Washington (Platts)--12Nov2012/134 pm EST/1834 GMT

Implementing alternatives to traditional electricity infrastructure is more critical than ever in light of the extended, widespread outages in New Jersey and New York in the wake of Hurricane Sandy, a New Jersey energy regulator said.

New Jersey Board of Public Utilities member Joseph Fiordaliso noted at the National Association of Regulatory Utility Commissioners annual meeting in Baltimore on Sunday that two-thirds of the state lost electricity because of the recent extreme weather. Creating the grid of the future, including distributed generation that could aid in protecting against extreme weather, has many components, he said.

"It's going to take approaches that are revolutionary," Fiordaliso said. Noting that the electricity grid in 50 years will look very different from now, he added that "every step we take is new ground." He also mentioned that policy goals such as renewable portfolio standards are originating from states.

Article continues below...

Request a free trial of: Electric Power Daily
	No other daily publication delivers so complete an account of North American power industry news as Electric Power Daily. For those who need solid grounding every day in this complex arena where so much is at stake, Electric Power Daily is a must read.

"We're seeing innovation, we're seeing change at the state level," Fiordaliso said

State regulators and Federal Energy Regulatory Commission Chairman Jon Wellinghoff discussed at the NARUC meeting ways to incorporate distributed generation, energy efficiency, demand response and other non-transmission alternatives.

A recurring theme was a need for a paradigm change in planning policies and compensation to move forward with more use of distributed generation, energy efficiency, demand response and microgrids. The discussion also focused on the controversial topic of how to fairly compensate non-traditional electricity resources and demand response.

Recycled Energy head of public affairs Dick Munson listed the benefits of distributed generation, including the ability to ramp up and down quickly and extremely low outage rates. Recycled Energy Development develops, owns and operates power projects that harness waste heat.

According to Munson, distributed generation is receiving about 60% of its value in wholesale markets. Also, DG should be compensated for the efficiency it creates in reducing transmission line losses, he said. Munson argued that there are many unappreciated social benefits from technologies such as waste to heat energy, which recycles heat from manufacturing and other industrial processes.

Overall, "your procurement processes are designed for very large things -- they don't work for DG," he told the state regulators. "You need to reflect the true value in what you pay DG." Munson argued that there are many unappreciated social benefits from technologies such as waste to heat energy, which recycles heat from manufacturing and other industrial processes.

Hawaii Public Service Commission member Michael Champley said distributed generation is hindered by a lack of market access, revenue streams, jurisdictional issues and a "transmission culture." There is not a level playing field for distributed generation at the regional level, because regional operators are worried about infringing on state jurisdiction on resource planning.

"There needs to be a voice a the regional transmission planning level, that says 'hey, let's get together and work on this,'" Champley said.

FERC's Wellinghoff in an interview said that he thinks many people will be turning toward distributed generation in coming years, especially that fired by natural gas. There is going to be pushback to implementing new technologies, Wellinghoff said, adding that "it's going to be a huge fight."

--Jason Fordney, jason_fordney@platts.com
--Edited by Carla Bass, carla_bass@platts.com

Tweet