Michael Panfil: Energy Exchange

Federal regulators are currently considering a proposal that could fundamentally alter how our nation’s power markets work in tandem with state-crafted public policies. The change being considered, submitted by the nation’s largest grid operator, PJM, would increase electricity prices and undermine state policies in the 13 states and D.C. where PJM operates. Today, Environmental Defense […]

Last week the Midwest and northeastern United States experienced an historic cold snap that tested our nation’s electric grid. Like last year’s solar eclipse, unprecedented wildfires in California, and extreme flooding after Hurricane Harvey, this year’s “bomb cyclone” has not created a reliability crisis. In fact, it appears based on the evidence thus far that […]

A new report from Environmental Defense Fund (EDF) highlights lessons learned and recommendations for the future of Cuba’s electric sector. These include the benefits of Cuba’s decentralized grid, the potential benefits of fueling the grid with more clean energy, and new financing opportunities. The full report is entitled The Cuban Electric Grid, and an abridged […]

Secretary of Energy Rick Perry – whose agenda as governor of Texas was squarely focused on states’ rights and free markets – is now pushing for a federal plan that could disrupt organized electric markets. Perry’s proposal to the Federal Energy Regulatory Commission (FERC) aims to prop up uneconomic coal at the expense of Americans’ health […]

Late Wednesday night, the U.S. Department of Energy (DOE) released its so-called “study” on grid reliability. Secretary Perry commissioned the report in this April memo, asking the DOE to investigate whether our electric grid’s reliability is threatened by the “erosion of critical baseload resources,” meaning coal and nuclear power plants. Perry took the unusual step […]

Electricity is becoming increasingly affordable throughout the United States. This fact was not lost on the Federal Energy Regulatory Commission (FERC), the entity charged with overseeing our interstate electricity grid, during a Technical Conference held last month. Although the Conference was initially organized to focus on how regional electricity markets and state public policies interact, […]

Yesterday, the Supreme Court issued an important decision in support of a vital clean energy resource: demand response. The case, FERC v. EPSA, revolves around demand response, a resource that helps keep prices low and the lights on, all while being environmentally friendly. It’s a significant victory for anyone in favor of a cleaner, cheaper, […]

The Federal Energy Regulatory Commission (FERC), a grid operator, states, and other parties just filed briefs with the U.S. Supreme Court in a case that could decide whether Americans have access to low-cost, clean and reliable electricity. The case, EPSA v. FERC, revolves around demand response, a resource that helps keep prices low and the […]

You’ve probably heard the saying “life is a journey,” but this could not be more true for EPSA v. FERC, the landmark demand response case clean energy experts have been eyeing for more than a year as it’s made its way through the U.S. legal system. Starting in the D.C. Circuit Court of Appeals back […]

If reducing climate pollution from power plants were a football game, the U.S. team would be halfway to the goal line while fans were still singing the national anthem. That is, we have already gotten about halfway to the expected goals of the Clean Power Plan – before the rule is even final. The Clean Power Plan […]

Demand response. It’s a cost-effective energy resource that pays customers to use less energy. Few people even know exists, but it invisibly impacts the life of so many Americans. It’s a clean energy resource that embodies precisely what electricity can and should be: cleaner, cheaper, and more efficient than traditional fuel sources. We’ve written about […]

Last June, the Environmental Protection Agency (EPA) proposed the first ever national carbon pollution standards for existing power plants. Fossil fuel-fired power plants account for almost 40% of U.S. carbon dioxide emissions, making them the largest source of greenhouse gas emissions in the nation and one of the single largest categories of greenhouse gas sources […]

Earlier this week, Environmental Defense Fund (EDF), along with 11 other environmental and consumer groups, joined forces in asking the Supreme Court to hear an important case involving an energy resource that saves families and businesses money, improves electric grid reliability, and reduces carbon emissions: demand response. We’ve written a lot about demand response and […]

By Michael Panfil

A tool only has value if it’s used. For example, you could be the sort of person who’s set a goal of wanting to exercise more. If someone gives you a nifty little Fitbit to help you do that, and you never open the box, how useful, then, is this little device? The same is true about smart energy management solutions: good tools exist, but whether it’s calories or energy use that you want to cut, at some point those helpful devices need to be unpacked. The same is true for demand response, an energy conservation tool that pays people to save energy when the electric grid is stressed.

California's electricity industry stands at a crossroads. The state got an early start on creating laws and policies to cut carbon pollution, and is now reaping the benefits of these policies through reduced emissions and healthy economic growth. That said, California can’t cut carbon emissions and reduce its reliance on fossil fuels without having alternatives to choose from — some focusing on promoting renewable energy, others on smarter energy management tools. Demand response is one of these tools, and a critical one. This highly-flexible, cost-effective resource should play a key role in California’s clean energy future, but several barriers stand in the way of unleashing its full potential.

It’s hard to think of California as anything but forward-thinking, but, right now, the state’s demand response programs are lagging behind those in other states and regions of the country like the Mid-Atlantic. There is good news, however, because demand response is an evolving resource. And, with advances in smart grid technologies, demand response has the potential to improve our energy mix in California. In EDF’s new report, Putting Demand Response to Work for California, we offer recommendations on how to unlock demand response as an important part of the overall strategy for California’s bright energy future.

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Demand response works by empowering customers to shift their energy use to times of day when there is less demand on the power grid or when renewable energy is more abundant. When energy demand goes up, this puts stress on the electric grid and encourages the use of “peaker plants” – dirty, typically coal-fired power plants reserved for use only a few days a year to accommodate “peak” electricity demand. Instead of turning on one of these expensive, polluting peaker plants, utilities can leverage demand response by asking customers to turn off non-essential appliances (like pool pumps, unused lights, idle water heaters, etc.), or delay the use of certain appliances (like dish washers) to a time of day when clean, renewable energy sources are more abundant. This “people-powered” solution saves customers money, prevents blackouts, avoids carbon pollution, and helps integrate more renewables like wind and solar onto the electric grid.

Simply put, demand response is good for people, businesses, and the environment – as demonstrated throughout the U.S. For example, in PJM Interconnection, the power grid operator that covers all or parts of 13 states (and Washington D.C.) throughout the Midwest and Northeast, demand response programs saved electricity users $11.8 billion in 2013 alone. Demand response also helped avoid blackouts during extreme weather events in the Northeast region of the United States between 2013 and 2014.

EDF’s demand response report calls for three actions to advance the resource in California:

1. Identify the range of benefits demand response can offer, such as helping to reduce the cost of electricity for customers, integrate renewables, and improving grid reliability.
2. Spur the rapid adoption of demand response programs by ensuring fair compensation for the value it provides to utilities, customers, the grid, and others.
3. Properly account for all types of demand response in energy forecasts so the state can rely upon this tool when assessing energy supply and demand for the future.

While much more work needs to be done to follow through on the actions outlined above, significant change is already underway in California and much of the United States. For example, California recently passed S.B. 1414, which will help accelerate the use of the resource. Likewise, the state’s Public Utilities Commission (which is responsible for regulating the electricity industry) has been investigating how to increase the resource in its ‘demand response’ docket. EDF has been heavily involved in this case, given how important demand response could be in helping to lower customer energy costs and providing environmental benefits.

Let’s take demand response out of its box and start using this powerful tool to move California toward a low-carbon, clean energy future.

Photo source: iStock

This post originally appeared on our California Dream 2.0 blog.

By Michael Panfil

Over the past several months, we’ve been providing updates on the ongoing litigation surrounding Order 745 – a vital, federal rule on demand response. As a low-cost, environmentally beneficial resource, demand response relies on people and technology, not power plants, to manage stress on the electric grid during periods of peak energy demand. Simply put, demand response pays people to conserve energy when it matters most – a win-win for people and the environment.

But this critical energy management tool has also been subject to an amazing amount of scrutiny (which we’ve covered here, here, and yes, here, as well). In short, the thorny issue boils down to this: a recent court decision found that the federal agency responsible for regulating demand response didn’t have the authority to do so.

When the decision came down, many were shocked. The general assumption had been that this agency (known as the Federal Energy Regulatory Commission or “FERC”) certainly was within its rights to issue Order 745, a set of rules for how demand response would function in our nation’s energy markets.

And last week, the United States Solicitor General sided with the “general consensus” on Order 745.

How? The Solicitor General’s office, on behalf of FERC, has formally asked the Supreme Court of the United States to review the lower court’s decision and overturn its ruling. Stating that the lower court invalidated an important rule “for ensuring the efficiency and reliability” of electricity markets, the Solicitor General argued that “the court…seriously misinterpreted” the relevant law and “misapplied basic principles” of how courts should review agency action.

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What does it all mean?

“Jurisdiction” lies at the heart of this prickly debate – a word only a lawyer could love. Simply put, jurisdiction involves the question of who should be able to create a set of rules relating to an issue – the federal government or state governments. As a rule of thumb, if the issue is one that crosses state lines, the federal government is responsible for creating rules, laws, and regulations; if the issue is entirely within the state, then it’s the responsibility of the state. In the Order 745 case, the lower court found that demand response is a state-only issue, and thus FERC – a federal agency – cannot help to create a set of rules for demand response, even if those rules only applied to interstate (i.e., crossing state lines) questions.

Even states disagree with this assessment, and the Solicitor General provided a convincing argument as well, stating that Order 745 “governs only payments made by wholesale power purchasers for demand-response commitments used by wholesale-market operators to set the wholesale price.” As you may have guessed, if something is “wholesale” then it is a federal, not state, issue.

So where do we go from here?

The Supreme Court has a monumental task, with over 10,000 cases brought before it every year. Nine justices have little hope of being able to review each one, and thus have discretion to decide whether to take certain types of cases. Typically, the Supreme Court hears 75-80 cases a year, meaning that less than one percent of all appeals are actually reviewed by the Supreme Court.

Long odds, indeed. However, there is reason to believe that chances are better for this case. Because it deals with “jurisdiction” it is a particularly important case, significant for our legal system, as it deals with a question of what the government can and cannot do. Second, the case was brought by the Solicitor General, a move that improves the odds of being accepted and heard by the Supreme Court.

It’s unclear at this point whether the Supreme Court will choose to hear the case, and we won’t know more until later this year. But the Solicitor General’s decision to petition the Supreme Court to hear Order 745 is a move in the right direction. It signals the importance of this case, which will no doubt shape how demand response is valued in our energy markets, and to what extent Americans are able to reap the full benefits of this important resource.

By Michael Panfil

Late last week, the Solicitor General signaled its intention to file cert. before the Supreme Court in the demand response Order 745 case, EPSA v. FERC. Hidden within this legalese is an important update about a significant (and already complex) case.

So what does it all mean?

First, a bit of background

Demand response pays customers to conserve energy when the electric grid is stressed. With demand response, people and technology, not power plants, help meet energy demand. This is good news for customers, who pay less for electricity, the environment, via reductions in harmful air emissions, and the electric grid, by making it more efficient.

The Federal Energy Regulatory Commission (FERC), tasked with ensuring our nation’s wholesale electricity rates are ‘just and reasonable,’ created Order 745 to ensure that those providing demand response as a service would be adequately compensated.

This all changed, however, in a recent court ruling, which found that FERC lacked legal authority to regulate demand response. This decision was widely criticized, with White House Counselor John Podesta recently stating, “We think this is a very significant and mistaken decision and we’re hopeful that in time we can see it reversed.”

After an unsuccessful petition for en banc review (meaning that the entire D.C. Circuit Court of Appeals would review the earlier court ruling), FERC was left with one option: ask the Supreme Court to review the decision and reinstate Order 745. However, FERC has no right to appeal to the Supreme Court; instead, the Supreme Court has discretion whether to accept the appeal.

Supreme Court discretionary review is no walk in the park

The Court receives roughly 10,000 petitions for discretionary review (i.e. requests for a case to be heard) each term and only hears 75-80, approximately. For those keeping track at home, that translates to roughly .8 percent.

However, for a federal agency, there is an initial and vital step that must be taken before even requesting the Supreme Court to review a case: The agency must ask the Solicitor General to bring the case. Why? Because the Solicitor General acts as attorney in all Supreme Court cases where the United States government is involved.

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Since the Solicitor General must fulfill this duty for all parts of the Federal government, it naturally has the right to decide against bringing any one particular case. This is both good and bad: the Solicitor General often chooses not to bring a case based on what it determines is the likelihood of success; however, the Supreme Court is historically more likely to review a case where the Solicitor General is involved.

So what does this mean for demand response, FERC, and Order 745?

The Solicitor General’s intention to appeal before the Supreme Court signals an important step in the Order 745 case. The Solicitor General, as ‘gatekeeper’ to cases involving the United States government, has signaled this is a case it believes to be worthy of review by our nation’s highest court. It’s not a responsibility the Solicitor General takes lightly, and its decision shows why this case is so important.

The next step in this legal process is for the Solicitor General to file its brief by January 15th (stating why the Supreme Court should review the lower court’s decision). From there, all eyes will be on the Supreme Court to see whether or not they decide to take up the case.

In the meantime, EDF will be watching this case closely and keeping our Energy Exchange readers up-to-date on new advancements. Regardless of the outcome, there’s no doubt demand response is an invaluable clean energy resource that must play an important role in our transition to a clean energy future. How the Supreme Court decides to treat this case will have a significant effect on how demand response is valued in our energy markets, and to what extent Americans are able to reap the full benefits of this important resource.

By Michael Panfil

Last week the New York Times reported that, for the first time in history, clean energy resources like solar and wind are becoming cost competitive with conventional coal in some markets. This paradigm shift, where clean energy is beginning to compete head-to-head with traditional energy sources, calls for a change in perspective.

This ‘change in perspective’ is a movement toward what I would describe as “sustainable sustainability” – in which “sustainable” means the ability to stand the test of time, and “sustainability” refers to an environmentally responsible approach to making, moving, and using energy. In other words, we must find a way to ensure clean energy resources remain competitive in the marketplace and become ‘business as usual’ resources in the overall energy mix. The International Energy Agency (IEA) does a great job of explaining the need for this shift:

In the classical approach, variable renewables are added to an existing system without considering all available options for adapting it as a whole. This approach misses the point. Integration is not simply about adding wind and solar on top of ‘business as usual’. We need to transform the system as a whole to do this cost-effectively.”

Sustainable, or environmentally beneficial, energy resources must be holistically integrated into the market – not placed in a set-aside – to compete with traditional fossil fuel resources. To do this, we must leverage existing market trends and reform antiquated rules that hinder progress toward a future in which clean energy makes up a significant portion of our electricity generation.

A New Paradigm Shift to Sustainable Sustainability

One way that we are already seeing a shift toward this new paradigm is in markets. Navigant Research predicts worldwide revenue from smart grid technologies is expected to grow from $44.1 billion in 2014 to $70.2 billion by 2023. Global corporations like Walmart, Google, IKEA, FedEx, Costco, and Johnson & Johnson are investing in renewable energy resources in a big way because it makes practical, financial sense. Other global tech companies – including Apple, Google, Samsung, and yes, even Airbnb – have all recently entered the smart home energy arena in a move that illustrates the profitability of the growing clean energy sector.

Financing clean energy projects has also become more affordable than ever before, and more accessible for a broader population. A recent ACEEE study found that energy efficiency is two to three times cheaper than traditional power sources. Solar and wind power are becoming cost-effective in many parts of the world, with one research firm boldly predicting that solar will become cost-competitive with natural gas by 2025. Likewise, demand response – an energy savings tool that pays people to shift their electricity use to times of day when there is less demand on the power grid or when more renewable energy is abundant – has proven to be a low- to no-cost option. Creative financing options like on-bill repayment, Property Accessed Clean Energy (PACE) programs, and green banks are responsible for some of this shift, but market penetration for previously novel energy technologies has also played an important role.

These changes illustrate that clean energy resources are becoming not only the environmentally preferable and sustainable choice, but the economically preferable one as well.

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Unlocking Sustainable Energy Resources

It would be tempting to assume we must only continue trending towards lower costs, better economics, and technological improvements – and that this is all we need to fully integrate sustainable energy resources into ‘business as usual.’ Unfortunately, however, it is not so simple.

Subsidies for the oil and gas industry still far outpace those for clean energy resources. IEA recently reported that internationally, “fossil fuels are reaping $550 billion a year in subsidies and holding back investment in cleaner forms of energy.” That’s around four times the amount renewables currently receive.

Compounding the issue, the legal system governing energy was created to regulate the types of power we had when those laws were enacted (i.e., traditional fossil fuel sources like coal). As the system has evolved to incorporate varied types of energy resources – from solar and wind power, to demand response, energy storage, and energy efficiency – regulations have been updated, but in no organized or consistent way.

Simply put, this goal of sustainable sustainability, where clean power has the opportunity to compete with traditional sources of power, is being inhibited because the rules of the game create an uneven playing field which puts clean energy resources at a disadvantage.

Examples are numerous. A recent court case, for instance, has prohibited demand response from participation in wholesale energy markets – a blow to not only environmental interests, but consumer pocketbooks as well. In 2013 alone, demand response saved people in the mid-Atlantic region $11.8 billion. Likewise, the Federal Energy Regulatory Commission does not include the cost of carbon emissions when calculating electricity rates, essentially requiring society to bear the devastating health and environmental costs. Even clean energy resources that are already installed are stymied. For example, a recent Brattle Group study found that already installed energy efficiency isn’t being accounted for in energy forecasts, which could be costing consumers $433 million a year.

Although it may not be surprising that the way energy is currently governed disadvantages sustainable resources, there is no reason for these resources to continue competing on an uneven playing field. Rather, with clean energy resources proving their competitive edge, there is every reason to do the opposite. Sustainable sustainability should be the goal of regulators and lawmakers, with updated and amended regulations and laws suited for the present and future, rather than the past. Without this evolution, a future in which sustainable resources are themselves sustainable, secure investments will be impeded.

By Michael Panfil

On September 17th, the D.C. Circuit Court of Appeals declined en banc review of Federal Energy Regulatory Commission (FERC) Order 745, dealing a blow to FERC’s regulation on demand response. This sounds complex, but behind these technical terms, hidden in plain sight, is a monumentally important and unfortunate legal outcome: we’re likely about to see an unnecessary rise in electricity prices and increase in new polluting power plants. This is bad news for the consumer, bad news for efficiency, and bad news for the environment.

First, a bit of background…

FERC Order 745, issued in 2011 by the federal agency that regulates electricity throughout the United States, has successfully allowed demand response to fairly compete in the electricity marketplace with more traditional energy resources like coal and natural gas.

Demand response is an important clean energy resource used by utilities and electric grid operators to balance stress on the electric grid by reducing demand for electricity, rather than relying on dirty “peaker” power plants or new infrastructure. It pays people to conserve energy during periods of peak or high demand in exchange for their offset energy use. This makes our grid more efficient, reduces harmful air emissions from fossil fuel plants, and keeps electricity prices lower.

In the wholesale energy market, when the electric grid is stressed by demand (like during a heat wave or cold front), energy resources such as coal and demand response are invited to duke it out in the competitive, open marketplace for a chance to “fill the energy capacity gap.” Whichever combination of energy resources is the most readily available at the best price is delivered to homes and businesses. The inclusion of demand response in this wholesale energy market created a level playing field for the resource – a logical and important step taken by FERC.

By giving a clean energy resource equal footing with traditional sources of power, FERC was merely allowing an additional option into the marketplace. More options usually results in more competition; more competition usually results in lower cost to the consumer. And this is exactly what has occurred.

In 2013 alone, for example, demand response saved consumers in the mid-Atlantic region $11.8 billion. These savings are now, however, in jeopardy. By declining en banc review of the Order, the court has said, in essence, that demand response can no longer participate on equal footing in the marketplace.

A look into the future

None of this is good news for demand response, which in turn is bad news for anyone who wants lower electricity bills and cleaner energy.

So where does demand response go from here? None of the options are certain and some overlap, but let’s look at each possibility.

• FERC can request cert. to the Supreme Court. Certiori is the process that parties use to request Supreme Court review of a prior decision. The Supreme Court has discretion in taking cases, but if granted, the Supreme Court would hear and potentially overturn the lower court’s decision. This would be the most beneficial outcome, but is unlikely statistically: Roughly 75-80 cases are heard by the Supreme Court each year out of the 10,000 petitions that are filed.

• Demand response could be completely kicked out of the market. This would be the least beneficial outcome, with one study indicating that wholesale capacity prices in the mid-Atlantic region could increase dramatically.

• Demand response could be allowed to compete, but on uneven footing. This is perhaps a more likely scenario than those identified above, but the final form this would take is unclear. For example, PJM, home of the largest wholesale energy market in the United States, has proposed one possible outcome, but notes that many different alternative approaches are possible.

• States may (and probably must) take a more active role in promoting demand response, either alone or in coordination. Although perhaps less elegant than what has existed, where demand response is able to compete alongside other resources on a level playing field, state level demand response could help fill the void if the resource is kicked out of the wholesale energy market.

Regardless of the outcome, one thing is certain. The court’s ruling has introduced a good deal of uncertainty as to how demand response will be treated going forward. And this uncertainty, in turn, is bad news for consumers and the environment. It’s too bad, given that demand response has been helping lower energy prices and incentivizing energy conservation as an additional option in the marketplace. Now that demand response could be inhibited in the marketplace, it may need to compete on unequal footing – an unfortunate outcome for people and the planet.

Photo Source: Flickr/Mark Fischer

By Michael Panfil

It’s September, fall is around the corner, and with it, the second anniversary of devastating Hurricane Sandy. A smarter, more efficient electric grid should be on the minds of all New Jerseyans. Unfortunately, it’s not.

Wired magazine calls America’s power grid the largest machine ever built. Over the past few decades, this grid has been expanded throughout the country to ensure that even remote areas have electricity. Although this is an incredible accomplishment, the grid should also strive to keep pace with the latest technological advances, becoming not just the largest machine ever built, but also a more efficient and resilient one.

What is the smart grid?

The electric grid of the future is called a smart grid. In reality, a smart grid isn’t any particular gadget, but a portfolio of products and grid improvements that can enable a more efficient, responsive, resilient, and clean electricity system. Technologies that improve consumer options, integrate clean energy resources, support electric vehicles, or improve energy efficiency are all considered part of a smart grid. We’ve covered some of these technologies earlier in this series, such as renewable energy, microgrids, and energy storage.

A smart grid could, for example, come equipped with such technologies as volt/VAR technology, which reduces the amount of electricity wasted in transporting electricity, or FLISR (Fault Location, Isolation, and Service Restoration) technology, which locates faults on the distribution system.

Smart meters are another key example of a product that is often included in a smart grid. These meters boost efficiency and lower costs by allowing for two-way communication between a utility company and its customers. Historically, meters have only allowed utilities to see how much energy a customer has used over any given time frame. With a smart meter, customers can see how much electricity they are using on a real-time basis instead of having to wait until the end of the month. As a result, customers may opt to reduce electricity use during peak periods when it is more expensive. By voluntarily reducing their electricity demand, customers save money and put less pressure on the central power grid, relieving the utility of having to invest in additional power substations. By the end of 2012, smart meters covered one third of the country, with installations expected to expand by more than 50 percent next year. 

New Jersey and the smart grid

A smart grid would have been particularly helpful during Hurricane Sandy, which knocked out power for a third of homes and businesses in New Jersey for days, weeks, and in some cases, months. Smart meters and FLISR technology help utility companies identify power outages immediately. Smart meters send out a ‘last gasp’ call, which utilities use to identify both the location and extent of the outage, leading to better planning and quicker response times. For example, the utility Pepco, which operates in Maryland and Washington D.C., used its smart meters to identify power outages, helping to restore power for 95 percent of customers within 48 hours.

New Jersey, like most states, is making progress in implementing some types of smart grid technology but not others. Public Service Electric & Gas, the state’s largest utility, recently got the green light from regulators as part of its Energy Strong settlement to begin upgrading its system with FLISR technology, and a distribution management system that would improve electricity data transfer. However, the utility has had to put plans to install smart meters on hold in parts of its service territory as regulators evaluate the costs and effectiveness of the technology.  

To improve resiliency, New Jersey should continue investing in smart grid technologies that will help the state more effectively respond to natural disasters, while at the same time supporting a cleaner, more interactive electricity grid. Only through these improvements can the ‘largest machine’ become a more efficient one as well.

 

Resiliency+ is a blog series, which highlights the ways in which different clean energy resources and technologies can play an important part in increasing energy resiliency in New Jersey and around the country. Check back every two weeks, or sign up to receive Energy Exchange blog posts via email.

By Michael Panfil

Source: BranderGuard Flickr

Late last week, the D.C. Circuit Court of Appeals affirmed an important Federal Energy Regulatory Commission (FERC) Order, giving the agency a big win and aiding in the promise of a cleaner, smarter, and more efficient power grid.

By upholding FERC’s Order 1000, the court confirmed what many think is common sense: Because the power grid crosses state and utility boundaries, a coordinated planning approach to electricity transmission (that is, moving electricity from one place to another) is more efficient and cost effective than multiple entities planning in isolation.

Order 1000 opens the door for two big electrical grid improvements. First, the order helps spur a more efficient planning process, meaning less waste and better coordination in our energy system. Second, the order allows greater opportunity for clean energy resources like demand response, energy efficiency, and renewables. It does this, in large part, by ensuring that state policies like renewable portfolio standards are taken into account. Relying on more clean energy resources will improve air quality and the health of millions of Americans now harmed by dangerous air pollution while advancing our country’s energy independence and economic growth.

Unlocking efficiency through better planning

The power grid does not end neatly at state borders or within utility service areas. Rather, electricity is transported regionally, and the country’s grid is interconnected via long-distance transmission. This interconnected grid deserves an interconnected planning process. FERC Order 1000 does exactly this by requiring grid operators to coordinate and cooperate in determining whether, how, and what type of transmission is needed to deliver safe, affordable, and reliable electricity.

This regional approach to planning is especially important in areas that don’t have an Independent System Operator (ISO) or Regional Transmission Organization (RTO), like the Southeast and much of the West. Ensuring that grid planning is done at a regional level, rather than state or utility level, could result in a more cost-effective and efficient design.

Spurring clean energy solutions

The order also has big implications for clean energy resources, because it gives them a fair opportunity to be used when they’re able to provide power. By requiring regional transmission planning that incorporates state policies, clean energy resources that might not have been considered or planned for will have the opportunity to provide cost-effective electricity to power the grid. The court’s decision makes this clear:

The Commission expects that many States will require construction of new transmission infrastructure to integrate sources of renewable energy, such as wind farms, into the grid and that new federal environmental regulations will shape utilities’ decisions about when to retire old coal-based generators. Plans that fail to account for such laws and regulations, the Commission reasoned, would not adequately reflect future needs.”

Because FERC Order 1000 requires state policies like renewable portfolio standards be considered in planning, it helps ensure the transmission for clean energy resources will exist. Likewise, by including clean energy resources like demand response and energy efficiency in planning decisions, costly transmission won’t be built unless it’s actually needed.

The court’s decision was a big win for FERC, for a common-sense, efficient approach to grid planning, and for cleaner air and safer climate.