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April 20, 2014

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Q&A: Jon Willinghoff:

On a path to energy efficiency

FERC chairman preaches proactive management of electricity demand as precursor to smart grid

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Steve Marcus

Federal Energy Regulatory Commission Chairman Jon Wellinghoff served two terms as Nevada’s advocate for customers of public utilities.

When Federal Energy Regulatory Commission Chairman Jon Wellinghoff came to town this week to speak to thousands of energy experts and engineers from across the U.S., it marked his return to the state that made him what he is today.

Wellinghoff, an attorney and longtime proponent of renewable energy, served two terms as Nevada’s advocate for customers of public utilities.

While he was back in Las Vegas, Wellinghoff talked to the Sun about a sea change he says is coming for electric companies and their customers, a future in which customers will be able to sell power back to utility companies, which will be able to remotely adjust how much power those customers are using.

You talk frequently about how power companies need to be able to better manage the amount of electricity they have to provide at any given moment. Why?

Grid management is one of the most expensive things in the electric system. It’s why electricity gets so expensive in high-demand times, because the utility has to buy high-priced wholesale electricity at the highest-demand period. If it can manage demand better, it can save money.

You preach “demand management” as the key to better balancing electricity supply and demand and to opening up competition in the wholesale electricity markets, which ultimately should keep electric bills as low as possible. So, what is demand management?

Demand management allows consumers to reduce their use in small ways to provide grid operators the ability to easily balance the electricity load. With demand management systems on the consumer end linked to the power companies’ management system, the utility companies can control the demand instead of being forced to simply increase the amount of electricity they are supplying. Controlling the demand can be done in such a way that the building owner hardly notices the difference. The building is still comfortable and all the systems work, it’s just tweaked a little. Demand management makes the grid more efficient and saves money and reduces emissions on the generation side. We can make the amount of electricity required more flexible and make electricity customers full participants in the process.

How does this help the community?

These systems allow the building owner to help reduce demand when price is highest and to help with integration of wind and other flexible and unpredictable energy resources. The cheapest way to do this is to moderate the necessary supply of electricity, and that can be done in ways that won’t affect comfort or services.

Don’t we need a “smart grid” — a system that delivers electricity from suppliers to consumers using two-way digital technology to control appliances — before we can start incorporating demand management?

Not for the initial rollout with large commercial properties like resorts. Many commercial buildings already have the systems in place to do this. They already manage their temperature and electricity loads; all they need is software that overlays all those systems that hooks it into NV Energy’s load balance center so the two systems can talk to each other. This could have wider applications in society. If the entire Las Vegas Strip, every hotel and restaurant and casino, was connected to the load management center, that would make balancing the grid a lot easier.

Are there applications for the average person?

Sure. For example, electric cars. At the University of Delaware, they’ve converted six cars to all-electric vehicles. Those cars have to be plugged in for several hours to charge, just like any electric car. But they’ve included in this car a generator control system that can signal how much electricity goes into the battery at any given moment based on the needs of the grid. So it still charges over six hours, but it gets more charge at some points and less charge at others and even puts some electricity back into the grid at some points as the electric load on the grid changes. It allows the generator to match the amount of electricity going into that battery with the needs of the grid. These types of apparatuses, on a much larger scale, are what keeps the grid in Las Vegas operating. They manage how much electricity is flowing through the system at any given time to keep it from not having enough electricity and browning out or having too much and overloading. So these generator managers on the cars are just helping to manage the load on a very small scale. Eventually we’ll see these systems in appliances like refrigerators and washing machines and home thermostats. That’s where the smart grid comes in. For residential uses you’d need the smart grid to handle the constant ebb and flow of energy.

When will this become the new normal?

I expect to see this rolled out in three to five years, including residential.

Will appliance manufacturers do this on their own? Is there any incentive for them to include this technology in products?

It makes sense to do these things because it makes economic sense. Then we’ll see major appliance manufacturers will start incorporating this technology into their products. They’re already working on that. They know it’s a market advantage for the product. They know people are going to want this.

Why would people want this? Aren’t they just handing control of their appliances over to the grid manager?

To a certain extent, yes, they’re choosing to participate in a program that gives some control to the grid manager. But they’re getting paid for it. That’s important. Customers getting to participate and getting paid for participating is a key to this. We want to make sure that if you’re putting electricity into the system as part of this demand management program, you get paid the same amount as a generator. It will all come competitively and the more we open up competition, the better the market operates. And for the first time it gives customers the option to participate in that market.

What is the FERC doing to help make this all happen?

One key is we’ve proposed rules that require the energy companies to pay the same amount to a consumer who participates in demand-side management and puts energy on the grid as they would pay to a generator. The average person shouldn’t get the shaft — for this to work they have to be on equal ground.

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