FERC vs NERC: A grid control showdown over cyber security

TRANSMISSIONS
WWW.INTELLIGENTUTILITY.COM /// JULY/AUGUST 2011
6
Vol 3, issue 3 » mAy/June 2011
Letters from readers
smARt sm smARt t gRiD gR gRiD iD
2020
©
Industry experts weigh
in on critical trends
tRAnsmission
inteRconnection
two new developments
putting the brakes on buildout
eneRgy eFFiciency impAct
How DR + ee is more than
the sum of their parts
where smart grid meets business—and reality.
cis/mDm
utility barriers still exist
» www.intelligentutility.com
Grid modernization
monetization
March/April 2011
Thank you for the interesting article
on ROCs. I had not previously heard
of this sort of financial instrument,
although it sounds a lot like a municipal
revenue bond. Those instruments
are tax-free and are low risk because
of the dedication of project revenues
to repay the debt. I like the long-term,
stable source of capital that an ROC
represents so that the payment stream
can be more stable.
I am curious about a few things.
Firstly, long-term finance and amortization
is common in the utility sector,
but with smart grid assets the steep
technology curve dictates much shorter
amortization periods like 10 years instead
of the typical 30. If the underlying
assets become no longer useful before
the debt is repaid, how is the remaining
balance paid? In utility ratemaking,
utilities can only have assets that are
used and useful in rate base.
I understand from a credit standpoint
why the instrument’s marketability
and lower interest rate is tied to
the dedicated charge on consumers’
bills along with a true-up mechanism
and assurance from regulators that
the deal will be honored over the term
of the loan. However, this very issue
of providing assured cost recovery, or
prudence, is a major issue for regulators
as evidenced best in the initial
order last June from the Maryland
Commission re: denying BG&E cost
recovery for its AMI project.
I am intrigued by the ROC, but
wonder what thought has been given
to satisfying or assuring regulators
relative to performance, ratepayer
benefit that would convince a PUC to
provide the sort of iron-clad support
contemplated in an ROC? Have any
ROCs been placed at this point that
would be instructive along these lines?
David O’Brien
Director Regulatory Strategy
Bridge Energy Group
Changing the
dispatch equation
March/April 2011
We continue to look at our mounting
problems through the lens that we
have used since the grid was created.
“We need to bring more data into
the equation and find a way for
dispatchers to manage it,” the gist of
this article, is based on a top-down,
center-based control paradigm. We
need much more data, that is certainly
true, but more data will overwhelm
our current system. Consider how
the Internet manages complexity and
massive amounts of data. The communication
protocols of the Internet
(TCP/IP, etc.) enable massive amounts
of data to self-route. They provide
an appropriate network architecture
to manage complexity and, in so
doing, unleash tremendous potential
for innovation and, importantly for
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