Jon Wellinghoff, Chairman of the Federal Energy Regulatory Commission (FERC) was one of my favorite interviews at the Alliance to Save Energy’s EEGlobal 2010. Jon spoke with me about the challenges of integrating America’s transmission and delivery systems, the importance of a proper smart grid roll out, how utilities are preparing for a smarter grid system and what he wants to be remembered for when he finishes his service at the FERC.
Full Transcription:
Ben Lack: Well, we’re here with Jon Wellinghoff, Federal Energy Regulatory Commission Chairman. Thanks so much for giving us some of your time.
Jon Wellinghoff: You’re very welcome, Ben.
Ben Lack: I want to talk to you today about the smart grid. There’s a lot of talk about the smart grid in the industry right now. If you would give us a little bit of insight on the infrastructure of the existing transmission grid and what you guys are doing to make it more integrated so that smart grid technology can actually come to fruition.
Jon Wellinghoff: Well, we’re trying to do everything we can to encourage the proliferation of technology for the smart grid. We have some statutory authority that allows us to provide incentives for smart grid type upgrades to the transmission side that is our responsibility. FERC is over the wholesale side of the grid. And we do what we can to encourage the transmission owners and operators to upgrade it with the latest and best technology to make sure that that side operates well. We also do what we can to encourage the wholesale markets to place into their tariffs ways for consumers who do have smart grid-enabled appliances or businesses and industries that have smart grid-enabled loads that can actually use those in ways that can make the grid work more efficiently. For example, in an area in the mid-Atlantic, from New Jersey to Chicago called PGM, which is a grid operator, an independent grid operator under our jurisdiction, they have tariffs in place that allow right now about 9,000 megawatts of what’s called demand response to participate in making the grid more efficient. And essentially, it is part of making the smart grid in the system because they control their loads, and they move their loads in ways that the grid operator directors them to through communications. And by doing that, they get paid to do it. So there’s some tremendous things going on there. We’re also working with some very innovative ideas that’s part of that PGM system. There’s a professor at the University of Delaware by the name of Will O’Campton, and he’s converted five formerly gasoline cars to all electric. And put in electric motors and lithium-ion batteries. And in addition to using them as electric cars, doing testing and stuff and how much they can drive them and their performance and so forth, when he plugs them into the grid, he’s got a box in that car that’s got electronic equipment into a very small module. That electronic equipment can wirelessly signal to the grid operator, PGM. The grid operator signals back to them what’s called a regulation signal, meaning how a signal is needed to determine and stabilize the grid. Based upon that signal, the car’s battery can actually follow the signal as it’s plugged, as it’s being charged, as the charge is going up, it follows the regulation signal and provides regulation service to the grid just like a generator.
Ben Lack: That’s very cool.
Jon Wellinghoff: Right now, the generators are providing that. The coolest thing is they’re getting paid to do it. They’re charging the car, and they’re getting paid seven to ten dollars per car per day to provide regulation service while they’re getting charged. It would be like driving to a gas station, filling your car up and a guy coming out and giving you twenty dollar bill.
Ben Lack: So how many stories like this are out in the country right now trying different types of technologies to make the different applications that a smart grid has work?
Jon Wellinghoff: Well, there’s a number of them. Another group, a national laboratory, Pacific Northwest National Labs, did a whole test on the Olympic peninsula with about 150 consumers, and they actually got IBM to work and bid chips in their dishwasher and washing machines and water heaters and could actually sense the frequency on the grid. By sensing the frequency, that sensed how congested it was with the price was. In essence, functioning when the price went up, and these appliances could determine whether or now they wanted to be used during that time or whether or not they wanted to shift to another time that was more economical for the consumer. So they ultimately saved consumers costs and did it automatically. There was no interaction by the consumer at all. It all happens automatically. Sort of “set it, forget it” kind of thing. This is happening in a number of pilots across the country, with the automobiles in Delaware, with these appliances in the Pacific Northwest. And I know that many other utilities in Boulder, Colorado and other areas are doing these kinds of pilots to see how consumers can best benefit from smart grid application.
Ben Lack: We know that there’s some areas in the country that might not have had as good to success as integrating smart grid technology, most recently, recently in Texas and in California. Talk to us about what you guys tell utilities and rate payers on how to integrate these types of new technologies because it’s proven that it’s saving money and that it’s improving the economy as a whole. But there’s such a backlash of customers saying, “Hey, my bill is higher because you’ve given me a digital meter, and we’re creating a smart grid. So how do you combat that messaging?
Jon Wellinghoff: I tell the state regulators all the time and, of course, we don’t have jurisdiction over state retail rates. We have jurisdiction on the wholesale side. But we have an interest in sharing the retail side in participating in the wholesale side because it makes the whole grid more efficient, makes the whole system nationwide work better, and reduces costs for consumers overall. So I tell retail regulators and the distribution utilities, “Don’t put in the smart meters until you provide the consumers with the smart information and with the tools they need to get the feedback as to what those meters are doing for them. Don’t simply put in a meter and walk away. Because if you do that, it’s like taking the model-T out of the driveway, towing it out and towing in Ferrari, but not giving the customer the key.” If they don’t have anyway to use the technology, it’s going to be very frustrating for them. And ultimately, I think that’s what we’ve seen. We’ve seen frustration in California, Northern California especially. We’ve seen some in Texas. But I think really the worst stories I’ve seen have been out of PG&E in Northern California where consumers are just given these meters, and they walk away. And there’s no interaction by the utility to give them the understanding and the education as to what those meters can do for them if they use them properly. And, number two, we have to have some type of internal feedback to the consumer. You just can’t have meter outside of the house. You have to have enabled your iPhones so you can look at your usages or the computer, or put a glowing orb inside the house or something that can tell consumers what are times that they can adjust loads and how they can use loads in ways so ultimately it would make the grid more efficient and lower their costs at the same time because costs can be lowered. I did it myself in Las Vegas when I was there using, in essence, a smart meter and a web-enabled system where I could find out how much I was using plus could control my thermostats on the web. Doing all that, I reduced my bill by about twenty percent.
Ben Lack: That’s pretty cool.
Jon Wellinghoff: Yeah. If consumers are given those tools, they’re not stupid. Consumers are not stupid. But it’s like you can’t just lock a guy up and say, “Here it is.” It doesn’t work that way. You have to ultimately give them the keys to the car.
Ben Lack: So what is the commission doing to aid these states to work with other states? Because that also a big issue as well is to be able to connect the states’ grids up together so that you can either transfer renewable energy power from one state to another or for peak load or off-load times, transfer power across state lines. What types of steps are you guys taking?
Jon Wellinghoff: Well, we’re doing two big things. Number one is we’re going to be rolling out a demand response action plan that will go to Congress in June. Congress designated us to do this plan. And in that plan, it has part of the communications plan across the nation. So we will be working with states and local jurisdictions and state commissions and utilities to help them better communicate to consumers. What are the benefits of smart grid? What are the benefits of doing demand response? So that action plan is coming out soon. The second thing that we’re really doing is we have a collaborative with the state utility commissioners, and we meet three times a year. That collaborative is both a demand response and a smart grid collaborative. We call the Smart Response Collaborative. So it combines the two things together saying smart grid is good technology, but you have to put in the economic benefits for the consumer which is ultimately the consumer doing demand response and getting paid to do it. And so we’re in those collaboratives, working with state regulators and working with other stakeholders both providers of these technologies and the utilities to come together to figure out better ways to deliver the services to consumers.
Ben Lack: Final question. And this is more about you personally.
Jon Wellinghoff: Sure.
Ben Lack: We interview folks all the time about all of the initiatives that they’re actually doing within their respective positions. But one of the things that doesn’t get much light is why do you do what you do.
Jon Wellinghoff: Well, I do what I do because I love helping people and getting people to look at how they can better their own lives through advances and technology. I’m a technology geek. There’s no question about that. I love technology. I think technology can provide us with many, many solutions. But part of the things that consumers don’t realize is that to get those technologies in place, there’s lots of barriers and not economic regulatory barriers and other institutional barriers that I just love. It’s sort of a problem-solving challenge for me to see how I can help consumers become more efficient and more technologically savvy. And at the same time, I get to play with all this technology. That’s the good part of it for me, I guess. I get to see all the technologies in action.
Ben Lack: Alright. So I lied. One more question.
Jon Wellinghoff: Sure.
Ben Lack: So when you’re finished as the chairman and you look back at your time at the FERC, what are you going to say is going to be your success?
Jon Wellinghoff: Well, I hope my success will be fully-integrating in consumers’ participation in the grid and the demand side with demand response and their ability to actually help control their bills and their costs by being a full participant and by doing that, making the grid more efficient. And doing things like being able to also integrate in more wind, more variable renewable resources because we now have a more flexible, more resilient grid than we had before. I hope that’s something that I could look back on that I achieved.
