Draft
Notes of Inaugural Meeting
Industry Task Force on Distributed Generation
March 5, 2003
Toronto Hydro Training Facility, 500 Commissioners Street, Toronto, Ontario

George Vegh of MacLeod Dixon opened the session by introducing himself as moderator and explaining the program for the coming session.

He said that "the Task Force is open to all who want to participate," and noted that the organizers would be sending an e-mail to participants asking if they would like to participate further. "All that is asked for is that you participate and bring some energy to the issues."

Vegh explained that input was to be collected from participants at today's meeting, with the purpose being to prepare recommendations that will be circulated among relevant decision makers such as the ministry, the OEB, and the IMO.

Using overheads, Mr. Vegh outlined the characteristics of Distributed Generation (DG):

- small, local, decentralized, smart (complements but will not replace power stations and transmission grids)

He noted that for DG, it is important to have transparent pricing information

The US DOE is targeting 20% of all new generating capacity to be DG by 2010.

The US NARUC (National Association of Regulatory Utility Commissioners) recently passed a resolution to alleviate barriers to DG.

Vegh concluded by expressing the hope that the Task Force will help people to grapple with the many challenges.

Mark Wolnik of Markham Energy, said he would try to explain the reasons for pursuing DG as director of Markham Energy. The Town of Markham currently has extensive involvement with DG and is considering further expansion. The initiative by the Town of Markham was motivated by a need to support the growing high tech community with a reliable source of local power/energy.

He noted that energy efficiency and environmental benefits can accrue to hosts of DG, and that capital cost deferrals for system reinforcement are possible as well. Markham Hydro has had to add a transformer station every 5 years, at about $15 million each. DG can defer or reduce these costs significantly, while improving reliability. Two or three onsite plants in the proper configuration would allow such deferral. In addition, DG has the potential to enhance supply, which seems to be a timely issue in Ontario at the moment.

DG in could already be allowing the avoidance of 300 MW of imported power on peak in Ontario but the current price freeze for the MUSH sector-where ideal hosts for DG exist- serves as a disincentive to further development. The province's plans should include DG as a means of bridging supply deficiencies in the short term and providing a competitive source of efficient local power to meet peak demands and growth on the long term. Support can be brought forward with action plans and lobbying in the context of implementing Bill 210.Industry associations should work together to assist government ministries to help make DG a part of the solution to short term and long term energy needs.

It's important for decision makers to resist changing policies in mid-stream - this discourages investment.

There is a need to put together stakeholders to develop uniform technical standards for interconnection that are both practical and safety-oriented.

(The complete text of Mr. Wolnik's presentation is available on request.)

Darius Vaiciunas, of COLLUS Power started by saying that he was glad to be able to speak on behalf of a small to medium sized utility. Collus Power serves Collingwood and several neighbouring communities and has a 56 MW load. What is large and what's small is often a matter of perspective. That's one reason there are problems dealing with unified standards, because there are multiple concepts about scale.

There are four types of distributed generation:

1. No interconnection

2. Isolated DG operation with automatic transfer between the DG and the grid

3. Parallel operation with grid, no power export (Load displacement)

4. Parallel operation with grid with power export

Safety is the number one operational and design consideration, Vaiciunas stressed. Any DG installation must ensure the safety of the personnel on site, at the local utility, and of the equipment. Ontario has a very reliable system with minimal outages. DG should be able to help improve that, if it's done right.

One thing we look at is reverse power flow; particularly back-flow through the distribution substation. Systems are designed to make sure that when there's a current flow back to the substation, quick response is triggered. Often this kind of event is seen as a fault, which trips a breaker and causes an outage. Obviously, more detailed design is needed to accommodate DG. But there are costs to redesign our systems. Sometimes you have to upgrade the breakers when you've added generation capacity. Are these costs to be paid for by the provincial system, the generator, the affected customers, the local utility, or some combination thereof?

There can be negative impacts when DG is installed including different impacts on voltage (sags, flickers, etc.) But such problems are not a necessary result of DG. It's just important to make sure it's done right.

People from the NRC are looking to develop an interconnection standard for small generation. So are groups working in New York, Massachusetts, New Hampshire and others. Obviously there's a need for a standard. We have the EDA, the NRC, and the OEB, and this new committee. "Let's take the opportunity to push this process and get everybody to work together. This is ground one," he said. "We have to march in step to get there."

Regulatory uncertainty is an ongoing issue. Echoing concerns of many in the audience, he said, "People should know going in what decisions they will have to make going forward."

Vaiciunas prompted people by saying "Net metering I don't think is the issue. The problem is how do you apply rates to that net metering." There are very few technical disagreements about how to install distributed generation and net metering, but there are numerous organizational questions that are unresolved, he stressed. "I think it can be done, it's just that we have to come to agreement on how we're handling it and paying for it."

A major regulatory issue he cited is the potential loss of revenue for distributor. Distributors revenue is based on throughput, and if they allow significant DG to go in, it may reduce the LDC's revenue, even if it saves costs for the customer, and for other customers. Regulators should ensure that such actions do not result in financial penalties for the LDC, he implied.

Vaiciunas stressed that "The adversarial approach isn't going to work." LDCs and DG proponents or developers can't be going to the government with negative statements about each other's approach. The preferred model is to be going hand in hand with joint recommendations to government. "That's what the steering committee can accomplish," he said. "I welcome the opportunities created by this steering committee."

Richard Lu of Toronto Hydro started by expressing Toronto Hydro's general enthusiasm for distributed generation. He explained that Toronto Hydro did an environmental scan before committing itself to DG. Relevant issues turned up by the scan included the supply crunch in Ontario, the Kyoto obligations, plus the new incentives under Bill 210.

Toronto Hydro Corporation is very interested in DG for the following kinds of reasons:

- Peak shaving, load shifting

- Environmental leadership

- New technology development

- Potential business opportunities

Challenges foreseen include the following. Although DG is a good thing to do, the market is ready, and there is an appetite for it, there are concerns:

- Impact on LDC revenue, including on capital infrastructure

- What are the legal and regulatory limits (there has been little direct instruction from the OEB on DG) Will there be a clearance account that never gets cleared?

- Corporate constraints on investment in DG business opportunities (potential issues with credit rating, investor confidence, etc.)

Mr. Lu concluded by saying "We would like to work with this group to find a way to move forward."

Joe Bailey of Toronto Hydro noted that many of his issues had been addressed by previous speakers. However, he stressed that Toronto Hydro wants to be involved and to be a contributor to the evolving DG market place. "We want to be seen as customer-friendly," he said, noting that this extends to having customer-friendly "interconnection processes that are not cumbersome or onerous on the participants."

Mr. Bailey reiterated that "Safety for Toronto Hydro is a moral imperative," and that this concern applies for all distribution utilities. When planning to connect DG, the primary concern is peoples' safety. System security and the prevention of electrical faults are also concerns.

There are issues around metering and billing and the threshold at which it applies, he noted. These issues are currently being discussed between the ministry, the EDA and OEB and others.

There's a lot of activity on standards and codes. IEEE is developing standard P1547 - Standard for Interconnection of Distributed Resources to Electric Power Systems. Parts 1, 2 and 3 focus on Equipment Conformance Test Procedures, Interconnection Application Guide, and Guide for Monitoring, Information Exchange, and Control of Distributed Resources with Electric Power Systems. NRC created MicroPower Connect to support the development of guidelines to streamline the interconnection approval process. This is work that we can leverage.

Reliability is a another major concern. DG can enhance reliability, however on the other hand it has the potential to inject harmonics into the system or result in outages especially when it unexpectedly becomes unavailable. It can provide reactive support, however sometimes it requires reactive support. Reactive co-ordination and power flow co-ordination also have to be considered.

There are financial impacts: The capital requirements for metering, settlement systems, control systems, etc. are concerns in terms of recovery for the LDC. Ongoing operating costs are a concern as well.

DG has a lot of appeal - plant upgrade deferral, reliability enhancement and environmental benefits, for example, yet, many important unknowns remain unresolved. "Utilities working collaboratively with other industry stakeholders, leveraging off each others' experience have a great opportunity to get this right for Ontario," he concluded.

George Vegh explained "the process from here." The purpose of this meeting, he said, "is to surface some ideas. The plan will be to collect ideas from today's session and incorporate them into a set of policy positions." People will have a chance to comment on that and the steering committee will take these ideas forward.

There will be three opportunities for input: today's meeting, participants' response to an e-mail on follow up, and formal invitation to comment when the draft policy positions are circulated. "The idea is to have an open process and take advantage of the ideas that come forward from that," he said.

He then invited comments and questions from the audience.

Note: This report contains informal recounting of discussions and has not been verified for accuracy
or completeness. The authors accept no responsibility for any use made of this information.
 

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