National Guidelines Adopted for Distributed Generation

National guidelines for the implementation of distributed generation have been approved in the United States.

BOULDER, Colorado, US, 2001-08-03 [] National guidelines for the implementation of distributed generation have been approved in the United States. Regulators should unbundle and redesign distribution rates, eliminate penalties, redundant charges, barriers to entry, and implement tariffs that encourage investment in distributed generation, according to the recommendations contained in the report from the National Energy Marketers Association. Utilities must provide consumers that invest in distributed generation equal, non-discriminatory access to markets for power and auxiliary services, and federal and state governments must adopt uniform technical requirements and procedures for interconnection of distributed generation technology. Reasonable environmental regulations and wide-scale education are critical, and the group says utilities should only perform natural monopoly functions. “Our country is urgently in need of new generation investments, and it is in the public interest that customers be incented to make these investments as soon as practicable,” says NEM president Craig Goodman. “Distributed generation is the ultimate act of consumer energy independence–the cell phone of a restructured energy market,” he says. “Unfortunately, there are far too many penalties and barriers to small consumers who wish to invest in distributed generation.” “For the past 20 years, large industrial consumers have significantly lowered energy costs; now is the time for smaller consumers including homeowners and small businesses to have the same opportunities,” he says. “In order for consumers to invest in distributed or self generation, existing penalties must be eliminated and consumers must be able to sell excess energy and buy needed back-up services at reasonable rates. Regulators must implement these needed changes within utility rate structures at the earliest possible time.” “Decades-old regulations governing the supply, generation, transmission, storage, distribution, marketing and delivery of energy are being rethought and rewritten nationwide,” says the report. “After years of experience in numerous industries, lawmakers, policymakers and regulators throughout the country have recognized that price competition and customer choice can provide greater public benefits and consumer protection than traditional utility-style regulation.” “System capacity needs, transmission and distribution constraints, the desire for enhanced reliability, market power concerns, and consumers’ drive to exert greater influence over their energy destiny all point toward a growing need for distributed generation,” it continues. “Distributed generation cannot solve the problems in electricity markets, but distributed generation can contribute significantly to the solution over both the short and long term.” Although the focus of the report is on small-scale DG technologies such as reciprocating internal combustion engines, microturbines and fuel cells, it adds that “several renewable energy technologies also provide power on an intermittent basis and reduce the environmental impact of the system as a whole.” “The installation of distributed generation is the ultimate act of consumer energy independence, and the role of government in this process should be limited to that of a facilitator,” and the report says a comprehensive national energy policy must encourage new investment in DG technology. California, New York, Ohio and Texas have adopted interconnection standards, but these vary significantly even among these states, it explains. IEEE is developing a technical interconnection standard which, if applied uniformly across the U.S., would reduce the ‘transaction cost barrier’ and provide a significant economic benefit. Electric utilities treat each DG application as unique, in an approach that NEM calls “time consuming and anti-competitive,” and calls for a standard application form and process to reduce administrative costs for investors and utilities. Regulatory commissions must take a lead in adopting a standard application process, including the timeline for utility response to an application to install distributed generation, with penalties for non-performance. Emissions regulations must recognize the benefits of distributed generation including the contribution of generating with waste gas, and the contribution of combined heat and power applications. “Utility tariffs and operating practices and procedures should recognize that distributed generation could enhance the reliability and lower the costs of the distribution system,” it adds. “Historical utility practices for distribution planning result in inconsistent treatment of distributed generation. The traditional utility practice is to charge all incremental system costs to the distributed generation customer, but not to acknowledge any incremental system benefits.” NEM is a national trade association representing wholesale and retail energy marketers in the United States.

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