Proposed Pepco substation highlights DC's grid modernization battle
The proposal has been met with backlash as environmentalists and residents argue there is a more sustainable approach to updating the grid.
A substation proposed by Pepco has become a focal point of the grid modernization debate in Washington, D.C. and could be the turning point in how the nation's capital handles its electric power.
The proposal comes as the grid modernization debate is heating up across the country, and for the District, could also lead to a first-of-its-kind independent regulatory body that would take over some utility planning functions.
"One of the big questions is what role the utility will play," Karl Rabago, an energy consultant hired to support some of the environmental groups active in the case, told Utility Dive. Utilities have immense market power, but "will they be able to get out of the way to allow an independent process to move forward?"
Modernizing D.C.'s grid
Pepco's application to the District of Columbia Public Service Commission (DC PSC) for its Capital Grid project includes the refurbishment of three existing substations and the building of a new substation in the district's Mt. Vernon neighborhood at a total cost of $851 million, including work in Maryland.
On a separate track, the DC PSC is in the midst of a process aimed at modernizing the District's grid. The goal of the process, Modernizing the Energy Delivery System for Increased Sustainability (MEDSIS), is to increase sustainability for consumers and make the energy delivery system more reliable, efficient, cost effective and interactive.
"One of the big questions is what role the utility will play. ... Will they be able to get out of the way to allow an independent process to move forward?"
The MEDSIS process arose as a response to protests over another Pepco substation. In 2014, the Sierra Club asked the PSC to consider non-wires alternatives to large utility investments, but the commission declined to do that during an ongoing ratemaking proceeding with Pepco. In 2015, DC Climate Action and the Advisory Neighborhood Commission pushed the PSC to consider non-wires alternatives to Pepco's proposed Waterfront substation in the Buzzard Point section of the District.
The PSC declined to take up that request as part of the substation approval process but said it would open a docket to establish a working group that could address "in a more global way the future outlook for energy growth," including the feasibility of more energy storage and increased generation distribution.
Meanwhile, the PSC approved — and Pepco built — the Waterfront substation, while the MEDSIS process led to the creation of working groups to study the issues, resolutions to define the terms of the debate and the hiring of the Smart Electric Power Alliance (SEPA) as a consultant on the process.
With the MEDSIS process still under way, Pepco in May 2017 filed with the PSC for approval of more substation investments as part of its Capital Grid project.
Noting that the district is experiencing its highest population growth in four decades, Pepco said the Capital Grid project will "address current and future energy needs," help build grid resilience to withstand and recover from events such as severe storms, and help the District reach its goal of generating half its electricity from renewable sources by 2032.
The Capital Grid project, however, is receiving pushback from environmental advocates, local residents and even the district's Department of Energy & Environment (DOEE).
New substation or DERs?
Residents are concerned about health and safety hazards from the proposed substation and its use of open space — owned by Pepco — that is near a school. Environmental advocates would like to explore distributed energy alternatives that they say would cost ratepayers less than Pepco's new substations.
In a filing before the PSC, DOEE submitted the findings of a report it commissioned by Synapse Energy Economics that finds Pepco's load forecast, which justifies the need for a new substation in Mt. Vernon, "questionable and without adequate support." Further, even if the load forecast were accurate, the DOEE argues there are lower‐cost, more sustainable and resilient alternatives to building a new substation.
Instead, the DOEE recommends that $10 million in MEDSIS funds be made available for distributed energy resources that could defer the need for a new substation by two years.
The Council of the District of Columbia has meanwhile proposed the creation of the Distributed Energy Resource Authority (DERA). The legislation, introduced in April by Democratic councilmembers Mary Cheh and Charles Allen would give the DER Authority the power to review any utility investment over $25 million to determine whether a non-wires alternative could just as well meet an identified need.
The DERA legislation "is a pretty amazing piece of legislation. ... Even though it is not passed, it is saying ‘You guys have to be serious or we will step in.'"
Executive Director, Solar United Neighbors
"The DERA legislation is a shot across the bow of the PSC," Rabago said. And it is tacit acknowledgement, he said, that the MEDSIS process is "not completely up to speed."
Similar grid modernization efforts are underway in states such as California, Hawaii and New York, which is working through Gov. Andrew Cuomo's Reforming the Energy Vision program.
Missouri passed legislation in June aimed at accelerating grid modernization in the state and Ohio regulators in August released their roadmap for grid modernization. In a recent report, the North Carolina Clean Energy Technology Center noted that 36 states have embarked on grid modernization plans.
Those efforts are being driven by states' efforts to incorporate new technologies that often are not based on a traditional utility model where energy flows one way out from a central station. Technologies such as rooftop solar and energy storage are disrupting that model and giving customers greater control over their energy choices.
Meanwhile, if the DERA legislation is passed, D.C. would become the first U.S. jurisdiction with an independent authority able to take over a utility's planning process.
Future of electric utility markets
The DERA bill puts the D.C. Council "square in the middle" of the District's grid modernization efforts, Rabago said. It could also pit the Council against Pepco.
One of the thorny issues in the debate is that a utility has proprietary customer data, so it is difficult for an outside party to do an independent assessment of power sector needs, Anya Schoolman, executive director of the advocacy group Solar United Neighbors, told Utility Dive.
The DERA legislation would create an independent authority to manage utility data. "It is a pretty amazing piece of legislation," Schoolman said. "Even though it is not passed, it is saying ‘You guys have to be serious or we will step in.'"
That is the essence of the legislation, according to Rabago. In effect, it says, "Let's stop wrestling with the utility. Let's just get someone else to do it. It just might be the future of electric utility markets," he said.
Meanwhile, Pepco's substation-focused Capital Grid proposal is moving forward more quickly than the MEDSIS grid modernization process. The DOEE is seeking a year pause in the process to give more consideration to non-wires alternatives, but it is unclear if the PSC will approve that plan.
The PSC, in a recent filing, said that Pepco has conducted a preliminary analysis on the use of non-wires solutions to defer the Mt. Vernon substation. The utility's analysis included the use of demand response, photovoltaic distribution generation and storage batteries, but found that while the safe and reliable alternatives to future substations "may be on the horizon, the Mt. Vernon Substation is necessary in 2023 to relieve overloads on and overstressing of certain network feeder groups."
The comment period on the Capital Grid project ends in December and approval could come as soon as year end, with construction beginning in 2019 and completion as soon as 2026.
MEDSIS, on the other hand, is a multi-year, four-phase process with no date certain when it will wrap up, PSC spokeswoman Kellie Didigu, told Utility Dive. The program had its formal start in 2017 and that year issued a staff report, vision statement and conducted a town hall meeting.
This year, the program is in its second phase, which is a year-long working group process facilitated by SEPA. That work will culminate in the submission of working group reports — mostly on definitions of terms — with recommended actions for the commission's consideration.
In phase 3, the commission will develop and implement a plan of action. The fourth and final phase calls for the submission and implementation of one or more pilot projects.
Meanwhile, the terms of two of the three commissioners on the DC PSC ended on June 30. Right now, they are in a "holdover" position, "waiting to see if the mayor is going to reappoint them or if there will be new nominees put forward," Didigu said.
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