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Greentech Media | April 13, 2018

District of Columbia's 'DER Authority' Bill: A Radical Approach to Grid Edge Regulatory Reform

This week’s big new concept for regulatory reform comes not from California, New York, Hawaii, or Texas, but from the nation’s capital.

On Tuesday, Washington, D.C. City Council members Mary Cheh and Charles Allen introduced a bill to create a Distributed Energy Resource Authority (DER Authority). This new entity, with its own board of directors and funding, would have the power to do a couple key things.

First, it would collect and manage granular customer energy usage data from Pepco, the utility that provides electricity for the district. This is aimed primarily at giving customers access to their own data, but is also meant to support third-party access and use, with an eye toward optimizing investment in solar, energy efficiency, demand response, energy storage, on-site generation, or other grid edge assets. 

Second, whenever Pepco proposes any grid investment of $25 million or more, the DER Authority would open the project to competitive bids from non-wires alternatives — including bids from the utility itself. The goal is to find combinations of DERs that can alleviate whatever problems the utility’s grid investment was meant to solve.

This is largely in line with what lawmakers and regulators are trying to accomplish under New York's Reforming the Energy Vision (REV) initiative. They’re also key to California's efforts in data sharing, security and privacy, and integrating DERs into utility grid investments. 

According to Sam Brooks, a former top D.C. energy official turned energy consultant, the new DER Authority could put Washington D.C. ahead of both states in achieving those goals. And while this radical action may be possible due to the District’s unique governmental structure, it could provide a model for how other states, cities or communities seize their own energy data from utilities. 

“In some respects, this is where REV should have gone,” he said. “I like to think of the Distributed Energy Resource Authority as a platform more than anything else — a platform and market maker for distributed energy resources.” But to achieve this, “the data is the great hurdle.” 

The Washington, D.C. DER Authority will likely face several hurdles on its way to becoming a reality. Pepco has already declared its concerns about the legislation’s potential effects on data privacy and security — a common complaint from utilities in other states that have been asked by regulators to provide smart meter or grid data, but one that must be taken seriously. 

Pepco will likely have concerns over the costs and risks of turning over data in real time, and to opening distribution grid investment plans to replacement by contracts for as-yet untested DER alternatives. 

Even so, Councilmember Allen — a co-sponsor of the district’s renewables mandate and low-income customer “Solar for All” program, and a leader of the faction that fought for years to prevent Pepco’s merger with Exelon — noted in a statement to Greentech Media that he has “heard an outpouring of overwhelming support” since the bill’s introduction. 

“If this bill passes it will be a monumental shift in the way we create and consume energy in the District,” he wrote. “I don’t take that lightly. I look forward to hearing all sides at a public hearing and working closely with all stakeholders. But at the end of the day, this legislation is good for ratepayers. It will mean cleaner, more affordable energy and economic development and jobs for District residents.”

Brooks led Washington, D.C.’s effort to collect, analyze and act on energy data for its buildings as energy division director for the district's Department of General Services from 2012 to 2014. That effort ended up yielding some very useful data in the form of the BuildsmartDC.com, which can break down internal energy usage data in a number of ways across 400 buildings and 25 million square feet, he said

But getting that data was a real struggle. Pepco already had its Silver Spring Networks-enabled smart meter network in place when his department started asking for data for its buildings initiative. But it took months of argument with Pepco before customers were able to get access to even their more limited, day-old interval data — something Brooks lamented at an industry conference back in 2013.

“When I was with the government, we were the first entity that really wanted and demanded the data,” he said this week. “I give them some credit for working with us ultimately. It was acrimonious at times, but to their credit, the D.C. government has AMI data today.” 

Still, going through a separate process every time customers want data isn’t the right way to build a system to support the fast integration of DERs. That’s particularly true in light of Pepco’s slow progress on its other data-sharing initiatives, he said. 

The utility was one of several to pledge moving its customers to the Green Button standard for energy data back in 2012, although it hasn't enabled the more useful Green Button Connect features, said Brooks. Today, technically any consumer can get their data. But it’s an extraordinarily cumbersome process. "I’d imagine I’m one of a handful of people who’ve gone through the process to get the data on my phone — and it’s useless data,” at least a day old, and without any system to authorize data-sharing with third parties, said Brooks.

What the DER Authority envisions for data access, by contrast, is a system in which properly secured data can be shared by any customer to any authorized third party, with APIs that connect all of these users to a common data platform. “What we want is, if I authorize a third party, I get to send my data via API to that third party — and Google should be able to build an app for the District of Columbia’s AMI infrastructure,” said Brooks. 

The legislation gives the DER Authority the task of creating an API to provide “consumers, and third parties that have entered into an energy data agreement with a consumer,” access to continuous and uninterrupted data from several types of utility data. Those include “timestamped interval energy usage data in real time, at the interval it is collected by the meter or provided by the Meter Data Management System, whichever is updated more frequently,” as well as “at least 60 months of timestamped interval usage as recorded by the meter, and any subsequent estimates or adjustments that may occur.” 

Brooks estimated that the technical requirements for Pepco to deliver these data flows to customers aren’t too onerous. “To move from where they are, to an API that’s customer-authorized to third parties — from a customer software perspective, that’s maybe a day’s effort for someone at Pepco to pull that off.” 

Other parts of the legislation may take longer to implement. Pepco’s smart meters already contain the ZigBee home area network (HAN) chips to meet the legislation’s mandate to allow any customer to connect any standards-compliant device. However, the history of smart meter ZigBee networks has shown that these technologies don’t always work smoothly together. Pepco would also have to work on creating a mandated “automated electronic method for the registration, authentication and authorization of Platform users, including consumers, third parties, DER providers, entities of the District of Columbia, and the electric company.”

The real challenge will be managing data privacy and security concerns, Brooks said. That’s also the first aspect of the legislation that will face a challenge from Pepco, if the utility’s early statements are to be taken as a guide. 

“As drafted, the legislation would allow the Authority access to sensitive customer information, including customer bills, account numbers, usage and billing data and would provide oversight of critical infrastructure projects that Pepco would be required to implement as part of the effort to provide continued safe and reliable service for customers," Pepco spokeswoman Tasha Jamerson said in a statement to Utility Dive

Brooks called these concerns a “red herring,” noting that they’re a standard part of almost every utility’s response to regulatory requests for more data access. “Nobody wants anything but the privacy and security of consumer data to be paramount,” he said. In fact, “we want to make that data more secure. What I think happens here is that as we begin to recalibrate the system, we start to create a more secure system.” 

Michael Murray, head of the Mission:Data business group, noted that utility compliance with data sharing will “inevitably run into various operational challenges. In California, utilities made a really terrible user experience,” he argued. "They were still able to say they complied with the mandate, but they’re not necessarily making it streamlined for the customer” — something that Mission:Data has been seeking to change for the DER and energy services providers it represents.  

Other states have lacked complete or accurate of data for customers, he noted. “This is where good policy can only go do far, and you have to have an early, well done implementation to get the distributed energy future we all want.” 

And from that perspective, he argued, a single entity for energy data may be a better choice than leaving implementation up to individual utilities. “Now, rather than mandating Pepco provides the data access and consent, it’s the DER Authority — and it can claim broader public interest than the utility.” 

The second part of the proposed DER Authority’s power goes deeper into Pepco’s core operations, through its creation of a non-wires alternatives mandate. As the legislation describes it, this authority would be triggered whenever Pepco files a notice of construction ("NOC") with the District of Columbia Public Service Commission (PSC), to expand system capacity or enhance system reliability with a cost-recovery price tag of “at least $25 million." 

Today, these types of grid upgrade requests are normally passed through the PSC with minimal opportunity for alternatives to be proposed, Brooks said. Under the legislation’s mandate, however, any project of $25 million or more would trigger a “non-wires alternative analysis to determine whether a non-wires alternative (NWA) can be deployed to meet the capacity/reliability needs specified in the NOC.” 

If that analysis finds that NWAs are “appropriate for the system expansion or enhancement, the Authority, in consultation with the Commission, shall commence a request for proposals (“RFP”) process to solicit offers for NWAs,” the bill states. These bids “may include a combination of onsite generation, energy efficiency, demand response, and dynamic load shifting,” and would come within 90 days of the original NOC — a much faster turnaround than we’ve seen from the NWA projects accomplished via state mandate so far. 

“It’s intended to cut through an endless bureaucratic study or a regulatory body trying to identify the solution, which is what I think is happening in too many places,” Brooks said. “You’ve got regulator and bureaucrats trying to design NWAs. We think the market should guide that process.”

The RFPs will be guided by a three-person committee made up of the DER Authority’s executive director and the PSC’s chairperson, and a technical expert selected by the DER Authority’s board. While the legislation contains a long list of requirements and restrictions for the process of picking a winner, if a qualified NWA comes in at below the original NOC cost estimate, it will be selected instead. 

Importantly, Pepco is specifically authorized to bid its own NWAs to replace its original NOC, as well as to work with third parties in concert. “We negotiated against ourselves to put that in there,” Brooks joked,” but reasonably, we thought it had to be there. The effort here is not to turn Pepco upside down, but to recalibrate how the utility would work.”

Even so, it’s likely that Pepco will object to turning over such an integral part of its business to outside control. Part of its initial statement on the legislation noted its concern with turning over “oversight of critical infrastructure projects” that are part of its mission to “provide continued safe and reliable service for customers.”

One of the big challenges for NWAs is proving that a combination of DERs can be counted on to be installed and running on time, and on budget, in the same fashion as utilities now rely on new transformers and substation upgrades. On that front, Brooks noted that this week’s legislation doesn’t supply much of the detail that would be required to implement its NWA mandate, but that it could rely on oversizing its procurements, contracting with multiple parties, or other methods to derisk the commitment. 

Another big challenge for NWAs is having the data needed to assess whether DERs or plain-vanilla upgrades — or a combination of the two — are the most cost-effective choice. The DER Authority legislation specifies that it will require Pepco to provide data to support the NWA process, including “dynamic hosting capacity analysis, locational net benefit value analysis, non-wires alternatives analysis, and probabilistic load forecasting.” 

It’s not clear what technology and business process upgrades Pepco might need to make to support up-to-date and accurate interconnection and hosting capacity data, Brooks noted. The utility now has hosting capacity maps online, but in his estimation, “the map’s useless. It’s not searchable, it’s not dynamic, it’s not updated in real time.” 

This is not an uncommon complaint from DER providers regarding the online maps and other digital tools from utilities in states that have mandated it. California’s investor-owned utilities have put hosting capacity maps online, but with different combinations of field data and statistical approximations, while New York is still working with its utilities on what their own maps will look like. 

The DER Authority’s role in improving this data picture will extend to providing Pepco its own assessments of the district’s needs, through an annual Distribution Resources Plan (DRP) it will file with the utility. The legislation provides four key goals for these DRPs: speeding the integration of “intercommunicating and operationally trustworthy DER,” making utility distribution system planning operations more efficient, increasing local clean energy generation, and reducing rates for all ratepayers.