SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1401 words

COMMITTEE: HOUSE ENERGY AND COMMERCE

SUBCOMMITTEE: ENERGY AND AIR QUALITY

HEADLINE: NATIONAL ENERGY POLICY

TESTIMONY-BY: RICHARD BRENT, DIRECTOR, GOVERNMENT AFFAIRS

AFFILIATION: SOLAR TURBINES INCORPORATED

BODY:
Richard Brent Director of Government Affairs Solar Turbines Incorporated 818 Connecticut Avenue, NW Suite 600 Washington, DC, 20006

Summary of Testimony

Solar Turbines Incorporated and the Distributed Power Coalition of America support:

Development of nationally uniform interconnection guidelines promulgated by the Federal Energy Regulatory Commission and individually implemented by each state. Uniform standards will enable electricity consumers to take full advantage of the transportable "plug and play" advantages of Distributed Generation Guidelines that govern the technical parameters of interconnections Require utilities to adopt transparent, straightforward interconnection standards Provide for equitable cost allocation rules that ensure that Distributed Generation and utilities each pay their fair share of interconnection costs

Testimony

Good morning, Mr. Chairman and distinguished members of the Subcommittee, my name is Richard Brent. I am Director of Government Affairs for Solar Turbines, a manufacturer of Distributed Generation technology. In my testimony today I am also representing the Distributed Power Coalition of America (DPCA) as a member of the Executive Committee. I would like to thank you for the opportunity to be here today, to speak on this topic, which is very important to Solar Turbines and to the DPCA. Distributed Generation is a highly competitive technology that can efficiently increase the nation's energy supply, reduce the demand on a constrained system, and add substantial benefits to the power grid. However, Distributed Generation must overcome numerous legal, regulatory and institutional barriers that currently interfere with the realization of its true economic potential. Distributed Generation is the name given to small (up to 50 MW) electricity generation facilities, including micro-turbines, fuel cells and small gas turbines, located on the distribution system, close to the point of consumption. Distributed Generation can help reduce the cost and enhance the efficiency of our electrical system. It can lower the demand for the construction of large central station generation facilities, reduce the need for difficult to site transmission facilities, substitute and/or supplement distribution facilities, and reduce overall emissions. However, today barriers stand in the way of the development of Distributed Generation.

Many of the barriers facing Distributed Generation are state- level barriers, such as discriminatory rate structures for standby power and exit fees designed to recover so-called "stranded costs," which this Subcommittee can not directly address. However, the U.S. Congress does possess the power to overturn some of the most important barriers facing Distributed Generation today. It is regarding those barriers that I have come to speak to you.

Legislation has been introduced in this session of Congress which, if enacted, would help eliminate some of the barriers facing Distributed Generation. H.R. 1045, introduced by Congresswoman Heather Wilson would, among other things, require the Federal Energy Regulatory Commission to determine standards governing the costs, terms and conditions of interconnections between Distributed Generation and local utility companies' distribution facilities. Today, development of Distributed Generation is thwarted, in part, because potential developers do not have the resources to navigate the crazy quilt of varying standards found across jurisdictions and across utilities. Uniform interconnection standards would go a long way toward helping Distributed Generation reach its potential.

The method used by the Public Utility Regulatory Policies Act of 1978 (PURPA) to establish standards for the regulation of the rates charged by Qualifying Facilities should also be used to establish interconnection standards for Distributed Generation. Under PURPA, FERC promulgated guidelines that each state was required to follow, but state-by-state implementation of those guidelines was left to each individual state. This delegation makes sense.

Interconnection standards should follow a similar path. Distributed Generation offers the very real prospect of "plug and play" technology. Many Distributed Generation resource technologies have become modular and standardized as well as relatively easy to transport. It would be - and today is - an enormous waste of resources for prospective Distributed Generation developers to go from state to state to persuade legislatures, one at a time, of the benefits and appropriate designs of standardized interconnection procedures. As a first step, FERC should be required to work with industry experts to design fair interconnection standards. The Institute of Electrical and Electronics Engineers (IEEE) has already begun the process of designing uniform interconnection standards. Members of DPCA are active participant in that collaborative process, which has been extremely productive. We recommend that, upon enactment of H.R. 1045, FERC piggyback on IEEE's efforts and appoint the existing IEEE working group to lead the effort to produce uniform interconnection standards. Subject to strict time limits, FERC should then be required to promulgate interconnection guidelines, which states must then be required to implement, subject to FERC's oversight.

The technical aspects of interconnection are critically important. No less important are the standardized procedural and cost allocation rules that all parties involved should be required to follow when determining what resources will be required to interconnect Distributed Generation to the distribution network, and how the costs of those facilities should be shared between the Distributed Generation developer and the utility. DPCA suggests two simple rules. First, when a Distributed Generation facility requests interconnection to a utility's facilities, the utility should not be allowed to study the request to death, as is often the case today. Utilities must be placed under strictly enforced timelines. We recommend that each utility be required to complete all required studies within 30 days of receiving an interconnection request. Each utility must have in place transparent interconnection guidelines, requiring the Distributed Generation developer to submit only that information that is necessary for the utility to determine the resource requirements necessary for the interconnection. Second, the Distributed Generation developer should only be required to pay for the interconnection facilities necessary to interconnect it to the grid. These facilities generally will include the facilities running between the Distributed Generation facility and the point of interconnection with the utility. Bloated interconnection cost estimates erode any economic benefits that Distributed Generation could otherwise offer. In the exceedingly rare circumstances when upgrades are required to the utility's network beyond that point of interconnection, the Distributed Generation developer should only be required to pay his fair share of the cost of such network upgrades. Other users of those network facilities should also be required to pay their fair share of those costs.

Besides interconnection, there is another important advancement that can be instituted at a federal level. The DPCA believes that the owner of a Distributed Generation facility should be able to sell the energy from that facility to any willing buyer. The owner ought to be allowed to buy, sell and consume electricity as necessary, free from artificial limitations. We recommend that legislation include provisions that ensure that right to Distributed Generation facilities.

I commend to the Subcommittee's attention an Arthur D. Little White Paper entitled "Distributed Generation: Policy Framework for Regulators". The Paper clearly, effectively and concisely discusses the primary policy questions that are raised by Distributed Generation, and provides a useful framework for resolving those questions.

The Subcommittee invited comment on net metering. While we believe net metering is an important topic, the DPCA has not taken any position on legislation on this issue; so I will not address it today.

Thank you again for the opportunity to testify before your Subcommittee. I would be pleased to answer any questions you may have.



LOAD-DATE: July 30, 2001