Latest / Not Another Energy Podcast / FERC 2222: So Close to Being a Solution
Transcript
- Bethany: Hello, hello, hello, and welcome to your new favorite show, not another energy podcast. I'm Bethany. Teresa: And I'm Teresa. Bethany: And together we are Bloom Advisory Partners. Thank you so much for joining us. You don't know this, but this is my first recording with my new microphone. Very excited about it. And I'm very excited to dig into this week's topic. So let's do it. When the grid is under stress, we most of us we only see the symptoms. Flickering service, emergency alerts, rising bills, and a system that suddenly seems very fragile. But there's a policy that was supposed to change that. One designed to let batteries, backup power, microgrids, and everyday energy users, aka residential, help stabilize the grid instead of just waiting for it to fail. It's called FERC Order 2222, or as a cool kids call it, I've been told, FERC 2x2. it promised a flexible, resilient, decentralized grid. So when the heat rises and demand spikes. Does this why does the system still act like the fix never arrived? And this is very timely because I was listening to one A this week, Teresa, and they did an episode about data centers. there was, of course, a ton of talk about how much energy data centers use and what are some solutions and how can we fix this and how can we help costs from get going down or help keep costs down, I should say. And not a single person on the show mentioned residential load. And how we could possibly use that. And I'm wondering, why is that? Teresa: I mean, it's because it hits residential customers and we tend to ignore their contribution to the grid ultimately. I I I think all of our listeners have heard us rage against the heat pump world, or the heat pump mafia, as I like to call them. Bethany: Mm-hmm. my god, that's what I'm gonna call them now forever. Teresa: Right, this concept of electrification has resulted in residential load being a large contributor to demand and stress on the grid. And for some reason, we like to talk about how high residential bills are, but we don't ever want to touch on the solutions. And FERC, I'm gonna say two by two, because I know you hate when I just keep repeating twos. I don't know why you don't like that number. I don't know what you have against the number two. Bethany: It just I lose track no, I'll tell you exactly what it was. I c I lose track midway through of how many twos I've said. That is the issue. So FERC two by two is i it's working for me. You could use whatever you want. But could could I ask you to step back for a minute and kind of maybe explain what the solutions were that FERC two by two brought to the table in terms of unlocking the power of residential users? Teresa: Yes, yes. So first I'm really happy that it's not Sesame Street trauma on the number two from your childhood. Bethany: It's no it's it's not. I just I'm just flaky sometimes and can't remember how many times I've said a number. Teresa: So FERC two by two was it came out I think we're on five years ago now. And the goal behind it was we have these large demand response programs through PJM or MISO or all these RTOs across the United States. And currently they're being used by commercial industrial customers. And at their core, it's hey, we need more or less load on our grid right now. And in return for you either ramping up or ramping down, we're going to pay you. The problem for residential customers was that the programs were never designed for the data that a residential customer receives from their meter. And what came out of that was FERC said, hey. There's a lot of load out there. Everybody's contributing to the rise and fall of our grid right now. You, PJM, MISO, California ISO, New York ISO, you guys now have a requirement that you need to develop the capabilities to allow residential customers to participate in these types of programs. Those entities then built out their programs. But it has sort of gotten snagged at the state level. So smart meters do have the data, but the utilities don't necessarily have the software, the capability, or in certain cases, the desire to share that data with the entities called curtailment service providers who would sell these types of services to residential customers and let the residential customer get paid to do it. It's not like that everywhere. New York has some pretty amazing programs. they do have programs that allow you as a residential customer can sign up with one of my favorites is Leap. I love those guys. They you sign up with them, they handle everything for you as a residential customer, and then you can control your thermostat, your battery, whatever you have on your home. California has very similar programs that theirs have been around for years. there's a huge company called Ohm Connect that actually grew out of that space back in our direct energy days. I don't know if you remember them. Direct was one of the first to invest in them. Yeah. Bethany: I do. I do. I do remember them. Teresa: So, but then you reach places like Michigan or Illinois, where it's become well, we don't we don't have the ability to share our data with somebody that's not a retail supplier. So we don't regulate these entities. How do we give them the data? How do we give them access to the data? And then it turns into how do I say this nicely? I feel like I'm always like bashing u r utility commissions right now. Bethany: No. Teresa: I know, I know, I know. The commissions need to open dockets with the sole purpose of implementing FERC two by two and not dockets that are this is a rate case and we're gonna negotiate in that access, or this is a procurement strategy case or an IRP. It needs to really be its own separate thing. And we also Need to get beyond the thing that I talk about all the time. Stop being afraid of letting residential customers access their data and give it to somebody else. This is utility data. You have more information out there about yourself that somebody can steal and use than your utility data. And yet, this is the one thing that we gatekeep to the point of actually. Bethany: Grid failure? Teresa: Yeah, I mean right? I mean the the 1A show that you listen to and it's a pretty good one if you guys want to listen to it, it it also included this thing that's Bethany: I'll link to it in the show notes. Teresa: yeah, it why are we fear-mongering residential customers right now? Your bills are high, there's nothing you can do about it. What a lie. What a frickin' lie. You can do something about it, right? Bethany: Yeah, well I would actually argue we are fear mongering. Yeah, we are fearmongering, but it's not it's not based on their bills being high, right? I mean I it is, it is. But they're pointing the finger everywhere else. I mean obviously hyperscalers, data centers, you know, these these are all the reasons that your bills are getting higher and then residential users feel like, Well, what am I gonna do about that? I can't do anything about that, right? Teresa: Exactly. so what are we gonna do? we'll do like this light utility program where I'll give you thirty-five dollars. Well how much is that program costing me? I got thirty-five dollars. And now I'm paying how much for that program when I could have gone with a great tailment service provider and gotten paid A more than that and B not had it keep showing up on my bill forever and ever because I'm paying for a program that is being run by a bloated utility that has all these other Yeah. Bethany: I was gonna say that's yeah, that's not even taking into account how much it's costing the utility to stand up that program and to keep it running and what that might also be, you know, playing into your higher bill too is again the blow the you know. Teresa: Yeah, and to be fair, that it to a utility, they're regulated. So a lot of their bloat is, hey, we now have to hire an independent consultant to review the program, to see the results of the program, so the commission staff can review the program and we gotta pay attorneys for that. So I'm not saying that th these programs are awful across the board or that utilities are responsible for bloat because they're just like gold plating things. They aren't, but there it are costs that come from only allowing the programs through the utilities and only letting the utilities access that data that don't exist when you just let the curtailment service providers and residential customers have a competitive market around it. And I It's not necessarily like, hey, me as a residential customer, I just got a hundred bucks. Isn't this cool? When you let residential customers reduce their peak transmission, which is a huge driver of costs right now across the US. Bethany: Mm-hmm. Teresa: Your transmission costs go down because your demand went down. So it it is a it is not just about me personally saving as a residential customer or getting money back. It helps the entire grid to bring it back to 1A. Why are we not talking about something that could have such a beneficial impact? Why is this ignored? Bethany: think and again, I'm not sure. I'll call Evan Helper from the Washington Post who is one of the one of the panelists and ask him, but maybe it's because they know enough about the industry to know it's just not viable right now. I mean they're I think they're in in the weeds enough that they know that, you know, it it just can't it just can't be done right now. It's so far from being scalable. Teresa: I I mean I I actually would disagree with that. The scalability of it is quite literally done. The the RTOs are ready. They've made their filing, Spark has approved their plans. It is solely about the states releasing the data. And I think some of that is some states wait for the utilities to show up and say do this instead of proactively taking that action. And if you're a utility right now and you want to control the all these programs, why would you ever show up and say, hey, let's talk about how to comply with FERC 2x2? Bethany: Okay, and just two questions on FERC two by two. So it's a rule, not a mandate, right? So there's no like you have to comply with it. Is that Teresa: It's a requirement for the RTOs to comply, but they can't tell the Bethany: Okay. Teresa: states to comply. Technically, I suppose some very savvy attorneys out there probably should get together and say, we have a federal requirement to comply with, and you're standing in the way of it as a state. Bethany: Okay, and then my second question was, is and FERC two by two then did say it was only through the RTOs, right? And that's why these kind of third parties can't come in and and start working on better solutions. Teresa: It they can at the RTO level, which is where they're registered. It does not go so far to tell the states you must release the data. Or you must register these curtailment service providers. It is a weird thing, which again is why it should be its own separate docket to work through those things with a goal towards let's comply and not necessarily, I don't know these people, I'm just gonna close the doors. Bethany: So then what is the pathway to success? I mean, is it just getting to the the states to agree to release the data? I mean what what in your mind would set some of these places that aren't doing as well as others up to succeed? Teresa: Yes, it's pretty simple. The states just have to release the data to the residential customers or set up a process where these curtailment service providers can directly pull the data from the utility, which is not a hard thing. Suppliers do it all the time. Brokers do it all the time. So it's just basically giving them access. But New York's a perfect blueprint of it. New York said, here's the data, it's all set up, here's how you access it, now go. And you have these providers everywhere in New York. You can sign up with them directly. Some of them actually do work directly with the utilities and run the utility programs. So it's not an impossible task. It's just the will to actually issue the order and do it. Bethany: Well and in the meantime, what are some of the real world ramifications of this, of these of these things not happening? Teresa: So you're absolutely seeing it t today. Residential load this summer during the heat wheat wave, we actually saw parts of the grid go down. And it some I know everybody wanted to blame the data centers, but if you actually look, the data centers were like, whoop, we're out of here. They pulled themselves off and you still had a problem. Bethany: Yeah. Teresa: So if data centers are off and commercial industrials were already off, why did you still have stress on the grid? Residential load. That's the first thing. The second thing is we're seeing winter peaks now, and NURC has pointed to this. It's heat pumps. They are a huge draw on the grid at cold temperatures, and they have created winter peaks that are not re related to data centers or commercial industrial load. So the result is we're now seeing outages in winter. Are that are not related to blizzards or massive weather events like wind, but actually just related to the fact that it was cold. Bethany: And I I think dual peaking is becoming a problem just, you know, climate change too, right? I we've talked about like tech places like Texas and Urquot that are getting they are actually getting winter peaks now where, you know, ten, fifteen years ago they might not have had them. Teresa: And y you also have this electrification movement that is tied to climate change. So it's a double-edged sword sometimes. If we want to electrify everything, we also have to pay attention to all of the solutions that help the grid support that. And if you're only focusing on electrification because you're trying to decarbonize your grid and what you're using, that's great. But now because you went to an all-electric heat pump, you're stressing the very thing that you're trying to resolve. So I'm not saying everybody move back to natural gas. I'm saying open the doors to residential, not only supporting the grid and taking part in their responsibility for the grid, but at the end of the day it would actually lower the cost for everybody too. Bethany: Yeah, and and residential customers are the one bearing the brunt. They're the ones getting the higher prices. They're the one dealing with outages. I know over the the early July heat wave, you were fielding questions from friends of yours that had their power out for days, right? Teresa: Yeah, this is my my rage moment again. I was very angry of so Lakewood, Ohio had a a days-long outage. My daughter lives in Lakewood. love that girl, but she called me, she was she had some elderly people in her building and she was like, My mom knows energy, she can fix this. And I I couldn't, obviously. I'm not some magical genie of the electric grid. But here's me Bethany: Ha ha. Teresa: trying to like call friends and family that still had power in the Cleveland area, find places for these elderly people to you know, keep their medications in a refrigerator. because we all know your power goes out, your utility is not compensating you for your lost medication. So good luck to you. And I mean Bethany: No, no they sure are not. Teresa: on the flip side, your insurance company is gonna give you a whole bunch of shit just for trying to replace it, right? Because you can't replace your you can't refill your prescription outside of your time. So finding them help in that way, finding them a place. I had a friend there who was willing to let them come and like sit in her her home, who knew this was gonna be a days long. The flip side of that though was I was really mad because it happened right before 4th of July weekend. Our state Bethany: Mm-hmm. Teresa: commission posted a notice, and anybody that follows me on LinkedIn, you saw my little rage there. They posted, hey, happy 4th. We're taking the day off. What? Why wait, I I know I can't fix anything, Bethany: Well well, how many like thousands of people? Yeah. Teresa: but what are you doing? It was a massive heat wave. Yes. Bethany: Happy birthday America. Yeah. Teresa: Side note, if you guys are following what's going on in Lakewood, the the city tried to file a complaint and the commission's response was we've been looking at Lakewood first first energy and and Lakewood issues since last October. So what happened and why was nothing fixed? Why was there not even a commission order to investigation opened to go after first energy and say look, there's a problem here, it's continuing, it's time for you to to deal with this. Now, the other part of it, if you look at first energy side, they're like, hey, we had we've been trying to replace this transformer, we've been asking for more money to to fix the grid. We've been trying to do everything that we can. And I I don't know who's to blame. At the end of the day, I personally believe that if a utility has an outage that lasts more than four hours, at a minimum, you should get a refund for your medications. But I can't change the law. And as we figured out, I also can't turn your power back on, but I can make sure that your medication's safe. Bethany: You could do the best you can, which is way better than a happy fourth of July. We're off for the weekend Facebook notice from your public utility commission during a blackout, during a Teresa: Yes. Yes. Bethany: heat wave. Teresa: Yes. And I I'm not sure. Like the FERC two two I I did that for you. Was it annoying? it probably Bethany: See? You lost track you lost track of yeah, you know you it's fine. Teresa: wouldn't have helped this situation 'cause it was a a a mechanical failure, but It lends itself to the other question, which is there are other technologies utilities can be used when stuff like that happens. There's batteries on the grid that could be used. There are portable generators that a lot of utilities use even when they're just doing maintenance on their grid to keep things going. Why was none of that happening? Was it because First Energy doesn't have access to those because the commission hasn't allowed it? Or was it because everybody decided that it doesn't matter if people are in you know n I don't think anybody died, but deadly heat temperatures. But it's Fourth of July, so we're Bethany: Yeah. Teresa: just going home. Bethany: Yeah. That's that is insane to me. Absolutely insane. you know, I kinda wanna bring this all together. I wanna give you an opportunity, Teresa, right here, right now, because I know not all of your enemies are organizations. Some of them are living creatures. Do you wanna do you wanna talk about your most recent sworn mortal enemy? You have my you have this platform. You have this platform and I'm gonna give it to you. La launch launch off, launch off. Teresa: I do, I do, I do. Okay, so th here's my Corgi story. I I have a beef with a a corgi in my neighborhood. I I I I go for a walk every day. I I pet all the dogs. They are all the sweetest little things. Except for this corgi. He's just a dick. Like he Every time I pass him, I go to the other side of the street and he's still like snarling. You know, even when I pass his house, because he's a corgi, he has this like little low fence. I don't know why that they did that, but he's always like, I'm waiting, I'm waiting. I know, I know, I'm Bethany: 'Cause he's not gonna jump it with those wittle wags. He's not gonna jump it. Teresa: just waiting for him. So I mean th the the corgi has turned into my my new enemy. But he's also like, you know, we talk about these things all the time and the corgi's a perfect example. I can't change the rest of the world. I can't change that corgi, but I can change what I do. So I try to like take a different route now, but that little shit has been taken on walks now by his elderly owner. And it just I I don't even go at the same time. I think I I think he's after me, Bethany. Bethany: He could sense Teresa: Yes. Bethany: Well, so funny story, funny story, listeners. I kind of thought Teresa was embellishing this a little bit and maybe being a tad dramatic. because she's been texting me about her cor Corgi beef for a few days now. And then she sent me a picture of the Corgi from across the street. And yeah, Teresa: Vicious, he's vicious. Bethany: he was I'm here to tell you, listeners, absolute evil eye glaring at Teresa from across the street. And like he was looking behind himself, behind his little cute corgi butt to glare at Teresa. Teresa: Yes, he hates me. I'm a likable creature. I don't know what's going on. Bethany: Yeah. What it well, maybe it was it was probably a reincarnation situation. He was a utility executive in a previous life and now he could you imagine? Teresa: I'm I'm calling this out. I I'm always I always wear my Cleveland Guardians hat, right? My my baseball hat. And I bet he's a Cubs fan. Bethany: that could be it. Tale as old as time. Baseball baseball beef. Maybe it just boils down to that. Teresa: Yeah, yeah. Yeah. He's like he's like we won the World Series, get outta here. Ur. Yeah. I don't know. Bethany: Well, I cannot fix your relationship with your neighborhood Corgi, but FERC Two by Two can fix a lot of what's going on with the grid if people would just get their stuff together and unlock the potential that this could bring to all of us. And on that note, we're gonna go ahead and end it. Again, I am Bethany. Teresa: I'm Teresa. Bethany: We are Bloom Thank you for listening. Tune in next week. Who's Teresa gonna have beef with then? I don't know. Keep listening and remember: energy is never just about energy.