Let’s start this recap of the week’s major grid edge events by touching on the big story of the Department of Energy’s leaked grid reliability study. You know, the one ordered by Energy Secretary Rick Perry, which everyone assumed was going to yield a predetermined conclusion that renewable energy and state subsidies were making the U.S. power grid less safe.
Last Friday, Bloomberg and other outlets released a hastily photocopied rough-draft version of the report, along with the key takeaway that it finds renewables are only a minor factor in the closing of coal and nuclear power plants. Instead, the unnamed authors back up the industry-consensus view that flat electricity demand and low natural-gas prices, plus the sheer age of some plants, are the main culprits.
Speaking of takeaways, DOE sources are saying that the latest drafts of the study have removed a critical paragraph making this point, raising the specter of political interference into the final, yet-to-be-released version. Perry told reporters this week that he hasn’t yet seen the draft report and is anticipating it as much as they are.
We covered Friday’s initial reports and also tackled the topic on this week's Interchange podcast. As GTM Research head Shayle Kann noted, the leaked document is a very rough draft, with several large gaps marked by the author as awaiting further investigation. A final assessment will not be offered until the report’s official release, which is already nearly a month behind schedule.
New Congress-mandated report: A must-read on grid security
Meanwhile, the U.S. power grid is facing real security threats, from cyberattack to natural disaster, as detailed in this week’s report from the National Academies of Sciences, Engineering, and Medicine, entitled Enhancing the Resiliency of the Nation’s Electricity. It’s the result of a congressionally mandated study of the threats to the U.S. energy supply, transmission and distribution systems, and it provides suggestions on how to manage them.
The report makes for more alarming reading than the leaked DOE draft, largely because it considers worst-case scenarios for grid operators. These include coordinated cyberattacks on substation controls, like those carried out by Russian hackers against the Ukraine, as well as physical attacks like the 2013 sniper attack that took out a substation in California.
They also include extreme weather events, like the polar vortex, which revealed the weakness of fossil-fuel-fired power plants during the 2014 Northeast cold snap, when frozen pipes and valves took many out of commission, and their essential backup function, when they were called into play days later to cover for falling wind power.
The report’s recommendations are similarly exhaustive, and represent an end state that’s pretty far from where utilities, grid operators, regulators and government agencies are today. For a start, grid operators should “conduct more regional emergency preparedness exercises that simulate accidental failures, physical and cyber attacks and other impairments that result in large-scale loss of power,” not just with utilities but with communications, water and natural-gas providers, as well as local, state and regional emergency responders.
To prepare for the real thing, the report suggests investing in stockpiling some key equipment, like transmission substation transformers, which can take six months to a year to custom-design and build, as well as more prosaic equipment like backup generators. The report also has an entire section devoted to cyber monitoring and control systems, as well as a set of recommendations on incorporating distributed energy resources (DERs), such as solar-battery systems and plugged-in electric vehicles, into emergency response.
And in a nod to their fellow researchers, the report’s authors call for the federal government to “sustain and expand the substantive areas of research, development and demonstration that are now being undertaken by the Department of Energy’s Office of Electricity Delivery and Energy Reliability and the Office of Energy Efficiency and Renewable Energy.”
DOE’s budget battle: Senate committee bill would restore funding for EERE and ARPA-E
This brings us to this week's developing battle over the DOE’s budget. On Tuesday, the Senate energy and water appropriations subcommittee approved a $38.4 billion bill for federal energy and water programs in fiscal year 2018 -- nearly $1 billion more than the $37.56 billion budget approved by the corresponding House committee in late June, and more than $4 billion more than called for in the Trump administration's budget.
The Senate bill includes a record-high budget of $330 million for DOE’s Advanced Research Projects Agency-Energy (ARPA-E) for the 2018 fiscal year -- a move that makes sense given its track record. The Trump budget and the House bill call for eliminating the agency.
The Office of Energy Efficiency and Renewable Energy (EERE), which supports the National Renewable Energy Laboratory and the SunShot Initiative, would receive $1.94 billion for fiscal year 2018. That's down $153 million fiscal year 2017 but $1.3 billion more than the president had requested. It’s significantly more than the House bill, which would cut EERE’s budget by about 50 percent, from roughly $2 billion to $1.1 billion.
The Senate budget also rejects the Trump administration’s proposal to cut $919 million from the DOE’s Office of Science, instead increasing funding to $5.55 billion in fiscal year 2018, more than the House version’s $5.39 billion. Nuclear power plants, as well as weapons and waste, would also receive increased funding under the Senate bill.
It’s worth noting that Sen. Lamar Alexander (R-Tenn.), the chairman of the subcommittee, represents a state that houses one of DOE’s premier research facilities, Oak Ridge National Laboratory, which would face a $185 million budget cut under the administration’s budget proposal. While President Trump’s appointees may want to slash funding for energy research for political reasons, legislators know what DOE’s budget is worth to their constituents.
State policy update: Vermont eyes energy regulatory overhaul
We covered some important grid edge news at the state level this week, including Hawaiian Electric Industries getting its plan for 100 percent renewables by 2040 past state regulators and an interview with New York State Energy Czar Richard Kauffman on the state’s pending energy storage mandate.
Meanwhile, in Vermont, a state that’s been giving its biggest utilities like Green Mountain Power a free hand to try DER deployments through direct-to-customer marketing, regulators want to look at whether it’s time for a complete overhaul of the system. In a June order (PDF), the Vermont Public Service Board opened a discussion on how it could consider a new regulatory construct to replace the “alternative regulation mechanisms” it’s allowed Green Mountain Power and Vermont Gas Systems to operate under over the past decade.
Under these alternative mechanisms, these two utilities were allowed to “flow power costs through to customers in a timely manner to recover other costs without the need for litigated rate cases,” the board wrote. But whether the system is effective compared to other means to the same ends hasn’t been “comprehensively examined,” it wrote.
This unique arrangement among states has long been criticized by ratepayer advocates for its lack of public transparency and involvement. These concerns came to a head late last year, when Green Mountain Power opted out of the alternative mechanism, in order to return to traditional, quasi-judicial proceedings before the PSB. CEO Mary Powell said the move would provide more transparency to customers. But it came two months after Vermont Public Radio reported on the utility’s failure to properly document millions of dollars of infrastructure projects under the alternative mechanism.
Meanwhile, factors including the state’s aggressive renewable energy and carbon reduction goals, the deployment of advanced metering infrastructure, the emergence of DERs like "electric vehicles, battery storage, and heat pumps," and “a more dynamic energy environment in which end users and third-party aggregators have greater ability to manage loads in real time” all call out for new regulatory constructs to replace the soon-to-expire alternative mechanisms.
It’s an important start to something that will take a long time. An initial workshop is scheduled for August 8, where topics will include a review of regulatory practices and performance in Vermont, emerging industry trends and opportunities, and discussion on how regulatory goals can be “articulated and measured, and how they overlap with existing statutory criteria.”
NARUC conference: A plea to fund DOE’s national labs and an app that fails the data security test
The National Association of Regulatory Utility Commissioners held its Summer Policy Summit in San Diego, Calif. this week, giving state utility regulators a chance to agree on a few key asks of the federal government. On Thursday, NARUC released the results of that process in the form of three draft resolutions -- two addressed to the FCC and one geared toward a Congress debating the future of the DOE’s national laboratories.
The two FCC resolutions asked for more universal service funding for rural telecommunications providers, and more state and local government representatives on a Broadband Deployment Advisory Committee currently dominated by industry representatives, respectively.
The third was a plea to Congress not to carry out the Trump administration’s proposed cuts to DOE’s national laboratories. The 10 labs spread across nine states have “cultivated and deployed countless technology solutions” and play a critical role in maintaining the country’s energy security -- all roles that “many state budgets cannot adequately support.”
National labs also provide key research and technical support for state regulators themselves, the resolution noted. The latest version of the NARUC cybersecurity manual, released in January, was largely DOE-funded and -supported, for example. The document ends with a 108-question checklist for regulators considering data security, privacy and access issues.
Ironically, according to Michael Murray, head of the Mission:Data consortium of companies with an interest in accessing utility and customer energy data, the smartphone app NARUC asked conference attendees to download wouldn’t pass muster with the state of the art in utility data security policy.
In a Wednesday blog post, Murray laid out how the app -- which was only connecting a handful of state regulators at a conference, not millions of utility customers -- nonetheless violated data privacy and security policies put in place by the California Public Utilities Commission, one of the most progressive commissions on this front.
For example, the NARUC app doesn’t distinguish its data collection’s “primary purposes” from “secondary purposes” -- in simple terms, the difference between data that belongs to the utility and data that doesn’t. Instead, it states that customer data will be used “solely with the objective of fulfilling those purposes specified by us and for other compatible purposes” -- a statement that’s vague enough to encompass all kinds of uses.
The app also requests “access to read and modify any file stored on your device; to create new Bluetooth connections; and to control the phone’s networking settings,” he wrote. None of these were necessary for the simple task of showing people around a conference hall, making them a violation of the cybersecurity principle of “data minimization.”
Murray uses the opportunity to take a dig at what he called the “tough on privacy” stance of regulators, and to call for modernizing the utility-customer relationship in the same way that banking and health care are doing today. “Is it reasonable to give away the data on your phone with a single click, while your utility bills require filling out a four-page legal form?”
