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Quick Take:  Do you remember the days when state policymakers considered grid modernization with suspicion? Many of them thought it was a ploy by utilities to get approval to spend more money on unproven technology while shunting the risk onto ratepayers.

These days, states are not just allowing modernization, they are demanding it. For instance, read the release below from the State of Massachusetts. I’m not quite sure I agree with its claim to be the first to require utilities to modernize. Certainly jurisdictions such as California, Connecticut, Hawaii, Illinois, New York and Ontario have all issued orders that stimulate modernization, even if they have not expressed it in such sweeping terms.

But I’m glad Massachusetts is bragging. The more states compete to have the best, most reliable, most modern, most cost-efficient grid, the better for everyone. – Jesse Berst

 Massachusetts Becomes First State in the Nation to Require Utilities to Modernize the Electric Grid 

BOSTON – Thursday, June 12, 2014 – The Patrick Administration today announced that the Department of Public Utilities (DPU) has issued two groundbreaking orders requiring Massachusetts electric distribution companies to modernize the electric grid, building on the Commonwealth’s national leadership on energy efficiency and renewable energy. With these orders, Massachusetts is the first state in the nation to require electric distribution companies to take affirmative and far-reaching steps to modernize the electric grid.

“The grid modernization order builds on Governor Patrick’s commitment to strategic investments in innovation and infrastructure, and creates jobs,” said Energy and Environmental Affairs Secretary Maeve Vallely Bartlett. “By implementing grid modernization, Massachusetts will once again be leading the nation in the clean energy revolution and enabling customers to participate in how and when they consume energy.”

The DPU’s order requires each utility to develop and implement a 10-year grid modernization plan, to be updated regularly. The DPU determined grid modernization will provide several benefits including:

  • Empowering customers to better manage and reduce electricity costs;
  • Enhancing the reliability and resiliency of electricity service in the face of increasingly extreme weather;
  • Encouraging innovation and investment in new technology and infrastructure, strengthening the competitive electricity market;
  • Addressing climate change and meeting clean energy requirements by integrating more clean and renewable power, demand response, electricity storage, microgrids and electric vehicles, and providing for increased amounts of energy efficiency.

The companion order on time varying rates recognizes that the cost of electricity changes dramatically over the course of a day and year.  Currently, most customers pay a flat rate. The time varying order would require utilities to set prices that take into account the varying costs of electricity and allow customers to make informed decisions on their electricity use throughout the day.

Grid modernization and time varying rates also will allow the Commonwealth to reduce peak demand, a tremendous savings opportunity for all customers, not just those who respond to price signals.  Currently, for reliability purposes, all customers pay to have an electric system that can provide power during peak demand periods, even if those periods occur only a few times a year. Grid modernization and time varying rates will lead to lower electricity use during peak demand periods, reducing the need to build new energy infrastructure and saving money for all.

“This order establishes the platform and the incentives for utilities and other businesses to innovate and invest in new technology, to continue to upgrade our current infrastructure, and to increase the use of renewable energy, electric cars, energy storage, and microgrids,” said DPU Chair Ann Berwick. “At the same time, customers will be empowered to control their electricity use and save money.”

The Patrick Administration’s aggressive clean energy initiatives have made Massachusetts a leader in energy efficiency, renewable energy and emissions reductions. The American Council for an Energy Efficient Economy has named Massachusetts number one for three years running. Last year, Governor Patrick set a new solar goal after reaching the previous goal of 250 megawatts four years early. The Commonwealth now aims to install 1,600 megawatts of solar capacity by 2020. The clean energy revolution is yielding economic benefits as well, with 11.8 percent job growth in the last year; nearly 80,000 people are employed in the cleantech industry in Massachusetts.

Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.