Regulators See Smart-Grid R&D Money Spurring BPL Rollouts
Money for research and development and aid to utilities adopting smart-grid technology under a 2007 federal energy law is expected to spread broadband over power lines, state regulators said. But they derided provisions in the law that tell state commissions to look into smart grid implementation and let utilities recover BPL deployment costs through rates. “Those are things that state commissions are doing anyway,” said Tony Clark of the North Dakota Public Service Commission. “That is a lot of window dressing that Congress put on to make it feel good,” said Clark, who heads NARUC’s telecommunications committee.
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The Energy Independence and Security Act authorizes matching grants for utility smart-grid investments, requiring states to consider requiring utilities to show that they have considered investment in smart-grid systems. It also directs states to encourage smart-grid use and allow rate-based cost recovery for smart-grid investments.
Congress doesn’t control state commissions and “can’t compel us to do anything in terms of what we allow rate recovery for or not,” Clark told us. He sees no state commission prodding a utility into making uneconomical investments without allowing them at some point to recover costs, he said. That will be allowed case by case, he added. The “prerogative” to make that determination lies with the state commission, he said. “What will drive the state commission to allow recovery on it [smart grid] is going to be whether it saves consumers money and is it in the public interest.”
Renewed focus on smart grid will help BPL rollouts, Clark said. “The big driver for BPL communications capabilities for consumers was going to be utilities first building the system to benefit the operations of the grid itself and then the communications aspect becomes kind of almost a free rider on that system,” he said. The North Dakota PSC has met with utilities on smart-grid development, he said. “This has been going on around the country already.”
Regulating utilities using BPL for both smart-grid and broadband applications is a “huge issue,” Clark said, since a monopoly utility competing in broadband would have advantages, including rate-based revenue. “That will be the key question that I think comes up before a lot of regulatory commissions,” he said, noting that the “cross-subsidy situation” applies to smart grid. A NARUC white paper deals with cost allocation and other considerations for state commissions, he said.
Even before the federal law, states were seeing momentum for smart grid technologies, said James Ervin of the North Carolina Utilities Commission, who earlier headed the NARUC electricity committee. But the congressional mandate to state commissions put the issue “front and center,” he said. As for cost recovery, anything a utility generally is made to do can be addressed by rate recovery, he said. But NARUC typically opposes federal legislation dictating how cost recovery is to be done, he said: “The state commissions have got some discretion in how they do it.”
State commissions have “wrestled with” how to regulate utilities using BPL for smart grid and broadband services, Ervin said, adding that it’s best handled state by state. “To the extent that the electric utility is using BPL also for broadband services, the electric utility customers shouldn’t be required to subsidize that activity because it provides unfairness among broadband providers,” Clark said. - - Dinesh Kumar