Regulators’ order requiring a income-qualified reduction system calls into question Co-op’s ability to self-govern
WEC’s flood response, outages
Louis: Our poles and wires were not too badly affected by the initial storm on July 10 that caused catastrophic statewide flooding. We had about 1,100 members out. We did, however, have a pretty major outage the following Thursday and Friday, July 13 and 14, with 2,000 members out. They went out between 3:00 and 4:00 in the afternoon and we had them back on by 10 the next morning.
We had five poles go out in a landslide in Chelsea. The main issue throughout our territory was crews didn’t have road access.
Steve: Having roads washed out is a terrible disruption and impediment to restoring service. Fortunately in this case, WEC’s crews are experienced and equipped in having to work in our rural territory. I’m proud of them.
Louis: Yeah, but that’s a double-edged sword. This was a rare instance in which our territory actually benefited us. Most flooding was in village centers and towns, and our territory is rural. Municipal utilities like Hardwick, Johnson, Ludlow, all had major problems mostly concentrated in their downtowns.
Steve: The larger context of all this is resilience to future storms and overall reliability. If flooding is becoming a decadal challenge, are there additional issues we’re going to have to pay more attention to? Is flooding going to have to cause us to reevaluate our strategic resiliency efforts?
Louis: Underground wiring is made to withstand water and moisture. BED [Burlington Electric Department] had few if any outages, and their system is largely underground. They kindly offered to send us crews because they had so few outages, though we ended up not needing them.
Steve: I wonder about functional differences in preparing for and responding to challenges from floods, as opposed to everyday challenges, like winter weather and trees.
Louis: I will say it’s something we’ll need to consider as we look at moving lines to the roadside, because there was a tremendous amount of damage to the road systems in the state. Generally, we had less damage than I would have expected, given the damage to the roads in our territory.
Our line crew members know our territory extremely well. We received feedback from a couple of members expressing gratitude to our crews for how quickly they were able to get the power back on, when all the roads were washed out.
Steve: Apart from our crews not being able to get from one place to another, do we have to shut people off while roads are being repaired?
Louis: Yes. As repairs are made near power lines, we need to cut off power so highway crews can safely do their job.
One more thing I would like our members to understand. The effects of storms, including this storm, on our system and the power grid, continue after storms end. In this case, we need to make some permanent repairs where we’ve made temporary fixes. It takes a little bit of time.
PUC orders WEC to plan income-qualified reduction system
Louis: The PUC [Public Utility Commission] recently issued an order for Washington Electric to come up with a plan for an income-qualified bill reduction system in our territory.
I often say “income-eligible rates,” but it’s not really a rate. It’s a bill credit. That may seem like a distinction without a difference, but it does make a difference for WEC. That’s because if we were to implement such a system, it will be a surcharge on bills other members pay in exchange for a bill credit for members who qualify.
Typically this would look like a surcharge on members’ bills, like the Efficiency Vermont charge. It would apply to net meterers as well. Members who are income-qualified for a reduction will see a credit on their bills instead of a surcharge.
Two utilities in Vermont, Burlington Electric Department and Green Mountain Power, have income-qualified bill reduction systems in place now. Washington Electric has long argued that if the state is going to mandate an income-qualifying reduction in electric bills, it should be a statewide system. The reason we’ve argued that is because some territories, including ours, have a larger share of income-qualifying members than other territories. We’ve always felt a statewide program was more equitable.
But the order was issued. We have six months to return to the PUC with a plan for what we propose to develop. We’re not yet sure what we’ll propose. There will certainly be a public comment period after that.
Steve: A goal of ratemaking is for a utility to recover its operation costs while fairly distributing those costs among its customers and incentivizing ratepayers’ behavior toward goals beneficial to both them and society. Such incentives have changed over the past few decades.
An income-qualified system would provide some relief to some members of the Co-op. As Louis mentioned, under this order, other members would cover the cost. It isn’t clear yet what the resulting rate increase would be.
We don’t have clear evidence to show that most income-qualified members are also low-electricity users who are penalized by a higher monthly charge and lower kilowatt per hour rates any more than others.
– Stephen Knowlton
Louis: For reasons I don’t fully understand, we are the only utility without a system already in place that was singled out and asked to develop such a system.
Steve: The order said we have the highest rates of any utility in Vermont, so perhaps some people see that as punitive to low-income members. Our territory is rural, wooded, and predominantly residential; the average cost to provide power per customer is higher here than elsewhere.
About five years ago the PUC approved our current rate design, which raised the fixed monthly charge each member pays and simultaneously lowered the rate per kilowatt hour. That was to incentivize our members’ use of WEC’s renewable electricity over high-emission fossil fuels, aligning with several state goals as well as the Co-op’s own environmental values.
Louis: Right. The rate design was revenue-neutral. The Co-op took in no more money after the change than before, although, of course, individual members saw changes.
Steve: We know that an unavoidable monthly charge is burdensome to some members. The idea is to offset it with lower rates per kilowatt hour.
Louis: WEC had pre-existing programs and projects in place to support income-eligible members before this order. We provide weatherization and incentives to our members, and partner with community action agencies to best reach those who can benefit from these incentives. We’re partnering with Vermont Electric Co-op on a solar program that uses federal funding to reduce income-eligible members’ bills.
Steve: WEC has a history of working with appropriate agencies to attempt to lower both emissions and bills. We have always believed the cheapest kilowatt hour is the one you don’t have to use.
Louis: That brings up something important, Steve. There seems to be an assumption in the order that income-qualified members use less electricity. We know that’s often not the case. People who are income-qualified tend to live in homes that are older, less weatherized, have older appliances, and have electric heat. All those things increase power use. If part of the assumption of the order is that low-income members use less electricity, that often does not seem to be borne out.
Steve: We looked into this in 2017 when we were studying rate redesign. I recall, somewhat to the surprise of some of us, we didn’t find much correlation between member income and electric use per month. We don’t have clear evidence to show that most income-qualified members are also low-electricity users who are penalized by a higher monthly charge and lower kilowatt per hour rates any more than others.
So this order is part of a larger issue regarding regulation vs. self-governance. That is: to what extent do electric cooperatives retain the leeway and authority to act in the interests of all their members, and to do so equitably, as long as we fulfill our mission?
Threat to Jackson Corner substation
Louis: Over the last year, Washington Electric has done some detailed engineering work on our system. This thorough assessment is driven mainly by our need for a new construction work plan and long-range system plan.
What we discovered is all of our substations are out of balance in terms of load to distributed generation. There’s a higher amount of solar production compared to power used on our system, substation by substation, than there should be. That can be a problem in terms of backfeed and potential risk to the grid.
More concerning than that is what’s happening at the Jackson Corner substation. That sub hosts two large solar arrays allowed by the state’s Standard Offer programs. WEC doesn’t take power from them, but moves the power onto the grid. The sub is handling too much power, which leads to thermal overload, as well as being out of balance. Of course, net metering systems on that substation also contribute to the problem.
What that means practically is that the transformers and other equipment at the Jackson Corner substation are at risk of damage or failure. We plan on rebuilding the sub entirely in our next cycle of borrowing from our federal lenders, the Rural Utility Service program of the USDA, and our new Construction Work Plan. However, it will take several years to get the financing, materials, design, and to reconstruct it. In the meantime, WEC will request the PUC not allow additional distributed generation linked to that sub until we can get it rebuilt.
The transformers and other equipment based at the Jackson Corner substation are at risk from the amount of distributed generation.
– Louis Porter
That means that as generation projects are proposed, whether Standard Offer, net metering, or other, we have to file objections with the PUC because of the risk it creates for the sub and our ability to provide safe and reliable power to our membership.
The substation structure at Jackson Corner is a wooden pole structure. It can’t take additional transformers. Because of supply chain delays, it would take just as long to increase the size of the transformers as it would to completely rebuild the sub, and a full rebuild is what we intend to do.
Steve: Louis made the point that the relative magnitude of the problem depends on two Standard Offer projects hooked up to our setup. Large distributed generation projects place demands on our infrastructure when they are not co-located with additional load. These are relatively expensive to address and require going to regulators to allow us to invest in upgrades.
Louis: While it’s true that the Jackson Corner substation has two Standard Offer projects on it, all the others are overloaded from a distributed generation to load perspective. Even if one residence’s net metering generation-to-load balances out over the course of a year, on sunny summer and fall days, generation from multiple solar projects overload each of our substations.
Steve: A challenge is that policies and incentives in Vermont have not evolved to keep up with the large amount of intermittent distributed generation, primarily solar power, in some territories, including WEC’s. All members have to pay for the much of the infrastructure upgrades and maintenance needed to ensure people still have reliable electricity even with the amount of solar on the system.
| Did you know: |
|---|
| “Load” is the utility term for how much electric power appliances or components use when they’re running. If there is an imbalance between the load present on a portion of the system and the generation supplied to it, the electrical infrastructure can be harmed. Imagine a water tank with a pipe feeding water into it. Some people dip water out of the tank, and others add more water to the tank with buckets. If more water goes into the tank than is dipped out, it can force water back up the pipe, risking system components. |