Revision: Jan. 20, 2023, 9:25 a.m.
SB 166-FN - AS INTRODUCED
2023 SESSION
23-1047
10/05
SENATE BILL 166-FN
AN ACT relative to electric grid modernization.
SPONSORS: Sen. Watters, Dist 4; Sen. Perkins Kwoka, Dist 21; Sen. D'Allesandro, Dist 20; Sen. Fenton, Dist 10; Sen. Avard, Dist 12; Sen. Rosenwald, Dist 13; Sen. Altschiller, Dist 24; Sen. Chandley, Dist 11; Sen. Soucy, Dist 18; Rep. McWilliams, Merr. 30; Rep. McGhee, Hills. 35
COMMITTEE: Energy and Natural Resources
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ANALYSIS
This bill allows the department of energy and the public utilities commission to implement the use of distributed energy resources, transactive energy, enhanced demand response, and distributed generation and storage for grid modernization for New Hampshire.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
23-1047
10/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Three
AN ACT relative to electric grid modernization.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Findings. The general court finds:
I. Recent record increases in the cost of electricity supply have created hardships and excessive burdens for many New Hampshire residents and businesses.
II. Many of the causes of this huge price spike are out of New Hampshire’s control, such as the internationalization of markets for liquified natural gas (LNG), which often serves as the marginal fuel for making electricity in New England during winter months when demand is the highest, resulting in the sharp run-up in the cost of electricity in the ISO New England wholesale electricity market.
III. New Hampshire can protect against such prices spikes and achieve lower costs and greater price stability for electricity while enabling greater local control, resiliency, and sustainability of our energy system and local economies.
IV. The July 2022 New Hampshire 10-Year State Energy Strategy adopted by the department of energy recommends that “New Hampshire policymakers should pursue market-based mechanisms for achieving cost effective energy, while avoiding preferential quotas and mandates” and that “New Hampshire should seek to foster an environment where new and emerging technologies can flourish by the value they may bring to the market.” Among the goals of the strategy are “Goal 7: Encourage market-selection of cost-effective energy resources” and “Goal 8: Generate in-state economic activity without reliance on permanent long term subsidization of energy.”
V. There are substantial opportunities for developing new cost-effective distributed energy resources (DERs), consisting of enhanced demand response (DR), distributed generation and storage (DG and DS) that are connected to the distribution grid that can help reduce and stabilize costs for electric ratepayers. DG and DS are those facilities with less than 5 MW in rated interconnection and are not participating in ISO New England interstate wholesale electricity markets.
VI. There are substantial barriers to the timely integration of such DERs, including lack of access to appropriate price signals and outdated interconnection standards.
VII. On August 28, 2022, the Federal Energy Regulatory Commission (FERC) issued an Order Accepting Tariff Revisions re ISO New England, Inc. et al. under ER 22-2226 that makes clear that DG and DS interconnections to the distribution grid under 5 MW that are not ISO-New England market participants are purely state jurisdictional matters. That is reaffirmed in 2022, 328:2, that “it is in the public interest to stimulate the deployment of DERs in New Hampshire and eliminate unreasonable barriers thereto.” New Hampshire can ensure distribution utilities do not impose interconnection requirements that are not expressed in their tariffs or in public utilities commission rules.
VIII. In 1996 the general court enacted RSA 374-F restructuring the electric utility industry in New Hampshire and stipulated, as part of the purpose statement, that “[i]ncreased customer choice and the development of competitive markets for wholesale and retail electricity services are key elements in a restructured industry” and that “[c]ompetitive markets should provide electricity suppliers with incentives to operate efficiently and cleanly, open markets for new and improved technologies, provide electricity buyers and sellers with appropriate price signals, and improve public confidence in the electric utility industry.”
IX. While a fairly robust competitive market for the bulk supply of electricity in the regional interstate wholesale market administered by ISO New England has developed over the last 26 years, where bulk generators participate in a day-ahead market priced at hourly intervals and in a real time electricity market where supply is settled at 5 minute intervals. Very little retail load (demand) or DERs are able to respond to such price signals. Therefore, the market for retail electricity services and DERs has failed to develop to provide appropriate price signals and choice to suppliers and retail customers.
X. The value of distributed energy resources study recently completed for the department of energy found that a substantial part of the value that DERs provide is “time-dependent, varying hour by hour,” and that the “value that a net-metered DER can generate depends on the coincidence of its energy production/load reduction with the hourly avoided cost value stacks.”
XI. ISO New England has aligned its operating procedures and the New England Open Access Transmission Tariff (OATT) so that DERs that do not participate in FERC jurisdictional interstate wholesale markets are treated as load-reducers for purposes of energy market charges and transmission cost allocations. Therefore, DERs producing at the hour of system coincident peaks can reduce the allocation of forward capacity market and transmission costs.
XII. In 2008 the public utilities commission in Order No. 24,819 found “that as a general policy matter it is appropriate to implement some form of smart metering and time-based rates as set forth in the federal standard” regarding “time-based metering and communication (also call ‘smart metering’ and ‘advanced meter infrastructure’ or ‘AMI’),” “which enable such customers to participate in time-based pricing rate schedules and other demand response programs” as set forth under Section 1252 of the Energy Policy Act of 2005 amending the Public Utility Regulator Policies Act. Despite this order, most New Hampshire retail electric customers do not have access to such interval metering.
XIII. Optimal market price formation and economic efficiency occurs best when both supply and demand can respond to the same price signal, and this can promote market and customer choice in New Hampshire.
XIV. Rates should reflect marginal costs in a way that resembles how marginal costs are reflected in competitive markets. New Hampshire beneficiaries of the system, primarily end users, should pay rates based on cost causation, and avoided costs should be appropriately attributed to the resources or actions that cause them.
XV. New England has experienced declining load factors or asset utilization rates in the past resulting in fixed costs for generation, transmission, and distribution capacity being spread over relatively fewer kilowatt hours, resulting in higher electric rates than would otherwise be the case with higher load factors.
XVI. New Hampshire DERs that are able to respond to the same temporal price signals as bulk generation, as well as the marginal cost price signals for avoided transmission costs by reducing coincident peak demands and receive credit for such avoided costs as load reducers, can help shave the peaks and fill the valleys of electric load. This will result in higher load factors lower the requirements for and cost of new generation and transmission capacity per kilowatt hour of retail load. In 2019 the public utilities commission observed that “Increasing usage without increasing peak demand, (improving the system load factor) has the potential to result in lower rates for both program participants and nonprogram participants.” (Order No 26,322 at 12.)
XVII. In July 2015, the public utilities commission opened an investigation into modernization of New Hampshire’s electric grid pursuant to direction from 2015, 219:1, which culminated in Order No. 26,358 in May 2020 after “several years of extensive contributions by, and consensus building among, a broad array of stakeholders led by Commission Staff.” In its “Guidance on Utility Distribution System Planning And Order Requiring Continued Investigation” the Commission provided guidance on numerous issues in grid modernization and called for creation of a grid modernization stakeholder group to help inform grid modernization planning with the support of an independent distribution system engineer under the direction of staff and directed additional investigatory steps. In Order No. 26,575 in February 2022 the public utilities commission closed its investigation and canceled certain previous decisions, including direction to create a grid modernization stakeholder group in response to a motion for clarification and rehearing of Order No. 26,358 and an objection to the motion. By addressing the objection, New Hampshire can move forward on grid modernization in partnership with the utilities.
XVIII. Promoting transactive energy in the distribution system by engaging retail customer choice and DERs in an intrastate wholesale and retail electricity market, tied to the ISO New England regional interstate market, will provide a key policy framework for advancing grid modernization and economic efficiency. It will harness the power of competitive markets to enable retail load and DERs to respond to temporal market price signals and to regulate marginal cost price signals for transmission and distribution services. Transactive energy is the distributed economic and control techniques used to manage the flow or exchange of energy within an existing electric power system regarding economic and market based standard values of energy.
XIX. The definition of transactive energy developed by the United States Department of Energy’s Gridwise Architecture Council and adopted by the National Institute of Standards and Technology (NIST) is: “a system of economic and control mechanisms that allows the dynamic balance of supply and demand across the entire electrical infrastructure using value as a key operational parameter. This provides a framework for continuing to implement electric utility restructuring in New Hampshire.
2 New Section; Department of Energy; Grid Modernization Advisory Group. Amend RSA 12-P by inserting after section 15 the following new section:
12-P:16 Grid Modernization Advisory Group.
I. The department of energy shall establish and support a grid modernization advisory group (GMAG) consisting of the following voting members:
(a) A staff member of the department of energy, appointed by the commissioner.
(b) The consumer advocate.
(c) A consultant for technical support concerning distribution systems to support department of energy staff, the consumer advocate, and the GMAG.
(d) Representatives of each of the electric distribution utilities regulated by the public utilities commission and the New Hampshire Electric Cooperative, appointed by these entities.
(e) Three representatives of distributed energy providers, appointed by the commissioner, including at least one with experience interconnecting distributed generation and one with experience interconnecting distributed storage.
(f) A representative of the Community Power Coalition of New Hampshire, appointed by that organization.
(g) A representative of a not-for-profit organization representing clean energy, environmental, or consumer issues appointed by the commissioner.
II. The grid modernization advisory group shall consider and advise the department, the distribution utilities, and the commission on emerging issues for grid modernization as defined in RSA 374-F:2, including but not limited to plans to deploy advanced meter infrastructure (AMI), if they are not already in process of doing so, and the required capabilities to measure and report load for settlement at the same 5-minute interval that generation is settled at in ISO-New England.
III. A quorum shall be a majority of filled positions.
IV. The grid modernization advisory group shall report annually on November 1 on its meetings and any recommendations for legislation, rules, and practices, to the governor, senate president, speaker of the house of representatives, chair of the house and senate committees with jurisdiction over utilities, and the chair of the public utilities commission.
3 New Paragraphs; Electric Utilities; Definitions Added. Amend RSA 374-F:2 by inserting after paragraph V the following new paragraphs:
VI. "Demand response" means a reduction in the use of electricity by retail electricity energy customers in response to power grid needs, economic signals from their electricity supplier based on wholesale market prices, or time varying rates.
VII. "Distributed energy resources" or "DER" means demand response, distributed generation, and distributed storage.
VIII. "Distributed generation" or "DG" means a customer-generator as defined in RSA 362-A:1-a, II-b or a limited producer as defined in RSA 362-A:1-a, III, excluding qualifying storage systems and grid-interactive electric vehicles.
IX. "Distributed storage" or "DS" means qualifying storage systems as defined in RSA 362-A:1-a, IX-a, grid-integrated electric vehicles when they are interconnected to a New Hampshire jurisdictional distribution grid behind a retail electric meter, or energy storage as defined in RSA 374-H:1, III, that are not participating in any wholesale energy markets administered by ISO New England as a registered asset or otherwise.
X. "Grid-integrated electric vehicle" or "GIEV" means a battery-run motor vehicle that has the ability for 2-way power flow between the vehicle and the electric grid and the communications hardware and software that allow for the external control of battery charging and discharging by the electric utility customer, an electric distribution company, an electricity supplier, or an aggregator.
XI. "Grid modernization" means improvements to electric distribution or transmission infrastructure, including related data analytics equipment, that are designed to accommodate or facilitate the integration of renewable electric generation resources with the electric distribution grid or to otherwise enhance electric distribution or transmission grid reliability, grid security, demand response capability, customer service or energy efficiency, or conservation and includes:
(1) Advanced metering infrastructure that facilitates metering and providing related price signals to users to incentivize shifting demand and support transactive energy;
(2) Intelligent grid devices for real time system and asset information at key substations and customer locations;
(3) Automated control systems for electric distribution circuits and substations;
(4) Communications networks for service meters;
(5) Distribution system hardening projects for circuits and substations designed to reduce service outages or service restoration times;
(6) Physical security measures at key distribution substations;
(7) Cybersecurity measures;
(8) Energy storage systems and microgrids that support circuit-level grid stability, power quality, reliability or resiliency or provide temporary backup energy supply;
(9) Electrical facilities and infrastructure necessary to support electric vehicle charging systems;
(10) New customer information platforms designed to provide improved customer access, greater service options and expanded access to energy usage information;
(11) Updating interconnection standards and procedures for state jurisdictional DG and DS connection to the distribution grid consistent with New Hampshire’s energy policy in RSA 378:37 that reasonably balances reliability and safety risks with costs and benefits; and
(12) Other new technologies that may be developed regarding the electric grid.
XII. "Transactive energy" or "TE" means a system of economic and control mechanisms that allows the dynamic balance of supply and demand across the entire electrical infrastructure using value as a key operational parameter.
4 Electric Utilities; Principles; Interconnection Requirements. Amend RSA 374-F:3, IV to read as follows:
IV. Open Access to Transmission and Distribution Facilities. Non-discriminatory open access to the electric system for wholesale and retail transactions should be promoted. The commission and the department should monitor companies providing transmission or distribution services and take necessary measures to ensure that no supplier has an unfair advantage in offering and pricing such services. Interconnection requirements and procedures to enable distributed generation and distributed storage to have access to the grid and access to temporal price signals should be consistent with New Hampshire energy policy under RSA 378:37.
5 Electric Utilities; Principles; Competition. Amend RSA 374-F:3, VII to read as follows:
VII. Full and Fair Competition. Choice for retail customers cannot exist without a range of viable suppliers. The rules that govern market activity should apply to all buyers and sellers in a fair and consistent manner in order to ensure a fully competitive market. A fully competitive market with appropriate price signals shall incorporate transactive energy at the distribution system level, with customer and distributed energy resources access to temporal price signals.
6 New Paragraph; Electric Utilities; Implementation; Distributed Generation or Storage. Amend RSA 374-F:4 by inserting after paragraph XII the following new paragraph:
XIII The commission may approve tariff revisions that enable an entity that pays for interconnection costs for distributed generation or distributed storage to recoup a reasonable portion of those costs from entities that interconnect future distributed generation or storage to the distribution grid to the extent that such subsequent interconnection is enabled by the investment or costs incurred by the prior entity or entities that interconnect.
7 Limited Electrical Energy Producers Act; Definition; Customer-generator. Amend RSA 362-A:1-a, II-b to read as follows:
II-b. "Eligible customer-generator" or "customer-generator" means an electric utility customer who owns, operates, or purchases power from an electrical generating facility either powered by renewable energy or which employs a heat led combined heat and power system, with a total peak generating capacity of up to and including one megawatt, except as provided for a municipal host as defined in paragraph II-c, that is located behind a retail meter on the customer's premises, is interconnected and operates in parallel with the electric grid, and is used to offset the customer's own electricity requirements. Incremental generation added to an existing generation facility, that does not itself qualify for net metering, shall qualify if such incremental generation meets the qualifications of this paragraph and is metered separately from the nonqualifying facility. The term “customer-generator” shall include retail electric utility customers who own, operate, or purchases power from a qualifying storage system connected behind a retail meter with a total rated capacity to export to the distribution, including any generation, of up to and including one megawatt. The maximum rated capacity may be achieved by temporally and electronically limiting the output of any storage device so that it does not export to the grid more than one megawatt when combined with any generation behind the same retail meter.
8 Limited Electrical Energy Producers Act; Definition; Qualifying Storage System. Amend RSA 362-A:1-a, IX-a to read as follows:
IX-a. "Qualifying storage system" means an electric energy storage system as defined in RSA 72:84 or a grid-integrated electric vehicle as defined in RSA 374-F:2.
9 Limited Electrical Energy Producers Act; Pilot Programs. Amend RSA 362-A:2-b, IV to read as follows:
IV. Pilot projects shall be subject to the following limits:
(a) Projects for utilities serving less than ¼ of the total load in New Hampshire shall be limited to [2 megawatts in size] 5 megawatts in overall size. Projects for utilities serving more than ¼ of the total load in New Hampshire shall be limited to 10 megawatts in overall size.
(b) No more than one pilot shall be permitted for any utility.
(c) Pilot projects shall end no later than 10 years from their initiation.
(d) Each pilot project shall deliver a study [3] 2 years after project initiation to report to the commission on the consumer benefits of the project.
10 Limited Electrical Energy Producers Act; Pilot Programs; Grid Modernization. Amend RSA 362-A:2-b, VII to read as follows:
VII. Each electric distribution utility [may] shall propose and participate in [a pilot] one or more pilots, in conjunction with a competitive electric power supplier or municipal or county aggregation, pursuant to RSA 53-E, operating as or in conjunction with a load-serving entity. The commission may approve provisions to cover incremental costs of the utility related to any such approved pilot. The public utilities commission shall require each utility to participate in a pilot for transactive energy and distributed energy resources, and the associated advanced metering infrastructure, as components of grid modernization following successful resolution of jurisdictional conflicts under paragraph III and increase the allowed size of pilots to 5 MW for utilities serving less than 20 percent of New Hampshire load and up to 10 MW for any utility serving more than 50 percent of New Hampshire load.
11 Purchase of Output of Limited Electrical Energy Producers by Public Utilities. Amend 362-A:3, I to read as follows:
I. The entire output of electric energy of such limited electrical energy producers, including output from grid integrated electric vehicles as defined in RSA 374-F:2, if offered for sale to the electric utility, shall be purchased by the electric public utility which serves the franchise area in which the installations of such producers are located.
12 Customer Energy Storage; Definitions. Amend RSA 374-H:1, XI to read as follows:
XI. "Wholesale electricity markets" means any energy, capacity, or ancillary service market that ISO-New England operates or may operate pursuant to RSA 362-A:2-a or RSA 362-A:2-b.
13 Customer Energy Storage Systems; Tariffs. Amend the introductory paragraph of RSA 374-H:2, I to read as follows:
I. The commission shall adopt rules or approve tariffs clarifying policy for the installation, interconnection, and use of energy storage systems by customers of utilities, and shall incorporate the following principles into the rules or approved tariffs:
14 Energy Policy Act Standards. Amend RSA 378:7-a, to read as follows:
378:7-a Energy Policy Act Standards. Consistent with their statutory authority, the commission and the department of energy may establish requirements, standards, and rate mechanisms for net metering, fuel diversity, fossil fuel generation efficiency, advanced metering, time-based rates, demand response practices, electric vehicle charging programs, and interconnection with on-site generation facilities of customers in a manner not inconsistent with section 111 of the Public Utility Regulatory Policies Act of 1978 (16 U.S.C. Chapter 46) as amended by the Energy Policy Act of 2005 and 16 U.S.C. section 2621 (20) and (21).
15 Office of the Consumer Advocate. Amend RSA 363:28, III to read as follows:
III.(a) The consumer advocate shall have authority to contract for outside consultants within the limits of funds available to the office. With the approval of the fiscal committee of the general court and the governor and council, the office of the consumer advocate may employ experts to assist it in proceedings before the public utilities commission, and may pay them reasonable compensation. The department of energy shall charge a special assessment for any such amounts against any utility participating in such proceedings and shall provide for the timely recovery of such amounts for the affected utility.
(b) The consumer advocate shall contract a consultant for technical support concerning distribution systems to support the office of the consumer advocate, the department of energy staff, and the grid modernization advisory group, in work on transactive energy and grid modernization. The department of energy shall charge a special assessment for any such amounts for this consultant against any utility participating in the grid modernization advisory group and shall provide for the timely recovery of such amounts for the affected utility.
16 Effective Date. This act shall take effect 60 days after its passage.
23-1047
1/17/23
SB 166-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to electric grid modernization.
FISCAL IMPACT:
Due to time constraints, the Office of Legislative Budget Assistant is unable to provide a fiscal note for this bill, as introduced, at this time. When completed, the fiscal note will be forwarded to the Senate Clerk's Office.
AGENCIES CONTACTED:
Department of Energy, Public Utilities Commission and Office of the Consumer Advocate