Released November 20, 2015 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Southern California Edison (SCE) (Rosemead, California), the utility unit of Edison International (NYSE:EIX) (Rosemead), wants to shift its capital spending for the next few years. The utility, which serves nearly 14 million people in a 50,000-square-mile area of southern, central and coastal California, filed a request to refocus its $4 billion annual capital spend to turn its existing electric transmission and distribution grid from a one-way street to a two-way electricity freeway, where electrons flow in both directions--from the utility to customers, and from customers to the utility. That's no small task: SCE maintains more than 90,000 miles of distribution lines and 720,000 distribution transformers.
In a July 1 filing with the California Public Utilities Commission (CPUC) (Sacramento, California), which ran to 467 pages, SCE said it was responding to the commission's direction that utilities in the state find ways to incorporate more distributed energy resources (DERs) in their resource planning. A broad category of electric resources, DERs could include distributed energy generators like rooftop solar panels, electricity storage and new pricing options, and customer programs designed to shift or reduce peak electric usage. DERs stand in contrast to traditional, centralized power generation resources.
SCE's filing echoed changes in other state electric markets. State utility regulators are increasingly pushing utilities to change the way they operate, particularly the trade-off between DERs and traditional generation and transmission options. In New York, state utility regulators are pursuing similarly significant changes to its electricity market. The New York effort is called Revolutionizing the Electric Vision (REV). That effort also is geared toward investigating whether DERs could be a cost-effective and environmentally superior alternative to the traditional utility business model of generating electricity remotely and transmitting it over long distances to customers. For now, California and New York are at the forefront of an effort to change the way utilities and transmission organizations spend their infrastructure capital budgets. But if these initial efforts are successful, regulators and utilities in other states may replicate them.
In its CPUC filing, SCE said: "DERs have the potential to offer customers more choices, more control over their energy bills, and cleaner power. In addition, when strategically located, DERs could potentially defer or substitute for conventional infrastructure, such as large power plants, transmission lines and distribution system infrastructure."
"The existing distribution system is not structured to accommodate and facilitate these changes," the company noted. Instead, the utility's distribution network "was designed for one-way flow of electricity from big central generation stations across high-voltage transmission lines to the distribution system, and then to individual homes and businesses. Given this one-way structure, SCE's distribution system operators have limited visualization tools and limited ability to control resources for monitoring and adjusting power flow on the distribution system."
"The distribution grid of the future will look very different," SCE predicted. "To enhance customer choice for new technologies and services, as well as to manage bidirectional flows from many resources having a variety of generation and consumption patterns, the electric distribution system must become more dynamic, flexible and resilient. Distribution planning must be greatly enhanced to recognize the value that distributed resources play in offsetting the need for transmission and distribution capital investment. With end-use customers playing a much more active role in generating and storing power, the distribution system is becoming a more complex two-way system that needs more sophisticated and advanced technologies and capabilities."
In an interview, SCE spokesman David Song emphasized that the utility asked regulators to shift its planned capital spending to meet the state's energy policy goals, specifically supporting the broader proliferation of DERs like rooftop solar, electric vehicles, community solar gardens, electric storage and other decentralized energy resources.
"We've asked the CPUC to let us reprogram our capital spending," Song said of the utility's filing. "The requested future spend is about the same is it is now, but we've asked to be able to put it in different buckets." The CPUC is expected to rule on SCE's application during the first quarter of 2016.
Song emphasized that the three-year capital budget request the utility filed with the CPUC does not represent a surge in new capital spending: "What we propose to spend will not change much, but we are asking for authorization to spend it differently, to comply with state energy policy."
Earlier this month, The Los Angeles Times reported SCE had plans to spend $12 billion over three years modernizing its electric grid. The number is accurate, but misleading, and SCE has had to battle assumptions that this represents a jump in new capital spending.
California's electric utilities don't own much electric generation anymore. When the state restructured its electricity market, it ordered utilities to sell their thermal plants, though SCE was able to keep its nuclear and hydro generation. In addition to divesting most of its generation plants, the utility no longer controls the high-voltage transmission lines in and around its service areas. Those are controlled by the California Independent System Operator (CAISO) (Folsom, California).
"Incumbent utilities like SCE don't have the right to decide which transmission lines get built and where they go," Song told Industrial Info. That explains why the utility's filing with the CPUC doesn't seek authorization to spend on new transmission lines. "First CAISO has to determine there is a need for a new line. Then, according to Order 1000 from the Federal Energy Regulatory Commission (ERC) (Washington, D.C.), a competitive bid is opened." In some cases, implementing customer programs like demand response--or implementing new pricing structures, or building a distributed energy resource--can obviate the need for long transmission lines, he explained.
In a July 1 statement accompanying its CPUC filing, SCE President Pedro Pizzaro said: "As more customers adopt clean-energy technologies like solar panels and energy storage equipment in their homes and businesses, the grid will become much more complicated to operate. The Distribution Resources Plan (DRP) is our game plan to build a state-of-the-art power network that is essential to assure reliability, power quality, customer choice of new technologies, and to further reduce greenhouse gases."
"We're moving toward a 'plug-and-play' system," Pizarro said. "The coming power network will make it easier for customers to plug in many types of energy technologies, whether it's an electric vehicle, solar panels or energy storage devices."
"Turning the nation's existing transmission and distribution network into a two-way electricity freeway will be a lengthy, complicated and expensive endeavor," said Britt Burt, Industrial Info's vice president of global power research. "We see a lot of project work for a long time for suppliers of equipment and services. Going forward, transmission investments, like generation investments before them, will have to compete on a level playing field with non-traditional options. This amounts to Phase 2 of electric-industry restructuring."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
In a July 1 filing with the California Public Utilities Commission (CPUC) (Sacramento, California), which ran to 467 pages, SCE said it was responding to the commission's direction that utilities in the state find ways to incorporate more distributed energy resources (DERs) in their resource planning. A broad category of electric resources, DERs could include distributed energy generators like rooftop solar panels, electricity storage and new pricing options, and customer programs designed to shift or reduce peak electric usage. DERs stand in contrast to traditional, centralized power generation resources.
SCE's filing echoed changes in other state electric markets. State utility regulators are increasingly pushing utilities to change the way they operate, particularly the trade-off between DERs and traditional generation and transmission options. In New York, state utility regulators are pursuing similarly significant changes to its electricity market. The New York effort is called Revolutionizing the Electric Vision (REV). That effort also is geared toward investigating whether DERs could be a cost-effective and environmentally superior alternative to the traditional utility business model of generating electricity remotely and transmitting it over long distances to customers. For now, California and New York are at the forefront of an effort to change the way utilities and transmission organizations spend their infrastructure capital budgets. But if these initial efforts are successful, regulators and utilities in other states may replicate them.
In its CPUC filing, SCE said: "DERs have the potential to offer customers more choices, more control over their energy bills, and cleaner power. In addition, when strategically located, DERs could potentially defer or substitute for conventional infrastructure, such as large power plants, transmission lines and distribution system infrastructure."
"The existing distribution system is not structured to accommodate and facilitate these changes," the company noted. Instead, the utility's distribution network "was designed for one-way flow of electricity from big central generation stations across high-voltage transmission lines to the distribution system, and then to individual homes and businesses. Given this one-way structure, SCE's distribution system operators have limited visualization tools and limited ability to control resources for monitoring and adjusting power flow on the distribution system."
"The distribution grid of the future will look very different," SCE predicted. "To enhance customer choice for new technologies and services, as well as to manage bidirectional flows from many resources having a variety of generation and consumption patterns, the electric distribution system must become more dynamic, flexible and resilient. Distribution planning must be greatly enhanced to recognize the value that distributed resources play in offsetting the need for transmission and distribution capital investment. With end-use customers playing a much more active role in generating and storing power, the distribution system is becoming a more complex two-way system that needs more sophisticated and advanced technologies and capabilities."
In an interview, SCE spokesman David Song emphasized that the utility asked regulators to shift its planned capital spending to meet the state's energy policy goals, specifically supporting the broader proliferation of DERs like rooftop solar, electric vehicles, community solar gardens, electric storage and other decentralized energy resources.
"We've asked the CPUC to let us reprogram our capital spending," Song said of the utility's filing. "The requested future spend is about the same is it is now, but we've asked to be able to put it in different buckets." The CPUC is expected to rule on SCE's application during the first quarter of 2016.
Song emphasized that the three-year capital budget request the utility filed with the CPUC does not represent a surge in new capital spending: "What we propose to spend will not change much, but we are asking for authorization to spend it differently, to comply with state energy policy."
Earlier this month, The Los Angeles Times reported SCE had plans to spend $12 billion over three years modernizing its electric grid. The number is accurate, but misleading, and SCE has had to battle assumptions that this represents a jump in new capital spending.
California's electric utilities don't own much electric generation anymore. When the state restructured its electricity market, it ordered utilities to sell their thermal plants, though SCE was able to keep its nuclear and hydro generation. In addition to divesting most of its generation plants, the utility no longer controls the high-voltage transmission lines in and around its service areas. Those are controlled by the California Independent System Operator (CAISO) (Folsom, California).
"Incumbent utilities like SCE don't have the right to decide which transmission lines get built and where they go," Song told Industrial Info. That explains why the utility's filing with the CPUC doesn't seek authorization to spend on new transmission lines. "First CAISO has to determine there is a need for a new line. Then, according to Order 1000 from the Federal Energy Regulatory Commission (ERC) (Washington, D.C.), a competitive bid is opened." In some cases, implementing customer programs like demand response--or implementing new pricing structures, or building a distributed energy resource--can obviate the need for long transmission lines, he explained.
In a July 1 statement accompanying its CPUC filing, SCE President Pedro Pizzaro said: "As more customers adopt clean-energy technologies like solar panels and energy storage equipment in their homes and businesses, the grid will become much more complicated to operate. The Distribution Resources Plan (DRP) is our game plan to build a state-of-the-art power network that is essential to assure reliability, power quality, customer choice of new technologies, and to further reduce greenhouse gases."
"We're moving toward a 'plug-and-play' system," Pizarro said. "The coming power network will make it easier for customers to plug in many types of energy technologies, whether it's an electric vehicle, solar panels or energy storage devices."
"Turning the nation's existing transmission and distribution network into a two-way electricity freeway will be a lengthy, complicated and expensive endeavor," said Britt Burt, Industrial Info's vice president of global power research. "We see a lot of project work for a long time for suppliers of equipment and services. Going forward, transmission investments, like generation investments before them, will have to compete on a level playing field with non-traditional options. This amounts to Phase 2 of electric-industry restructuring."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
