FERC’s Smart Grid Policy Statement (And an Aside on Federal-State Jurisdictional Issues)

Michael Giberson

Also emerging from today’s FERC meeting, issuance of the Commission’s smart grid policy statement. At present only a press release and the chairman’s statement is available, but likely the full policy statement and remarks by other commissioners will be posted on the FERC home page in the next few hours. I imagine our local smart grid expert will have something to say about the policy statement when she has time.

According to the press release:

The new policy adopts as a Commission priority the early development by industry of smart grid standards to:

  • Ensure the cybersecurity of the grid;
  • Provide two-way communications among regional market operators, utilities, service providers and consumers;
  • Ensure that power system operators have equipment that allows them to operate reliably by monitoring their own systems as well as neighboring systems that affect them; and
  • Coordinate the integration into the power system of emerging technologies such as renewable resources, demand response resources, electricity storage facilities and electric transportation systems.

The policy also provides for early adopters of smart grid technologies to recover smart grid costs if they demonstrate that those costs serve to protect cybersecurity and reliability of the electric system, and have the ability to be upgraded, among other requirements.

The commissioners’ remarks during the meeting today involved a lot of assurances to the effect that FERC was not impinging on state authority nor altering the traditional federal-state jurisdictional boundary.

Similar concerns on the part of state regulators were raised in response to FERC actions on demand response, and a demand-response-related FERC order issued today similarly involved the offering of assurances to state regulators that the Feds are not crossing established jurisdictional boundaries.

Of course it is a slightly different issue whether established jurisdictional boundaries should be maintained. For the most part, however, this is an issue for the Congress to decide, not the Commission. In the present cases – smart grid policy, demand response – FERC is reacting to the obvious real-time linkage between consumer action and wholesale market performance, the latter an area obviously in the federal bailiwick. If there is any erosion of state regulatory control, and I’m not saying that there is, the official story is that it is only a consequence of the FERC pursuing its statutory responsibilities.

(If I were a state commission interested in protecting my current regulatory jurisdiction against a FERC merely “pursuing its statutory responsibilities,” I’d be doing everything I could to encourage the development and deployment of low-cost energy storage devices on the grid.  Once a local distribution company can cheaply store electric power, then the tight link between real-time consumer action and wholesale market performance is broken, and consumers not big enough to play in the bulk power markets become solely state-level regulator concerns again.)

One thought on “FERC’s Smart Grid Policy Statement (And an Aside on Federal-State Jurisdictional Issues)

  1. Have been teaching at an Institute for Humane Studies seminar all week, but will read materials and say whatever I’ve got to say ASAP. I know that I contributed to comments on this statement in the public comment period, so will be interested in seeing the final product.

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