🔒Sweeping power grid modernization plan hits 2-year mark, with small business interests a top priority

Almost two years after unveiling a sweeping initiative aimed at improving and re-imagining Connecticut’s power grid, regulatory officials say they’ve made considerable strides, pointing to new programs, increased engagement with ratepayers and an apparent new willingness to shake up the state’s regulatory culture itself in the interest of spurring innovation.

The Equitable Modern Grid Initiative, announced by the Public Utilities Regulatory Authority in Oct. 2019, encompasses 11 areas of focus, or “tracks,” centering on some of the most contentious issues now facing Connecticut’s utilities and their overseers, including energy reliability and affordability.

To date, PURA has issued final decisions in three of those 11 tracks, including the establishment of a new energy storage program, and released straw proposals in an additional three.

Other grid-modernization initiatives include investments in electric vehicles, the broader rollout of smart meters, and plans to study the state’s regulatory environment, power purchase agreements and more resilient technological alternatives to traditional energy infrastructure, namely poles and wires.

And regulators acknowledge this is just the beginning, as the programs launched from the grid modernization plan will continue for years to come.

“I think that we’ve been making remarkable progress on the initiative, especially in light of the challenges that the state’s seen in the past two years, between the pandemic and [Tropical Storm Isaias],” said PURA Chair Marissa P. Gillett. “There was certainly the chance that the progress could have been derailed and I think, if anything, we’ve pushed forward beyond the timelines that stakeholders expected.”

Throughout the process, PURA has paid particularly close attention to the interests and needs of small businesses, many of which have been hit hard by the COVID-19 pandemic.

In June, the agency ordered Eversource Energy to develop an optional tariff rate for small business customers aimed at controlling their energy costs, a move applauded by the state’s business interest groups, including the Connecticut Business & Industry Association.

“We want to make sure affordability is front and center in every program that comes out of the grid [modernization] umbrella,” Gillett said. “We have ratepayers who are stretched thin already. So we’re making sure we’re really thoughtful about the way we structure these programs so that we’re not leaving out low- and moderate-income customers, that we’re not leaving out small business customers, that we’re not crowding out expansion opportunities for industrial customers.”

Joshua Ryor, director of the Office of Utility Programs and Initiatives at PURA, drew a direct link between affordability and the state’s ability to attract new investment.

As an example, Ryor said, when a low-income electricity customer can’t afford their bill, and doesn’t pay it, the utilities eventually recoup that cost from other users. It makes more sense to charge something a low-income customer can actually afford to prevent costs from being spread out over the broader customer base, he noted, and a similar principle applies to commercial growth.

“We hear a lot about the Lamont administration trying to attract businesses to Connecticut,” Ryor said. “We’re trying to help there and saying, if you actually attract more [energy customers] to Connecticut, that means that those expenses are spread out over more people. So the question becomes — how do we address that in a thoughtful way that attracts businesses, but also leverages the benefits there to lower everybody else’s rates.”

Companies looking to expand into or possibly relocate their operations to Connecticut also need to see that the state has a handle on broader affordability and reliability questions, Gillett said.

“All that private investment needs those long-term price signals,” she said. “The programs that we’re setting up are making sure that folks aren’t coming here, throwing down a one-time investment and going back to their home states.”

Cost concerns

Connecticut has the highest energy rates in the continental U.S., a fact utility companies have partially attributed to the state’s investment in green energy. And there are concerns that as the state pivots even further in the direction of renewable resources, prices will continue to go up.

CBIA lobbyist John Blair said those worries extend to certain aspects of the state’s grid modernization efforts.

“We’re supportive of all the ideas, but our main concern is the cost,” Blair said. “Yes, this is good stuff for the state, but we have to do it in a way that’s reasonable and where there’s some reliability and predictability in terms of price.”

Continued high costs will only make it harder for small businesses to get back on a solid footing, he added.

“It becomes difficult if we’re going green at a price small businesses can’t afford,” Blair said.

Gillett acknowledged there is some truth to the connection between high energy prices and the state’s embrace of green energy goals and said one of the grid modernization tracks was set up specifically to study whether the state is capturing the full benefits of the clean power purchase agreements it’s entered into.

“We’re making sure that the money that’s being put in is delivering the return on investment,” she said.

Fully realizing the benefits of renewables, she added, will require changes in the way electric distribution companies approach long-standing obstacles.

“I always fall back to the example of vegetation management, which is a hot-button issue in this state,” Gillett said. “Do we want to put $400 million into trimming trees that have to be trimmed every four years, or do we want to split those funds into a combination of strategic undergrounding, [improved power distribution technology], things like that? We use some [of the money] on vegetation management, but you’ve also put money into something that has a longer life with undergrounding.”

Nimbler approach

Several tracks within PURA’s grid modernization effort focus on, or at least touch on, ways in which the grid, and the regulatory environment surrounding it, can be made more responsive to customers’ needs.

This includes greater adoption of power storage devices, allowing customers to continue to run some parts of their household or businesses when storms knock down power lines, and possibly the development of microgrids, which could power private companies such as grocery stores and gas stations independently, at least for a time.

“Through all these different programs we’re standing up, we’re trying to send signals to customers,” Gillett said. “Deploy storage. Deploy storage plus solar. And we’re trying to send the same signals to the utilities about shoring up different parts of their grid.”

The mission has required nimbler thinking and a willingness to move, as Connecticut Green Bank CEO Bryan Garcia put it, “at the speed of business.”

The Green Bank is administering the grid modernization plan’s battery storage program, and will have a hand in other tracks as well. Garcia said the program is impressive in its scale — it aims to have no less than 40% of vulnerable communities participate — and much needed if regulators are to tackle the problems confronting customers.

He gave particular credit to the agency for working to involve ratepayers, businesses, advocacy groups and other parties that might have been overlooked in proceedings years ago.

“PURA has created a space for stakeholders to engage and come to the table,” Garcia said.

Gillett, who previously served in Maryland’s equivalent of PURA, is cognizant of the cultural shift she’s overseen, which includes efforts to break down the image of regulatory agencies as “black boxes” little understood by the broader public.

PURA officials acknowledged their efforts will at times run up against the utilities’ established way of doing business, and regulators will sometimes have to work around those issues when they don’t fall directly within their purview.

“It’s an industry that has a lot of inertia,” Gillett said. “Even where things have long existed as strategies. Undergrounding [or burying power lines below the ground] has been a strategy for decades at this point, and yet in Connecticut we don’t mandate new developments be underground.”

Still, regulators have been heartened by the broader interest in their work since Tropical Storm Isaias hit the state in Aug. 2020, and by the attendant rise in public participation at meetings.

“It’s only possible to have the best outcome for ratepayers if we have as many people involved giving us good ideas and helping us refine those ideas,” Ryor said. “So everyone benefits from greater participation throughout all of our processes.”