The Middle Years 2024-2031: Fracturing the Grid During these years, the lack of coordination and cooperation between the states and provinces in the Western Interconnection starts the ball rolling toward the longer-term fracturing of the bulk power system in the West. Some states and provinces decide to continue to support the bulk system while others effectively opt out by not being willing to participate in any costs related to the expansion of the grid. Some agree to pay the absolute minimum in other costs to assure access in emergencies or in the event of catastrophic events. In the longer term, the operations of the bulk power system will have to be restructured. Underneath the fracturing of the system are significant policy disagreements about how to handle the costs associated with providing electric power services, and who should incur them based on what received benefits. In some states and provinces there is a strong concern for high-income customers who can afford distributed generation options pushing costs on customers who remain tied to the traditional system. In others, there are concerns about paying for reserve capacity to assure reliability when wind and solar power sources are not delivering. Other states are trying to avoid costly the “duck curve” phenomena when there is steep daily ramping up and down of energy needs with impacts on energy prices. On the most fundamental policy level, some state regulatory rulings are aimed at assuring the notion that power is a public good that does not exist in a vacuum from other issues of economic and community development. With such variations in concern and actions, it is not surprising that an un-coordinated field of energy policies emerge in the Western Interconnection. Table 1.1: Category & Forms of Oversight Policy Area Statewide Oversight Local: County/City Oversight Scenario 1 Electric Rates, Prices and Revenue State/Provincial PUCs For municipal utilities and community aggregation Wide variations across the region with little or no commonality Renewable Portfolio Standards & Climate State/Provincial Laws and PUCs For municipal utilities and community aggregation RPS are maintained where they exist, and climate issues are addressed with widely varying laws and actions Air Quality, Water and Land Use State/Provincial Laws, Commissions & Agencies City & County Departments and Agencies Concerns about environment quality are common throughout the region, actions may vary widely Capital/Resource Investment Planning Approval State/Provincial Laws, ISOs, Commissions & Agencies For municipal utilities and community aggregation Investments and approvals are considered from a cost-benefit view of tested and proven technology and infrastructure
All states and provinces in the West increase communication and notifications with customers about new rules and regulations so that they can become more sophisticated and wiser consumers. Customers with electric vehicles and other behind the meter devices are interested in more empowerment to match their lifestyles. Other customers simply want to know what choices to make to keep their bills as low as possible while avoiding information overload. Table 1.2: Customer Segments and Choice -------- Electric Power Services or Products Offered to End Use Customers -------- Customer Segment Wholesale Demand Side Management Distributed Energy Resources Local Retail Choice CCAs Large commercial & industrial At current levels unless increased by new technology High adoption and use High adoption and use based on cost benefits Limited availability and use High use by high power users High use where offered – cost and values- driven Not applicable C&I At current levels unless increased by new technology High adoption and use High use if available Low usage Moderate to low use: usually rooftop solar Moderate to high use if offered, cost or At current levels unless increased by customer demand, technology or policy Residential Rural* Not applicable Limited to High use with wide regional variation Limited to offering by incumbent utility Little or no usage Moderate rooftop solar, region dependent Moderate to high use if offered, cost or At current levels unless increased by customer demand, technology or policy Residential Urban Not applicable High to Limited use and adoption with wide regional variations Moderate to high usage where available Moderate to high usage where available Moderate to high rooftop solar, wide regional variations High to moderate use if clear cost and values benefits At current levels unless increased by customer demand, technology or policy Agricultural At current levels for large agricultural companies High use and adoption Left to local Co-ops Limited to Co-op actions Moderate solar and wind where climate allows Limited to Co-op offerings Not applicable Generation
utility some states not allowed states not allowed states not allowed over time Agricultural Current levels for large agricultural companies unless restricted by regulation In cooperation with local utility or Limited to a few states and in some states not allowed Limited to a few states and in some states not allowed Limited to a few states and in some states not allowed Limited to a few states and curtailed over time Reduced by regulation and policy Electricity demand continues to grow slowly during these years due to increased energy efficiency. What little boost in growth that does occur, is largely driven by the growing use of EVs and their need for periodic charging. Customers and policymakers continue to desire clean energy, so older coal-fired power plants continue to be retired and replaced with clean energy alternatives. The End Years 2031-2038: Integrating Continuing Innovation The issue of scale—how big should the most efficient operating power company be—is the question confronting policymakers during these years. How big should interstate electricity transmission companies be allowed to grow through consolidation? If, through better technology, companies can effectively manage larger operations, why should they not be allowed to do so? Through a sequence of mergers, a mega-utility is forming in the Western Interconnection which strides across several states. How should such an entity be federally regulated when its operations within one state are so well integrated with operations in another that they are actually one seamless whole? Incumbent utility managers don’t see a problem because they argue they are meeting all of their regulated requirements, meeting all renewable portfolio standards, and delivering reliable power at fair prices. Their companies are successfully integrating clean energy resources with a limited amount of gas-fired generation so that reliable power is available at the lowest cost. Natural gas markets have stabilized in the US as excess supplies are being exported. The large utility companies suggest that a natural next step in the evolution of the US power system is toward some form of nationalization of the grid to enhance reliability. Federal support will be needed for investments to connect a nationalized grid. FERC is satisfied with assuring openness in the market for emerging technologies, and that big companies don’t exert too much market power. During these years economic conditions in the Western Interconnection are stable and in line with the national economy. Global economic trends are still affected by trade flows, swings in capital markets, and demographics. Companies in the West remain strong players in international trade. The power industry in the Western Interconnection is benefitting from global trends that improve technology and
C&I Change based on policy High use High use as available Moderate use as available Moderate use, business specific Used if cost benefits are worthwhile At current levels unless increased by policy Residential Rural* Not applicable High use as available High use as available Moderate use as available High use Used if cost benefits are worthwhile At current levels unless increased by policy Residential Urban Possible selling to local utility based on policy High use High use as available High use as available High Use Used if cost benefits are worthwhile At current levels unless increased by policy Agricultural Selling or buying to local utility or Co-op by large agricultural companies based on policy High use High use as available Dependent on local High use Used if offered by local Co-op Not applicable Policymakers are not sure in all cases how to react to some of these changes, but in general, they lean toward asking for and are granted increased regulatory authority to set new rules. Policies that govern how distributed resources can be used to support overall system reliability are an area of debate. Distribution companies are ordered to procure reliability services from distributed resources and to assure the bulk power system reliability performance through long-term contracts for services. Policy makers begin to approve large investments by distribution system owners for system upgrades, and allow recovery of those costs through revised utility rates. In a few states, experiments with adding two-way power flow capability are approved, and oversight for safety and quality of power is strengthened with new standards. The Federal government is not sitting idly by and watching these changes. FERC steps in to assure states are holding up reliability standards. Increased standards in some areas lead to increased costs in utility rates. FERC is particularly watching customer choice aggregation and micro-grids which might not have access to secure long-term supplies of power. At the same time, FERC keeps an eye on how large industrial and commercial customers are using micro-grids to assure they have adequate capacity without subsidies from local power companies in the event of a disruption. Table 4.2: Category & Forms of Oversight