One of the problems with journalism is that important stuff is often boring. A perfect example is the way New Hampshire is considering new rules for the state Site Evaluation Committee. It will have huge repercussions about the existence and location of electric transmission lines and natural gas pipelines, so it’s important – but jeeeeeeez, it’s dull. (Here’s a Union-Leader story which discusses legislative and industry actions and reactions but hardly touches on the actual rules – because who would read that minutia?)
Something similar is occurring in Washington, where the U.S. Supreme Court is considering the legal structure around “demand response,” a relatively new tool used to create the modern electric system. (Here’s Greentech Media’s story.)
Stay with me here. Under demand response, customers get a break on their bill if they agree to reduce their demand when the grid needs it – it often involves a company that will turn off certain equipment or even close down a plant early when, say, a hot summer day has left the grid is having trouble producing all the power that air conditioning needs. It makes sense because demand-response is cheaper than building power plants and transmission systems that are really needed only a few times a year during peak usage.
ISO-New England, the group that runs the six-state power grid, has been a leader in using demand response; last time I checked, the total demand response they can call on is roughly equal to the maximum output of Seabrook Station nuclear power plant. Here’s their discussion of the system.
So what’s the legal angle? The Federal EnergyRegulatory Commission said in 2012 that grid operators must pay full market price (“locational marginal price”) for demand response in real-time and day-ahead markets, just as if they were traditional power production. In other words, a contract to cut 100 MW in demand is worth the same when bidding into complicated wholesale marks as is the ability to produce 100 MW – which is a terrific incentive to use power more efficiently.
That makes sense to me, but it goes against long-established legal and regulatory definitions about who and what can participate in wholesale electricity markets. A lower court tossed out the FERC ruling, largely because they said it imposed federal guidelines on something that should be in the hands of the states and FERC appealed. Oral arguments took place this week. Greentech Media says “On Wednesday, upward of 200 people waited in line to hear the arguments, but only a handful of energy professionals and lawyers got in.”
This is a states’-rights kind of debate rather than a future-of-energy or best-use-of-technology debate, so don’t expect the issue to hinge on the issues that interest us here at Granite Geek. But it is, as I say, important.
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