of standards which will lead to a seamless marketplace for wholesale and retail natural gas and electricity, as recognized by its customers, business community, participants, and regulatory entities."
In its Notice of Proposed Rulemaking (29-page PDF), Standards for Business Practices and Communication Protocols for Public Utilities, 139 FERC ¶ 61,041, FERC states its hope that "[a]doption of these standards is intended to improve the methods and procedures used to accurately measure demand response and energy efficiency resource performance" and that their adoption should help regional grid operators "properly credit demand response and energy efficiency resources for their services".
Managing an electric grid entails ensuring a constant balance between electric generation and customer demand for electricity. As customer demand rises, grid operators have traditionally called on more and more generating units. In most markets, grid operators dispatch the lowest-cost units first to keep overall costs down. As a result, generating units needed to meet peak demand tend to be more expensive than baseload generation. Many peaking units also emit more pollutants per unit of energy than baseload units.
In a demand response program, customers can volunteer to be available to reduce their load during times of peak demand. When done right, this reduction in customer demand can play much the same role as dispatching additional generation, but at a lower cost in dollars and environmental impacts. Energy efficiency resources can also play a similar role.
The U.S. Congress and the Federal Energy Regulatory Commission have both recognized that demand response can be a decentralized, crowd-sourced alternative to peaking power plants. Utilities and regional transmission organizations across the nation are implementing demand response programs.
As demand response grows in importance, the question of how to measure a customer's performance is important. Different utilities and regions have adopted varying standards for how performance is measured. In an attempt to standardize the measurement and verification of demand response and energy efficiency resources participating in organized wholesale electricity markets, the FERC has proposed to amend its regulations to incorporate by reference the demand-side management and energy efficiency business practice standards of the North American Energy Standards Board. NAESB describes itself as "an industry forum for the development and promotion of standards which will lead to a seamless marketplace for wholesale and retail natural gas and electricity, as recognized by its customers, business community, participants, and regulatory entities."
In its Notice of Proposed Rulemaking (29-page PDF), Standards for Business Practices and Communication Protocols for Public Utilities, 139 FERC ¶ 61,041, FERC states its hope that "[a]doption of these standards is intended to improve the methods and procedures used to accurately measure demand response and energy efficiency resource performance" and that their adoption should help regional grid operators "properly credit demand response and energy efficiency resources for their services".
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