EXPERT PANEL CONCLUDES DISTRIBUTED ENERGY CAN SIGNIFICANTLY IMPROVE NATION’S ELECTRICITY SYSTEM

Consumer and Environmental Leaders Team with Industry, Regulators and Senior Federal Energy Officials to Assess Distributed Energy Possibilities

WASHINGTON, D.C. July 18, 2001 - Distributed energy can play a much larger and more beneficial role in the nation’s electricity energy infrastructure, according to a broad- based panel of experts representing utilities, public interest groups, and government.

After a year of in-depth study and review, the distinguished forum, convened by the Consumer Energy Council of America (CECA), concluded that distributed energy resources, when properly integrated into an improved national electric power system, can foster lower prices, greater reliability, and a new platform for integrated consumer services.

“This was the highest ranking group of experts ever to take an in-depth look at distributed energy,” said CECA President Ellen Berman. “The participants represented every sector of the electric power industry - including executives from investor owned utilities, public power systems, and rural electric cooperatives- senior officials at the Department of Energy, chairs of state public service commissions, and consumer and environmental leaders. The report constitutes the most comprehensive analysis of distributed energy to date.”

The CECA Forum on Distributed Energy was chaired by Charles Curtis, a former Deputy Secretary of the Department of Energy and Chairman of the Federal Energy Regulatory Commission. Other prominent members included Vice Chair Ernest Moniz, then Undersecretary of Energy, Anthony Earley, Jr., Chairman, President and CEO of DTE Energy Company, and Commissioner Bob Anderson, Chairman of the NARUC Committee on Energy Resources and member of the Montana Public Service Commission.

Distributed energy (DE) is defined as small generators located on or near the consumer’s site. The actual size of the generator can vary depending on the particular circumstance. For the new emerging DE technologies, the electric generating unit is usually manufactured, not erected in the field. Most current distributed energy facilities derive power from diesel engines or combined heat and power steam turbines, though a variety of new and emerging technologies include solar, wind, biomass, natural gas, petroleum and even geothermal and micro-hydro energy sources.

“We are seeing the convergence of need - an aging utility infrastructure, new economy demands on power reliability and quality, consumer interest in greater flexibility and new services - with emerging technologies - fuel cells, microturbines, photovoltaics, and others - well suited to addressing those needs,” said the Forum’s Vice Chair Ernest Moniz. “The opportunity is at hand to begin reshaping our energy infrastructure for the 21st century.”

The CECA Distributed Energy Forum recognized that many hurdles must be overcome before distributed energy can realize its full potential within the nation’s electric power infrastructure. Among the CECA Distributed Energy Forum’s key recommendations are:

• Rapid adoption of consensus standards for interconnection of DE into the nation’s power grid.
• Quick action by local, state and federal regulatory authorities to “fast track” the use of existing and new standby and emergency power facilities to meet generator shortages and mitigate power reliability problems.
• Support for DE in a way that will enhance environmental quality, and consideration of total system impact in the policy framework for DE.
• A concerted effort to develop and adopt best business practices in the treatment of DE.
• Development of regulatory procedures to facilitate and support economic and technical transactions between the customer and host utility.
• Development of creative new rate structures and business arrangements for DE.
• Authority to allow local distribution utilities or service providers to own or operate DE, whether located on the grid or on customer premises.
• Higher priority for federal research, development and demonstration of DE technologies.
• A concerted effort to address the regulatory and institutional barriers to more widespread DE deployment.

Forum Chair Charles Curtis noted that “these recommendations reflect the concerted regulatory, legislative, and business actions that are needed if distributed power is to grow in a timely fashion beyond important niche markets into a major component of an integrated modernized national electricity system. Today’s focus on energy issues and restructuring of the energy marketplace present an important opportunity for moving forward with such actions.”

The CECA report - and the members of the Distributed Energy Forum - can help inform the Administration, the Congress, the states, and the private sector as they work through and around the technological, economic, regulatory, and structural obstacles to realizing this opportunity.

The full CECA DE Forum Report is available from CECA. More information about distributed energy can be obtained from CECA’s web site at www.cecarf.org.

CECA is the senior public interest organization in the United States focusing on the energy, telecommunications and other networked industries that provide essential services to consumers. As a leading national and international resource for policy information and analysis, CECA has nearly three decades of experience building consensus among stakeholders and developing policy that serves the consumer’s interest.