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GE's John McDonald: regulatory changes needed

If you haven't seen IEEE's interview with John McDonald, director of technical strategy and policy development at GE Digital Energy, I recommend it. Here are a few highlights with a little kibitzing tossed in, gratis.

Asked whether "the media"—hardly a monolithic beast—has miscommunicated smart grid, McDonald noted the seemingly hard-and-fast linkage between smart grid and smart meters and suggested that "a dramatic shift" in spending will soon focus instead on "distribution systems." Because meters belong in the distribution system, I take McDonald to mean distribution automation. Indeed, that's what we're hearing as well.

The smart grid-smart meter linkage is, of course, completely understandable, given that utilities have managed to obtain regulatory approval to install them and charge customers for them. The general public will never see or notice distribution automation unless it results in markedly fewer and shorter outages, and even then, that's not likely to be a topic of persistent discussion. The appearance of a new, digital meter on one's home, in contrast, raises a lot of questions. In service territories where a utility has carefully laid the groundwork, those questions have been answered. In other cases, as we've detailed in these pages, persistent headlines often couple "controversial" with "smart meter." 

Asked about the efficacy of IEEE's 2030 guide for interoperability of energy, communications and IT systems, McDonald characterized interoperability as "the most critical key" to smart grid's success. But he cautioned that standards hardly guarantee interoperability.

"A standard can only define a certain level of detail for a technology," he said. "Compliance to a standard doesn't necessarily ensure interoperability."

"The only way to achieve interoperability in industry standards groups is to get all the vendors for a particular standard together, connect all the products to make sure they can interoperate and flush out incompatibilities that occur."

So IEEE 2030 will help drive compliance and it will help the industry grasp that a separate step is needed to ensure actual interoperability, McDonald said. Further, a third step is performance testing, as we documented in articles about, for instance, Consumers Energy. (See "Consumers Energy's Measured Steps.")

McDonald discussed the "three-legged stool" of smart grid: technology, standards and policy. The first two are adequately addressed in the United States, but "policy is the wild card right now."

"Utilities need decoupled rate structures so they don't have to worry about losing revenues when they implement energy conservation and efficiency programs," McDonald said. "Right now, fewer than 10 states allow decoupled rates."

Other regulatory changes needed: accelerated depreciation to bolster the business case for smart grid investments and dynamic pricing.

What topics of industry concern does McDonald hear a lot about? Privacy, he said.

"Utilities are developing and deploying solutions for this but privacy is something the industry, overall, needs to pay attention to and actually implement," he said.

(Indeed, we've been raving and ranting about privacy issues for the past two years. Two of our latest pieces are "Colorado Mulls Data Privacy Rule," and "Data Privacy: Ohio Ponders." An earlier piece provides the privacy rationale, "Data Privacy Issues.")

There's more food for thought in the cited interview with McDonald. I'll just cite one more. Asked how important smart grid's early years are, McDonald offered a little free advice.

"I want to make sure that as an industry we're thinking things through before we act, because one stumble will take ten positives to neutralize," he said. "Before utilities deploy smart meters [for instance], they should educate customers to ensure they understand the technology, the value they're being provided and the additional services available to them."

Of course, that depends on whether services are being made available in a timely way following meter deployment, but that takes us back to the initial points in today's column.

Food for thought.

Phil Carson
Intelligent Utility Daily


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