U S Electricity Infrastructure State Initiatives for Advancing

U. S. Electricity Infrastructure: State Initiatives for Advancing Security, Technology and Market Transformation Sue Gander Director Environment, Energy and Natural Resources Division National Governors Association Center for Best Practices 202 -624 -7740 sgander@nga. org www. nga. org/center/eenr

Overview • Electricity infrastructure challenges • State leadership to address these through transmission, technology and markets – Transmission – Planning, cost allocation, environment – Smart Grid – Pilots and road maps – Energy efficiency as a resource – Best practices and opportunities • ARRA (Recovery Act) support

The National Governors Association Providing Governors Ideas that Work Federal Relations • Builds consensus on federal issues • Committee structure • Gives governors a collective voice on Capitol Hill Center for Best Practices • Comparative policy shop • Provides governors and staff timely technical assistance • Securing a Clean Energy Future (2007 -2008) • Strengthening our Infrastructure for a Sustainable Future (20082009)

Transmission Benefits - If We Get it Right Economic Environment Security DOE study on 20% potential wind penetration creates $450 billion in economic gain and 500, 000 jobs Allows states to develop Protects consumers and DG and off-grid renewable industry from blackouts, energy sources data theft, etc Avoids transmission congestion -- costs homeowners and businesses $22 billion/yr Increases energy efficiency Allows for better data opportunities, notably DR collection, backup mechanisms, and analysis of benefits Source: Energy Future Coalition and NGA Center

Transmission faces “old” challenges… • Growing demand for electric services – Growing population/reliance on digital technology/PHEVs • Aging infrastructure – Grid is similar to one envisioned by Thomas Edison – 70% transmission lines at least 25 years old – 70% power transformers at least 25 years old – average is 40 years – 60% of all circuit breakers at least 30 years old – By 2030, the electric utility industry will need to invest up to $2. 0 trillion to maintain today’s level of service ($300 B in transmission) • Concerns with reliability – Three major blackouts in last 9 years – Impacts quality of life, safety, bottom-lines

Transmission Faces New Challenges… • Concerns about global climate change – Electricity use is 40 percent of U. S. CO 2 emissions • Greening of power supply – 20 states have CO 2 reduction targets – 33 states have Renewable Portfolio Standard (RPS) or similar goal for electricity – Nearly 20 states with Energy Efficiency Resource Standards (EERS)

The Transmission Planning Process FERC Grid Operators PUCs Interconnection Entities Federal Agencies Utilities Environ. Agencies Governors Source: Energy Future Coalition

State Leadership on Transmission Needs Three areas of focus: • Doing more -- Addressing planning, cost allocation • Doing it smarter -- Improving the grid • Doing it better -- Reducing demand for transmission (deferring investments)

Improved Transmission Planning -- CA • Renewable Energy Transmission Initiatives (RETI – Statewide collaborative process between CPUC, CEC, CAISO, other utilities, land managers, and enviros – RETI process will identify, plan and permit the “best” transmission lines to meet CA’s 33% RPS – Includes significant investment by PG&E

Improved Planning -- MT, CO, UT • Montana Alberta Tie Ltd. transmission line – 230 kilovolt, 214 mile-line that will connect state energy to markets in Alberta, Canada • completed the permitting process in 2008 • expected to attract nearly $1 billion in wind development • Colorado study to propose ways to achieve 1 GW of new RE capacity • Utah statewide REZ study – Phase I completed

Improved Planning -- Regional Efforts • Western Governors Association - WREZ – GIS based study on potential for large scale development of renewable resources – June 15 phase I – Partner with utilities to evaluate needs to move power from preferred REZs – 30, 000 MW by 2015 • Upper Midwest Transmission Development – MGA Governors of IA, MN, ND, SD, and WI – Identify cost-effective wind resources and transmission infrastructure projects – Cost allocation and planning working groups

ARRA Support for Transmission • DOE provided $6. 5 billion for transmission activities – Western Area Power Administration and Bonneville Power Authority each given $3. 25 billion in spending authority • To construct transmission only for delivery of RE power • Projects must repay the U. S. Treasury with interest • Additional ARRA planning provisions • Regional Planning Entity must be established for 3 interconnections (Western, Eastern, Texas)

Smart Grid - The Potential Source: http: //www. urbanecoist. com/wp-content/uploads/2009/03/smartgrid_454570 a-6. jpg

Smart Grid -- The Barriers • New technology risk • Lack of standards – Security and interoperability • Cost recovery risk – Who pays, who benefits? • Need a strategy – Statewide vision, plan or roadmap

Selected Smart Grid Pilots State Southern CA IL PA Boulder, CO Miami, FL Portland, OR Ohio Charlottesville, VA Meters Cost 2 -way interface for household devices to communicate w/meter 141, 000 two-way smart meters under proposed pilot $1. 63 billion ($9 million and $304 million in benefits) Com Ed plans to apply for stimulus funds 1. 3 million AMIs with fixed power line carriers 25, 000 planned smart meters Over 1 million wireless meters to every house in Miami-Dade County 850, 000 AMIs $163 million Three-year pilot (20092011) with AMI for 110, 000 meters 14, 700 meters $109 million over 3 years via $33. 3 million rider for 2009 TBD Programmable thermostats near real-time energy usage information 6 -month review of pricing and technology options to best benefit consumers established Statewide Smart Grid Collaborative to manage planning and develop vision TBD Technical Details • hourly interval data for all customers available on-line within two days First fully integrated “Smart Grid City” new outage management, energy usage and tools on Internet better consumer bill information Distribution automation for real-time control Monitoring of electrical equipment Microgrid: Interconnected network that can function connected to or separate from grid TBD $132 million

ARRA Support for Smart Grid • The Smart Grid Investment program $3. 4 billion available starting in the summer and DOE anticipates over 1, 500 applications • The Smart Grid Demonstration program has $615 million available through matching grants

EE as a Resource - New England • ISO New England Forward Capacity Market – Electricity resources compete for capacity payments – Accepts DR (e. g. EE, DG, load management, etc) – All resources that clear auction paid market clearing price & receive up to 5 -yr usage commitment – Offers price response and reliability response • 2, 029 MW of DR as of 12/2008 • Played key role in July/Aug 2008 heat wave – NYISO saved 948 MW in peak demand – CT saved 217 MW

EE as a Resource - Mid-Atlantic • Demand Response in PJM • Planning Auction for 2012/2013 held in May • 10, 464 MW of incrementally new capacity available – Auction resulted in 5, 682 of DR, 400% over last year’s auction – Wind resources accounted for 323 MW – Combined results of six PJM capacity auctions = 27, 640 MW

EE Barriers • Upfront costs • Measurement & verification • Scale

ARRA Support for EE • $3. 1 billion to state energy offices • $3. 2 billion in energy efficiency conservation block grants • Additional support for weatherization, green schools, bonding authority, tax incentives etc.

Conclusions • States need combination of transmission, smart grid activities along with creative market mechanisms to ensure delivery of clean, affordable and reliable energy – Do more, Do it smarter, Do it better • ARRA presents opportunities for states and regions to move ahead

Resources • DOE/Office of Electricity • EPA/National Action Plan on Energy Efficiency • EPRI • Edison Electric Institute • National Council on Electricity Policy • Regulatory Assistance Project • Center for American Progress • American Council for an Energy Efficient Economy