Council Communication
August 15, 2016 Study Session
Discussion of the Future of the Electric Utility
FROM
Mark Holden, director of IT and electric utility, [email protected]
SUMMARY
This is a discussion of the current state and future state of the City of Ashland’s electric distribution
utility. The outline also describes the Electric Utility’s transition from current to future state and the
anticipated barriers, hurdles and issues.
The transition to a future state is being driven by the need for a net zero carbon future, customer
expectations, developing markets, and evolving changes in generation, transmission and distribution
system technologies.
This presentation is brought forward at the request of the Mayor.
BACKGROUND AND POLICY IMPLICATIONS:
The City of Ashland Electric Utility (Utility) distributes a combination of power from local generation
and the Bonneville Power Administration (BPA). The Utility focuses on providing power in a safe,
reliable, affordable and environmentally responsible manner.
Current State:
The Utility operates within an interconnected northwest regional power supply system. Power is
generated locally and externally (BPA). BPA uses transmission systems (BPA, Pacific Power) to
supply power to the Utility. The Utility uses its distribution system to deliver the combined local and
external power to the residents, businesses and other entities within the urban growth boundary.
The electric generation, transmission and distribution industries are in an evolutionary period. While
the details of the industry’s future are still developing, the need to reduce carbon emissions is
advancing these industries. Supporting and prescribing the changes are federal (PURPA1, Clean Power
Plan), regional/federal (Seventh Northwest Power Plan - Northwest Power and Conservation Council),
1
“The Public Utility Regulatory Policies Act of 1978 (PURPA) was implemented to encourage…
1. The conservation of electric energy,
2. Increased efficiency in the use of facilities and resources by electric utilities,
3. Equitable retail rates for electric consumers,”
- What is a Qualifying Facility, (n.d), Federal Energy Regulatory Commission (FERC),
https://www.ferc.gov/industries/electric/gen-info/qual-fac/what-is.asp, Accessed 05/17/2016
Page 1 of 3
state (SB1547 also known as “Coal to Clean”), industry economics, technology, and community
expectations.
Current trends supporting the evolution and helping to move the electric utility industries forward are:
a) conservation efforts (e.g. energy efficiency) – which reduce consumption
b) demand response initiatives – which reduce capacity requirements
c) availability of renewable resources - increasing capacity/displacing carbon based power
d) developing technologies that integrate new resources (demand response, intermittent/variable
renewable resources, storage) into the power supply chain
a) developing/emerging balancing markets/associations - enabling a broader use of intermittent
generation resources
While the Utility does own and operate generation resources (small hydro and solar) and does acquire
excess generation from customer owned solar installations through a net metering rate, the Utility is
primarily a distribution utility. To meet the balance of the Utility’s power requirements, the Utility
contracts with BPA for generation and transmission services. The Utility is in a seventeen year, take or
pay contract with BPA (expiration September 30, 2028). BPA acquires and plans its own generation
resources. BPA owns/acquires, plans, manages and operates its own transmission resources.
The Utility’s own generation resources combined with BPA resources provide the Utility with ninetyfive percent zero carbon power (eighty-five percent hydro, ten percent nuclear). The remaining five
percent is variably sourced by BPA with market contracts (small hydro, wind, biomass, gas, other).
Over the past five years the Utility has purchased qualifying renewal energy credits (RECs) in an effort
to match the five percent variable supply from BPA. Through the combination of generation sources
and RECs the Utility has provided the benefits of nearly one hundred percent carbon free energy.
Ashland’s projected energy consumption is flat to slightly up (one-half to one percent). This is
consistent with regional and national trends. Since approximately 2007 the Utility has met any new
consumption needs through conservation (efficiency) and the installation of local solar resources.
Northwest regional planners anticipate conservation and demand response can provide the growth
needs for the region for the next twenty years2. The Utility currently supports ongoing conservation
(efficiency) but does not have any developed demand response resources.
The Utility (and industry) is continuing to migrate away from a simpler distribution utility to a more
complex integrated utility. The future of the Utility is being shaped by the need for more conservation
(efficiencies), gaining capacity through demand response and the incorporation of more distributed
energy resources (DER - such as solar and storage resources). Other forces shaping the future are the
economics of power generation, governmental requirements and community expectations.
Future State:
While the future is not certain, Ashland’s integrated Utility will operate in an environment where
existing zero carbon generation (BPA, solar, other) continues to play a key role but is blended with
alternative grid attached and local resources (generation and storage). The integrated Utility will
2
Summary of the Key Findings and Resource Strategy of the Seventh Plan, (n.d.), Northwest Power and Conservation
Council, http://www.nwcouncil.org/media/7150142/ppseventhplansummary_032816.pptx, Accessed 05/16/2016.
Page 2 of 3
experience a collaboration with customers where customer loads are more flexible and consumers are
more empowered to make energy usage choices (consumption, demand response, generation). The
integrated Utility will incorporate both grid based and local energy choices. The Utility will use
distribution technology (smart grid, advanced metering infrastructure - AMI) to empower both the
utility and consumers to plan, manage and more efficiently/effectively use electric energy.
The changes will not occur overnight. The Utility (with the rest of the industry) is moving through a
continuum of technologies, economic values, and consumer expectations where consumption changes
as information and collaboration grow and where resources are developed and technology expands to
provide additional economic value.
As the Utility has done in the past, the Utility will navigate the technologies, economics and customer
expectations with a focus on providing safe, reliable, affordable and environmentally responsible
electric services.
The attached “Outline of the Future of the Electric Utility” presents an overview of the current and
future states of the Utility. The outline also provides a description for the transition from current to
future state and the barriers, hurdles and issues facing the City’s electric utility.
COUNCIL GOALS SUPPORTED:
N/A
FISCAL IMPLICATIONS:
N/A
STAFF RECOMMENDATION AND REQUESTED ACTION:
N/A
SUGGESTED MOTION:
N/A
ATTACHMENTS:
Outline of the Future of the Electric Utility
Page 3 of 3
Outline of Future of the Electric Utility
Current State – Distribution System Utility
Distribution System Utility (Utility) – Transmission Grid connected 1, purchases power, distributes power,
supports energy efficiency for Utility and customers, adopter of distributed energy resources (renewable
energy resources and consumers as source of renewable energy)
Operational Priorities
1.
2.
3.
4.
Reliability
Safety
Affordability
Environmentally responsible
a. BPA 2 zero carbon (95% + 5% RECs)
b. Efficiency – Utility and consumer
c. Provide opportunity for renewable energies (residential/commercial/educational/other)
i. Net metering; primary metering (SOU – demand and power)
d. Provide opportunity to participate in renewable energy (e.g. Solar Pioneer II project)
Future state – Integrated Utility
Integrated Utility – Transmission Grid connected, distribution becomes more controllable and resilient,
load becomes more interactive and dynamic, generation becomes more flexible, consumers/communities
continue as energy producers, the Utility and consumers gain real time knowledge and control of energy
consumption.
Operational Priorities
1. Reliability
2. Safety
3. Affordable/Economic
a. Provide customer with further control of their energy usage (smart grid, smart homes)
b. Maintain energy efficiencies and demand response
c. Enabled customers (information for control, distributed generation, storage)
d. Grid/utility level storage
e. Manage cost drivers – consumption and peak usage (efficiency/conservation, demand
response, energy resources/storage)
4. Environmentally responsible
a. Efficiency – continued focus
b. BPA zero carbon
c. Integrated resources (energy resources)
i. Resiliency
1. Renewable integration – intermittency solution(s)
2. Storage integration
1 Transmission Grid Connected value = reliability, voltage quality, frequency quality, resiliency, availability of renewable and
zero carbon resources
2 BPA’s 2015 power was a mix of 83.6% hydro, 9.9% nuclear, 6.5% mixed resources (4.8% non-specified purchases, 0.9% small
hydro, 0.6% wind, 0.1% Biomass, 0.1% Natural Gas)
Page 1 of 3
08152016_discussion_of_the_future_of_the electric_utility_atch1.docx
h:\my documents\_electric\projects\future of electric
Created:
Last Maintained:
10/28/2015
8/10/2016 11:03 AM
Outline of Future of the Electric Utility
ii. Emissions reduction
1. Offset localized carbon sources (e.g. electric vehicles)
2. Offset non-zero carbon based generation
d. Integrate transportation (electrification of transportation)
e. Demand response - level the shape of the demand curve
i. Customers empowered to control their energy consumption
ii. Utility enables and supports (time-of-use)
f. Distribution optimization / Loss Reduction
i. Provides opportunity for renewable energies
- residential/commercial/educational/other
ii. Provides opportunity to participate in renewable energy (grid connected
renewables; community solar)
How is the Electric Utility Transitioning from Current to Future State?
1. Transition is under way
a. Nationally and regionally the industry is piloting a variety of solutions
b. Maintain Ashland’s head start
i. Zero carbon energy – BPA (95%)
ii. Efficiency programs - continuing education and offerings for single family
residences
iii. Developing infrastructure to support Demand Response
iv. Distributed generation (customer solar, community solar)
1. Revise and expand Net metering policies/opportunities – “virtual net
metering”/ “shared renewables”
2. Raise emphasis/underscore efficiency as a resource – most cost effective resource
a. Continue energy efficiency programs
b. Increase focus on multiple family residences
c. Leverage BPA participation and direction
i. Guided by regional energy efficiency goals
d. Leverage/comply with regional plans and authorities
i. BPA responsibilities within Seventh Power Plan (BPA Regional Technical
Forum and Implementation Manual)
ii. Seventh Regional Power Plan (Northwest Power and Conservation Council)
iii. Federal Energy Regulatory Commission - FERC
3. Prioritize smart grid development
a. Expand to include customers (AMI), knowledge is power (for customer and utility)
b. Focus on conservation efficiencies (Utility and consumer)
c. Develop demand response resources (match timing of conservation with supply capacity)
4. Continue to enable renewable power integration
a. Utility attached distributed energy resources (DER)
b. Investigate/develop Grid connected renewable resources, leverage most cost effective
resources
c. Invest in economically viable/proven solutions
i. Benefit from industry lessons learned and national and regional plans and pilots
Page 2 of 3
08152016_discussion_of_the_future_of_the electric_utility_atch1.docx
h:\my documents\_electric\projects\future of electric
Created:
Last Maintained:
10/28/2015
8/10/2016 11:03 AM
Outline of Future of the Electric Utility
Barriers, Hurdles, Issues
1. Technology
a. Smart Grid (data to action – grid and consumer)
i. Distribution system metrics, identifying issues and opportunities
1. Implementation of additional SCADA technology ($$)
ii. Provide consumer information => knowledge to modify personal consumption,
participate in demand response
1. Implement AMI 3 technology and provide customer information to
control usage ($$)
b. Reliability of DER versus Grid attached
c. Electrification of transportation, infrastructure impact is vague/unknown, esp. fast
charging
d. Solar, Storage (how to enter)
2. Cost/Benefit
a. Cost/benefit of DER
b. Cost of DER environment - instantaneous/long term standby/backup, ancillary resources
(voltage, frequency), managing the “duck curve”, other
c. Solar, Storage (when to enter) - BPA contract, ancillary resources (voltage, frequency),
managing the “duck curve”, other
3. Rates
a. Decoupling of rates – maintaining the reliability, safety, and affordability
i. Variable rate – consumption (kwh)
ii. Fixed rate – fixed costs
iii. Demand
b. Develop relationship between rates, efficiency/conservation and demand response (e.g.
time of use rates)
c. Solar incentive programs
i. Purpose, fairness
ii. Sustainable - purchase power agreement vs. incentive/rebate
3
AMI – Advanced Metering Infrastructure: technology for gathering and disseminating information at an individual utility meter.
Page 3 of 3
08152016_discussion_of_the_future_of_the electric_utility_atch1.docx
Created:
10/28/2015
h:\my documents\_electric\projects\future of electric
Last Maintained:
8/10/2016 11:03 AM