March 16, 2011

Historic New FERC Ruling to Enable Smart Grid

Preti Flaherty's Energy Attorney Donald J. Sipe Served as a National Thought Leader in Developing the Rule

PORTLAND and AUGUSTA, Maine (March 16, 2011) – Preti Flaherty announced today that the Federal Energy Regulatory Commission has adopted a Final Rule which establishes a level playing field for those who wish to reduce their energy consumption during times of scarcity. Energy attorney Donald J. Sipe was actively involved in providing legal and economic thought leadership to FERC throughout two and a half years of advocacy, research and eventually rulemaking hearings.

This landmark decision creates a crucial tool in efforts to save energy and reduce the costs of energy, not only for the curtailer but for the grid as a whole. Under this new rule, consumers can now be compensated as generators for reducing their energy use, under certain circumstances.

This new rule is a key element in implementation of a comprehensive Smart Grid system. The Smart Grid seeks to interconnect electric-powered devices and facilities to manage electric supply by better understanding and controlling demand. In order to implement this on a large scale, consumers needed to be able to be compensated for their participation in this system – this new rule provides the regulatory framework that allows for that to happen.

Sipe presented two academic papers to FERC and before its five commissioners. He has served as the national leader of efforts to gain recognition for the important role that Demand Response can play in reducing costs in the electric grid. The new rule issued by FERC has its basis in the algorithm Sipe developed and the ideas espoused in his papers, Defining the Product: Market Theory for an Essential Service and the Proper Role of Demand Response and Integration of Demand Response into Day Ahead Markets: A Supply Side Approach.

According to attorney Anthony Buxton, Chair of the firm's Energy & Utilities Practice Group, "We are extremely proud to see the forward-thinking work of Donald Sipe and the Preti Energy Group contribute to this historic ruling. The FERC rule establishes a principle that will greatly aid in the development of the Smart Grid. The Smart Grid is to appliances, lights and electric motors as the internet is to personal and office computers: by interconnecting electric-powered devices and allowing them to communicate with one another without human effort, the Smart Grid will allow the voluntary coordination of use of electricity by such devices to reduce both individual and societal energy costs."

Sipe practices with the firm's Energy and Telecommunications Group in Portland and Augusta, Maine, applying his expertise to helping energy and utilities clients make the transition from regulation to competition. He also serves as Vice Chair of the New England Power Pool (NEPOOL).

Before joining Preti Flaherty in 1997, he worked for eight years as a staff attorney with the Maine Public Utilities Commission, a unique experience that afforded him an insider's understanding of complex utilities issues from consumer, corporate and governmental points of view. While at the commission, he played a significant role in the development of the "Commissioner's Draft Report on Restructuring the Electric Industry in Maine."

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