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This document outlines the critical challenges and opportunities in electricity power delivery, focusing on market rules, planning processes, and investment policies. It emphasizes the need for regional system planning to identify emerging electricity demands and resource gaps while advocating for market-driven solutions to ensure reliability and reduce economic congestion. Additionally, it discusses performance-based ratemaking and the integration of demand-side resources in distribution systems to enhance operational economics and service reliability across New England.
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DR and Power Delivery • Setting: Transmission and Distribution present different challenges and opportunities. • PD-1: Develop market rules and price signals to reveal the temporal and locational value of electricity • PD-2: ISO-NE, State PUCs, and utilities should consider adopting PBR plans for T and D companies
Power Delivery: (1) Regional System Planning • PD-3: Conduct a continuing, regional power system planning process to identify system needs and consider alternative strategies to meet them. • PD-4: The regional power system planning process should evaluate on an even-handed basis all feasible, comparable solutions to emerging problems including generation, transmission, and demand-response resources.
Power Delivery (2) Regional Power System Investment Policy • Setting: First, the planning process should identify emerging needs and resource gaps. • PD-5: Market-based responses to regional power system needs should be encouraged to emerge, wherever possible • PD-6: Continue the regional dialogue to explore resource choices, cost allocation, and cost recovery to address problems of reliability and persistent economic congestion
Option A. Limit interventions to transmission alone • Alternative approach A: • Use market-driven approaches to meet regional needs, and avoid subsidies if possible; • Where markets do not fully address system needs, the planning process should provide a coordinated, regulated transmission plan of upgrades to ensure bulk power reliability; • Costs of such transmission upgrades should be recovered in regulated transmission rates. • NEDRI does not address the cost allocation debate (regional vs. participant vs. zone, etc)
Option B.“Efficient Reliability” test-- transmission and alternatives • Alternative Approach B: • Use market-driven approaches to meet regional needs wherever possible; • Where markets do not fully address reliability needs, apply an “Efficient Reliability” test; • Resource neutrality – both transmission and non-transmission investments eligible for cost recovery • Cost minimization – choose lowest cost, reliable solution for support and cost recovery
Option C. Transmission provider invests in alternatives • Alternative approach C: Same approach as in B, but non-transmission options supported by transmission tariffs only when they are selected and supervised by transmission providers • Transmission planners apply Efficient Reliability test; • Resource neutrality – both transmission and non-transmission investments eligible for cost recovery • Cost minimization – choose lowest cost, reliable solution for support and cost recovery • Performance-based ratemaking may be used to create least-cost and reliability incentives for transmission providers
Power Delivery (3) Distribution System Planning • PD-7: New England’s electric distribution companies should seek out and acquire cost-effective demand-side resources that would improve the reliability, operation, and economics of the local distribution system • Distribution-level pilots and experience are needed; • State PUCs should study rules to support the use of DR as part of distribution company operations; • State PUCs should study tariffs to provide credits to customers who lower demands in critical locations; • State PUCs should consider PBR plans that would reward reliable service and de-link distribution profits from throughput.
