The Commission should clarify whether it wishes to address the reliability of the distribution system only, or whether it shares the concerns of many around the region about whether there will be adequate generating capacity to meet peak load under critical conditions, and whether the transmission system can continue to be operated reliably in light of changes underway in wholesale power markets resulting from the Federal Energy Regulatory Commission's Orders 888 and 889. These comments focus on the reliable operation of the distribution system only, though some of the discussion may also be applicable to other areas. While these issues are not the same, problems in these two areas often coincide. Areas that are embedded within the main distribution grid tend to have both fewer interruptions and fewer power quality problems. Remote areas are subject to more power quality problems and more frequent and lengthier interruptions.
Many investments provide both interruption and power quality benefits.
Traditional, collective utility investment with broad, regulated cost recovery is an appropriate mechanism for making these investments. But there are some cases where the public good model breaks down. Customers in remote, forested areas might be extremely expensive to serve with the same reliability as the customers in the center of a major city. Or some customers might simply have a lower tolerance for reliability problems than other, similarly situated customers. In the first case, the beneficiary of the desired level of reliability is overwhelmingly a private entity, rather than the public at large.