State Commissioners
Steve DeFrank is the chair of the Pennsylvania Public Utility Commission. Paul Kjellander is PUF Senior Advisor and former Idaho PUC Chair.
Ten Commissioners discuss their concerns about electric power infrastructure.
PUF's Paul Kjellander: What are the most important needs for electric power infrastructure?
Chair Steve DeFrank: They are twofold. First, are ever increasing cyber and physical security threats. We discussed that in our panel in Santa Fe; AI and how that's entering into this space, particularly utilizing AI for cyber threats.
When we talk about cyber threats, I always talk about how we have to be perfect. They throw everything against a wall, and if something gets through and gets in, it could create havoc. Near perfect isn't good enough; we have to be perfect.
Then it's increasing physical security threats to substations. I visited the Riazzi substation in the Duquesne Light territory earlier this year, and it's a state-of-the-art facility, with twenty-foot fencing around it.
You can't see inside it, as it has bulletproofed fencing. Unfortunately, folks like to use these facilities as target practice just for fun, other times there're more nefarious motives, either of which create havoc.
Those threats are some of the important issues we're seeing with power infrastructure. The other is resiliency and reliability.
It's what we always talk about when we discuss this subject, and we're seeing more adverse weather becoming the norm. We had a meeting with one of our electric distribution companies earlier this week and for reportable storms each year we're seeing an increase.
We're already in April and far surpassed April of 2023 in terms of reportable storms for this electric distribution company. It looks like '24 will top '23, which set a record, and '23 topped '22, which set a record. That seems to be the norm.
It's how we address that, first to minimize outages and then what we do to restore customers quickly and efficiently when those storms occur. Then from the reliability standpoint, it's our ever-increasing load and how we handle those peaks and changing shifts of those peaks.
And finally, more folks are working from home. Our traditional twenty-four-hour load curve of twenty years ago is not the load curve today, and that's simply because we've changed our habits. How our systems adjust, so we meet reliability concerns in an affordable and cost-effective manner, that's the key �" striking that balance.
PUF: As you look at infrastructure, what are the concerns about trying to address some of those needs?
Chair Steve DeFrank: Effectively managing distribution planning with load growth and distributed generation to avoid stranded costs. Twenty years ago, the annual load growth of any electric distribution company was approximately one to two percent. Today, we have projections for some utilities up to and even over five percent, with the norm being in the two to five percent range.
While this is a huge challenge, it also creates an opportunity for utilities to leverage more demand to invest in the incremental upgrades needed to meet this new volume. However, if utilities mismanage investments to support growth that does not appear, this overbuild will lead to stranded costs for consumers.
Getting an accurate prediction. That's a challenge with data center proliferation and the amount of power they use. That's not going to end anytime soon. The question is where they're going and how that location will impact the grid.
Adding to this challenge are the dynamics brought about by distributed generation. Most behind-the-meter generation is solar that does not have a 24/7 profile. The result of the intermittent profile could be a grid with greater peaks, resulting in an expensive and uneconomic grid for consumers.
PUF: Does utility regulation need to adjust to address some of these concerns?
Chair Steve DeFrank: Absolutely. We recently instituted in Pennsylvania our battery storage proceeding policy statement. The policy makes it clear utilities may utilize battery storage as a distribution tool, as a non-wires and poles alternative to foster reliability.
Allowing electric distribution companies to utilize batteries, if it's cost-effective, makes a lot of sense. The more tools we can put in a utilities' toolbox, the better off we're going to be.
There will be more microgrids, for instance. With the increase in number and severity of weather events, the need for microgrids is becoming more apparent.
Pennsylvania is in phase four of our energy efficiency and conservation plans. We're going to be entering phase five in June of 2025.
All of these are going to come into play. We're not going to find one silver bullet to address all these concerns. It's going to be all available tools coming together to address new reliability issues.
Distributed energy resources, we're seeing more behind-the-meter applications, whether community solar or roof top. More folks are putting on solar panels, which creates a need to ensure the local distribution grid can handle increased distributed generation.
Distribution rates. Pennsylvania passed legislation allowing for alternative ratemaking, which allows utilities the option to utilize time-of-use, incentive, multi-year, decoupled, and other distribution rate designs. We haven't had significant applications of these designs yet, but the tools are in the toolbox if utilities want to file a rate case that veers away from volumetric ratemaking.
We're always open to new ideas, to think outside the box because of the challenges we're facing. We can't think in traditional ways on these issues like we did twenty years ago because they're too broad and diverse.
PUF: How different will electric power infrastructure look in 2040?
Chair Steve DeFrank: Earlier this year I was touring one of our electric distribution companies in the state and it has a fully implemented smart grid. We're going to see more of that.
It's a SCADA program where if there's an issue on the grid, it is isolated, power is moved around, sectionalized, and impact is minimized. The system I looked at did all of that within a two-to-three-minute time frame. It isolated an outage, which minimizes impact to the customer.
You're going to see more of those types of systems, and distributed generation is going to continue to increase. However, we will still have our traditional backbone grid to continue to be the "freeway" system for electricity to be delivered to our homes and businesses.
There will be more distributed resources on it, but even forty years from now, we're going to have a distribution system that will be even more important in facilitating all these various technologies. But even with all of that, I think we'll still be able recognize it from what we see today.
Additionally, there will be more microgrids spread throughout and more ability to section off parts of that grid. It's going to be more versatile in meeting challenges I described earlier.
Hopefully, there will be more battery deployment and other non-wire alternatives in place. But we'll certainly recognize the grid.
PUF: How do infrastructure needs compete with concerns about affordability?
Chair Steve DeFrank: We always ask that question, and we ask it as though it's either one or the other. I think we can have both. It's striking a balance.
How do you get there? I believe the cheapest power and most affordable power is the power we don’t use. Efficiency programs help us keep that reliable grid affordable.
We have a robust program, and most states are doing at least something with energy efficiency. It’s an important tool particularly in the PJM footprint, with resource adequacy concerns. Part of that answer, as well, is efficiency.
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