Legislation and Policy

U.S. Court of Appeals Hears Important Case Regarding Transmission Planning
One of the fastest rising parts of any consumer’s electric bill is the cost of transmission, that is the cost of moving power from where it is generated to where it is used, including homes and businesses in the District. One reason for those increased costs is the need to replace older transmission facilities that have reached the end of their service life.

On November 8th, the United States Court of Appeals for the District of Columbia heard a case regarding how planning for replacement projects should occur, and OPC was one of the principal parties arguing for more regional, cost-effective planning. Back in 2020 a group of stakeholders including OPC, other consumer advocates, state commissions, public power entities and merchant transmission developers developed a process in which PJM, the regional grid planner, would decide what replacement, if any, should be built when a facility is retired. OPC believes that PJM, as the regional planner, is in the best position to determine what replacement facilities should be built, ensure that costs are fairly allocated, and employ a competitive planning process to help ensure that the right project is built for the right price.

The transmission owners offered a competing proposal that would continue to allow them to self-approve the building of replacement projects. This means that individual transmission owners would get to determine what they build (and at what cost) and the regional planner, as well as consumer voices, would be absent from the review of these projects. Unfortunately, when these two competing visions of transmission planning were brought to the Federal Energy Regulatory Commission, the federal regulator chose the transmission owner proposal. OPC believes that this decision was based on neither the facts nor the law and, along with other parties, appealed it. A decision from the court is expected early next year.

Your electric bill has two primary costs, retail and wholesale.  Your retail costs are based on the cost of Pepco or your energy service provider bringing electricity to your home or business.  Wholesale costs are the costs that Pepco incurs in purchasing the electricity and bringing it to the District.  On average, wholesale costs comprise two-thirds of your electric bill so OPC’s advocacy in the wholesale markets is critical to keeping your electric bill down.

There are two organizations that govern the wholesale markets.  The first is PJM, which operates the largest organized market in the world encompassing thirteen states and the District and stretching from New Jersey to Chicago and Pennsylvania to Tennessee.  PJM is part commodity market and part traffic cop, operating markets where utilities and generators buy and sell electricity and then managing the flow of power across transmission lines from where it is generated to where it is used.  OPC is a member of PJM and participates in stakeholder meetings, working with other consumer advocates, utilities, generators, and other market participants to ensure reliable, cost-effective, and sustainable electricity is available to District consumers.

The Federal Energy Regulatory Commission or FERC serves as the primary regulator of the wholesale markets.  An independent federal regulatory agency, FERC has five commissioners nominated by the President with no more than three commissions from either political party.  Among other things, FERC reviews PJM’s markets to ensure consumer and commercial interests are balanced and that electric rates are “just and reasonable.”  OPC actively litigates proceedings at FERC and regularly meets with FERC commissioners and staff about issues important to District consumers.

As the District and other jurisdictions in the region look to meet ambitious de-carbonization targets consistent with climate policy, one of the key challenges will be how to best integrate carbon-free resources into the electric grid.  Many renewable resources such as solar, wind, and hydroelectric power do not contribute to climate change. However, in the case of solar and wind generation, the amount of power they produce depends on weather conditions so their ability to meet customer demand is “variable.”  Other resources, like storage, are limited in duration – they can operate anytime but only if they are “charged up.”

Regional grid operator PJM, which transmits electricity from generators in remote locations to Pepco’s system in our region, OPC and other stakeholders recently developed a methodology to better recognize these resources for the value they provide in meeting the region’s energy needs.  Known as Effective Load Carrying Capability or ELCC, this technology-neutral, market-based approach supports the integration of carbon-free resources by leveling the playing field and allowing each resource to participate based on the value it brings to the table. ELCC also recognizes the “diversity benefit” of complementary resources like solar or wind paired with storage where the combined value of the resources exceeds their individual contribution.

The ELCC construct will increase participation of carbon-free resources in PJM’s markets, resulting in increased competition, lower costs, and the ability of the District to meet its de-carbonization goals in a reliable and cost-effective manner.

Along with this year’s unprecedented events, inordinate energy burdens are contributing to many Americans’ struggle to make ends meet. To help understand the dynamics related to energy and housing challenges, OPC partnered with Apprise, a nonprofit research institute to conduct an Energy Affordability Study, to inform and advise OPC on matters affecting energy affordability, particularly for DC’s low-to-moderate-income households.

Apprise specializes in gathering and interpreting economic indicators that stakeholders use to better manage utility assistance programs, social services, and inform utility company best practices. The OPC Energy Affordability Study consists of two parts. The first is a Population Characterization Report that provides detailed information about low- to moderate-income household demographics, energy burden, and shelter burden.

The second part is a Survey of Programs that analyzes and compares the funding, program design, and program performance elements of District of Columbia energy assistance programs to those in other jurisdictions. Together, these reports will inform OPC’s advocacy to assist low to moderate income utility consumers. The report identifies the most vulnerable populations in the city and provides recommendations as to how existing low-income programs can be modified to be more effective.

OPC will be using this report to work with other stakeholders such as the District’s Department of the Environment that operates the utility discount programs and community groups who serve senior and low-income groups. The study will be available to the public in the first quarter of 2021

Demand response (DR) programs that signal energy consumers to curtail their energy use during periods of high demand in exchange for compensation, also provide a great way for consumers to save on electricity while reducing their carbon footprint. Learn how PJM uses DR to manage the electric grid and ways the program can be made even better!

Click: Summer Peak Shaving Adjustment Resources in PJM

The D.C. Sustainable Energy Utility (DC SEU) is a private contractor procured by the District of Columbia government primarily responsible for the District’s energy efficiency and renewable energy programs. The DC SEU helps District residents, businesses, and institutions save energy and money through providing education, technical assistance and funding for energy efficient appliances, energy efficiency building retrofits and renewable energy installations.

The DC SEU’s performance benchmarks include the following goals:

• Reduce energy consumption in the District of Columbia;
• Increase renewable energy generating capacity in the District of Columbia;
• Improve the energy efficiency and renewable energy generating capacity of low-income housing, shelters, clinics, or other buildings serving low-income residents in the District; and
• Increase the number of green-collar jobs in the District of Columbia.

Since the implementation of the Clean and Affordable Energy Act of 2008, which created the DC SEU, the People’s Counsel has served as a statutory member of the DC SEU Advisory Board. The DC SEU’s Advisory Board is responsible for providing advice, comments, and recommendations to the D.C. Council and the District Department of Energy and the Environment on the performance and administration of the DC SEU. OPC EES staff provide ongoing research, analysis, and technical support to the People’s Counsel for monitoring of the DC SEU’s progress and initiatives.

OPC has been committed to providing a voice for consumer advocates, both locally and nationally, in policy discussions about distributed energy resources (DER). OPC is a founding member of the DER Committee of the National Association of State Utility Consumer Advocates (NASUCA) and served as Chair of that committee since 2015. The purpose of the NASUCA DER Committee is to share information and establish policies regarding energy efficiency, renewable energy and distribution generation that foster the development of cost-effective programs and promote fairness and value for all consumers. OPC coordinates meetings, presentations, roundtable discussions and panels on various DER topics, throughout the year.

For example, these meetings have included presentations by Katherine Hamilton, Policy Director representing the Energy Storage Association; Karl Rabago and Radina Valova of the Pace Energy and Climate Center on their organization’s involvement in the New York “Reforming the Energy Vision” (REV) proceeding; Janee Briesemeister on her joint report with consumer affairs consultant Barbara Alexander, giving recommendations for expanding consumer protections for electricity customers who install solar panels; as well as, Tom Schneider, the public advocate in Maine, and Lon Huber of Strategen Consulting on their proposal regarding solar deployment and an alternative to net metering in Maine. Additionally, at the November 2016 NASUCA Annual Meeting, OPC coordinated and moderated a panel on electric vehicle integration which highlighted issues related to cost allocation of EV infrastructure expansion and environmental public policy commitments.

The Office believes that the integration of distributed energy resources, such as solar photovoltaic systems and solar thermal systems, is an important part of advancing the District’s goal of a sustainable energy future for all of its residents.The People’s Counsel has consistently advocated for renewable energy policies that promote equity, affordability, environmental responsibility and reliability in support of the District’s sustainability goals. For example, OPC strongly supported several clean energy legislative initiatives at the Council for the District of Columbia over the past several years. These initiatives include but are not limited to:

• Community Renewable Energy Amendment Act of 2013: established community net metering to enable the development of community-shared renewable energy facilities throughout the District. Community net metering removes the barrier of home ownership from solar energy generation. It allows renters, low-income residents and others to subscribe to a portion of a renewable energy facility and receive a monthly credit for the energy their portion generates.
• Sustainable DC Omnibus Amendment Act of 2014: contains a wide array of provisions that facilitate greater sustainable business practices, improved air quality and environmental stewardship such as the styrofoam ban, environmental literacy in DC Public Schools, beekeeping and radon screening. The law also included important energy benchmarking provisions which enable building owners to receive and report on aggregated energy consumption data for their buildings.
• Renewable Portfolio Standard Amendment Act of 2014: eliminated “black liquor” – a toxic by-product of the paper mill industry – from the list of Tier 1 resources under the District’s Renewable Energy Portfolio Standard.
• Renewable Portfolio Standard Expansion Amendment Act of 2016: increases the renewable energy mandate for the District energy portfolio to 50% by 2032, with a 5% solar carve-out. The legislation also establishes the “Solar for All” program focused on increasing solar energy deployment in low-income households.

In addition to advancing local sustainability goals for the District, OPC is committed to representing the interests of DC ratepayers on the regional and federal levels. OPC has been actively engaged in the stakeholder process in PJM Interconnection, LLC and made numerous filings with the Federal Energy Regulatory Commission on behalf of DC consumers. OPC is a founding member of Consumer Advocates of the PJM States, Inc. and continues to play an active role in the strategic planning of the organization to ensure that consumers’ voices are heard in the PJM stakeholder process.

What is PJM Interconnection?

PJM Interconnection, LLC is the mid-Atlantic regional transmission organization that manages the grid and coordinates the movement of wholesale electricity in Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. PJM is a non-governmental company that is responsible for planning transmission expansions in the mid-Atlantic region, forecasting future loads to be served, maintaining the reliability of the bulk power system and administering several energy markets where power is bought and sold to serve load.

What is the Consumer Advocates of the PJM States, Inc?

OPC was involved in the formation of Consumer Advocates of PJM States, Inc. (CAPS), a non-profit organization established to serve as a resource for all of the consumer advocate agencies in the PJM region and to represent their interests in PJM proceedings. OPC continues to play an active role in the PJM stakeholder process through itsinvolvement in numerous committees and user groups, such as the Markets and Reliability Committee, the Members Committee, Market Implementation Committee,Seasonal Capacity Resources Senior Task Force and the Public Interest Environmental Organization User Group.

What is the Federal Energy Regulatory Commission?

The U.S. Federal Energy Regulatory Commission (FERC) is a federal regulatory agency with jurisdiction over interstate electricity sales, wholesale electric rates, natural gas pricing, hydroelectric licensing and oil pipeline rates. For example, any changes which PJM intends to make to its market rules must first be approved by the FERC. OPC is a party to various proceedings before the FERC which have an impact on DC ratepayers. Indeed, rules established in the wholesale marketplace have a direct impact on retail customer electricity bills because generation costs make up the majority of District ratepayers’ electricity bills.

One of the most important ways OPC can help ensure reasonable prices for District consumers is to advocate that the wholesale electric markets where PEPCO buys electricity from are transparent and competitive. Unfortunately, for too long that wasn’t the case. The screen used by grid operator PJM, which serves the District and thirteen other states, to review power generators’ bids into the market and make sure they are competitive was not effective. This screen, known as the Market Seller Offer Cap (MSOC), allowed excessively high bids into PJM’s capacity or future market; costing ratepayers across the PJM region over a billion dollars a year.

In early 2019, OPC, other consumer advocates and customers, and the PJM independent market monitor, who serves as a watchdog to ensure competitive markets, filed complaints at the Federal Energy Regulatory Commission (FERC) alleging PJM’s MSOC was ineffective and consumers were paying too much. In March of this year, FERC granted our complaints and asked PJM and other parties, including OPC, to propose solutions to better ensure market competitiveness. Earlier this month FERC issued an order on its proposed solution. While FERC did not select OPC’s suggested approach, the approach it did choose will achieve OPC’s goals of safeguarding competitive markets and reasonable prices for District ratepayers.