An accord signed by a range of stakeholders this week opens the door toward rate-based EV infrastructure, which raises the question: Should rate-based microgrids be next?
Endorsed by automakers, utilities, labor groups, consumer advocates, and environmental organizations, the Transportation Electrification Accord creates a roadmap for electrifying the transportation sector.
While it isn’t a regulation or law, the agreement is expected to have an important impact on regulators because of the diversity of its backers. Signers include General Motors, Honda, Proterra, Exelon, National Grid, PG&E, Siemens, the Alliance for Transportation Electrification, Natural Resources Defense Council (NRDC), and many more.
One of the provisions of the transportation accord says that utilities should work with utility commissions and stakeholders to develop rate designs that allow utilities “reasonable cost recovery.” When regulators approve rate-based utility investments, they agree that their costs should be borne by all ratepayers.
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In addition, opposition may arise because customers inside the microgrid have higher levels of resiliency than those outside it. Some argue that they should pay for that extra resiliency.
John Caldwell, director of economics from Edison Electric Institute, predicts that in the future, microgrid customers will pay for some of the costs, and some costs — those that clearly serve the public in general — will be covered by ratepayers.
“The regulators will say, ‘We agree there are some benefits to all customers, but probably not to the same extent as customers being directly serviced.’ In the future, they might say, ‘We’ll have some of the costs borne only by microgrid users; any benefits that go to the general grid, those costs will go to all ratepayers,’” Caldwell said.
“If microgrids are needed to sustain sufficient levels of reliability, then they should be included in rates just like any other reliability investment,” states Chris King, chief policy officer of Siemens Digital Grid.