Rebuilding the US Electric Distribution System

As I have often noted on The Power Line, it is the US electric distribution system that needs the most work, not bulk transmission.  The emerging electrical technology needs new distribution technologies, before we look at restructuring and rebuilding bulk transmission lines.  Unfortunately, most federal and state regulators and politicians have been captured by the dying centralized electricity holding companies.

Scott Hempling, an attorney with extensive experience in regulatory matters, has a clear idea (at least clearer than most other people in the field) about what needs to happen as we move forward.  Here is a link to his monthly essay on how to go about rebuilding the US distribution system.

After a century of choicelessness, of buying a uniform product from a single supplier, electricity consumers now have ways to lower their costs, raise their comfort and reduce their environmental impact.  New companies are offering thermostat controls, time-of-use pricing, and renewable energy packages.  Solar panels allow consumers to self-supply; storage and neighborhood-level microgrids are not far off.  Aggregators of demand response are competing to pay consumers for using less, out of savings gleaned from displacing higher-cost generation.  (Demand response hit a snag when the D.C. Circuit struck FERC’s Order 745 in May, but last month’s essay described ways to save the idea.)  Today’s technologies can democratize demand, allowing consumers to custom-design their own services, while diversifying supply, as consumers pick providers based on merit.

The bump on this technological path is our current market structure.  The poles-and-wires distribution system remains controlled by traditional utilities, protected by state law from displacement by new entrants.  While they vary in their openness to the new technologies, they are united in their resistance to new competitors.  Citing “existential threats” and “death spirals,” one camp resists innovation as a way to preserve the status quo; the other embraces innovation as a way to expand their government-protected roles.  Because no monopoly willingly cedes control, no utility is hoping regulators answer the distribution system’s most pressing new question:  How do we find and attract the best players?

If you are new to thinking about decentralized power and what we need to do to support it with strong grid technologies, you should read Mr. Hempling’s essay.  It is an excellent overview of what regulators need to do to create a less expensive, more reliable, more democratic electric grid.

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