Grid 101: Part 1 - The Stakeholders of the Grid

The electric grid has a singular purpose, which is to transfer power to address the supply and demand of electricity. What makes the operation of the grid complex is the end user behavior, the introduction of bidirectional power flow, how the grid is paid for, and who is responsible for managing it.

The grid is a critical part of the energy value chain which consists of:

 Generation --> Transmission --> Distribution --> Customer Endpoint

The electric grid has a singular purpose, which is to transfer power to address the supply and demand of electricity. What makes the operation of the grid complex is the end user behavior, the introduction of bidirectional power flow, how the grid is paid for, and who is responsible for managing it.

The grid is a critical part of the energy value chain which consists of:

 Generation-> Transmission-> Distribution -> Customer Endpoint

When discussing the grid, the primary focus is on:

Transmission -> Distribution -> Customer Endpoint. 

This linearity is tied to the historical nature of the grid, where it was initially set up as a linear unidirectional flow; though today’s grid is evolving to address bidirectional flow.

There are key stakeholder groups in the management of the grid and can generally exist within three frameworks (non-exclusively). These frameworks consist of:

1. Regulatory lens- what is the grid obligated to do?

2. Operational lens- how does the grid get managed?

3. Economic lens- who pays for maintenance and new build of the grid?

This discussion will dive into the regulatory perspective and some of its key bodies:

FERC provides the national orders for the grid operators to understand what are the expectations in the continued operation of the grid, especially as the features of the grid evolves. They regularly listen to cases under their jurisdiction and provide executive orders which are enforceable with fines and other penalties.

NERC has a North American scope (includes jurisdiction of some Canadian territories as well) and focuses on providing reliability evaluation and guidance of the bulk electric system, as well as developing grid reliability standards of all the regions within its scope. These standards are enforced by FERC and government authorities in Canada.

PUCs are public utility commissions (also known as public service commissions), which are state led bodies that are responsible for being the regulatory check for the developments and operations of the grid in their state. Though it is important to mention that this is not their only responsibility as they may be involved with regulations for other utilities such as gas and water. Any entity that has an interest in the state in relation to a utility service may file a docket with the PUC, and all filings are public. 

These are some of the key regulatory bodies that impact the decisions related to the grid. There are other stakeholders involved who interact with these bodies, as these organizations are primarily responsible for regulating the grid infrastructure. For example, a utility will own, operate, and maintain all the grid infrastructure but will look to its state PUC for approval for budgets or what’s commonly known as rate cases for any capital investments or O&M budgets for a designated time period. And each state may have unique entities that support the PUC and the state in managing the grid assets. In later discussions, we will dive into the operational perspective of the grid and the economics of the grid. 

Unofficial references:

1. Stanford Electricity Grid Explained: https://understand-energy.stanford.edu/energy-currencies/electricity-grid

2. DOE Grid Energy 101: https://www.energy.gov/sites/prod/files/2019/04/f62/Miller-energy-basics.pdf

3. (Grid energy usage cycles) https://mestes.substack.com/p/explaining-the-grid-part-1

4. Quick overview of the grid: https://www.indermediate.com/p/indermediate-the-grid-overview

Regulatory overview of the grid entities: https://jasondoering.substack.com/p/the-grids-org-chart