MA DPU Approves Significant Investments and Upgrades to State’s Grid Modernization Technologies

On May 10, 2018, the Department of Public Utilities (DPU) issued an Order approving significant grid-facing investments and upgrades to the state’s electric grid. Specifically, the DPU’s Order authorizes Massachusetts’ utility companies to make $220 million in grid-facing investments in grid modernization technologies over the next three years to upgrade their distribution systems to improve the efficiency and reliability of the electric grid. In the Order, the DPU noted that the Order establishes the platform and the method for the electric distribution companies to make initial investments in grid modernization technologies to upgrade their current infrastructure and to increase the use of renewable energy, electric vehicles, and energy storage and that while it is difficult to quantify direct benefits, the pre-authorized grid-facing investments will make measureable progress towards meeting the DPU’s grid modernization objectives by reducing outages and optimizing distribution system performance, optimizing system demand, and integrating distributed energy resources.

In a press release announcing the Order, the DPU noted that the grid modernization investments authorized in the Order will automate processes so that mechanical equipment will provide improved visibility, automated command and control, and create a self-healing grid. The DPU further noted that these improvements will help reduce the effect of power outages and improve storm restoration, as well as improve the electric distribution companies’ ability to integrate distributed energy resources onto the electric grid and to increase the use of renewable energy, electric vehicles, and energy storage.

In the press release announcing the Order, DPU Chairman Angela M. O’Connor was quoted as saying that the “many significant storm-related power outages the Commonwealth experienced this year highlighted the importance of improving our electric grid to increase reliability and shorten power restoration times,”  and that by “authorizing these innovative grid modernization investments, the DPU is working to ensure that Massachusetts ratepayers are provided with consistently reliable electricity for many years to come.”

Energy and Environmental Affairs (EEA) Secretary Matthew Beaton was quoted in the press release as saying that the “Order will both allow better integration of renewable energy and energy storage into the electric grid, and improve the resiliency of Massachusetts’ electric grid in the face of a changing climate. Recognizing the role advanced meters play in increasing energy efficiency and reducing costs for ratepayers, the Order positions the Department of Public Utilities to engage with stakeholders to identify targeted advanced metering system investments that will maximize clean energy and ratepayer benefits.”

In the Order, the DPU declined to preauthorize any customer-facing investments at this time.    In particular, the DPU found that the primary benefits of advanced metering functionality are derived from reduced peak usage as customers respond to pricing signals and that achieving this benefit requires customers to participate in time varying rates or other dynamic pricing programs. The DPU noted that as more customers migrate off of basic service to alternatives, such as municipal aggregation, the DPU would need the certainty of wide adoption of dynamic pricing products from the competitive supply market to maximize the benefits of advanced metering functionality and that without such wide adoption, the DPU lacks the needed assurance that the benefits associated with advanced metering functionality will justify the substantial costs.  The DPU notes that the Order will facilitate stakeholder outreach and an investigation into potential investments in advanced metering infrastructure, or “smart meters.”

The Department intends to engage stakeholders, including the electric distribution companies and competitive market participants, in a process to consider how to remove barriers to the implementation of dynamic pricing products for all customers. The goal of this investigation will be to enable a successful future deployment of advanced metering functionality where the benefits are certain and they justify the costs. As part of this investigation, the DPU will consider whether an immediate targeted deployment of advanced metering functionality to certain customer groups will yield benefits that justify the costs. 

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