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Issues Affecting the Electricity T&D System in North America. Global Utility Summit Los Angeles, Nov 17, 2008 Presented by WK (Bill) Marshall Senior Associate. Personal Background. Retired President, now Independent Consultant. SPC. Why Visit Southern California?.
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Issues Affecting the Electricity T&D System in North America Global Utility Summit Los Angeles, Nov 17, 2008 Presented by WK (Bill) Marshall Senior Associate
Personal Background Retired President, now Independent Consultant SPC
System Development Challenge Balancing the policy drivers Reliable Supply Consumers Acceptable Environmental Prices Sustainability
Complicating Factors • Generation issues • Fuel costs and availability • Climate change (and other emission issues) • Renewable requirements • Distribution issues • Demand response • Distributed generation • “Smart” components • Transmission ownership, access and benefits
Fossil Fuel Prices in $/MBtu(Conventional Unit Electricity Cost in Cents/kWh) 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 • Source – US DOE • NY Harbour HFO, NYMEX Appalachian coal, NYMEX Henry Hub natural gas
Forecast Demand From David Hughes - NRCan
NE - Reliance on Natural Gas Original Slide from ISO-NE
Climate Change • Growing international issue • Increasing state and provincial issue • Regional climate change initiatives • Northeast and west • Targeted reductions • Kyoto – 6% from 1990 by 2012 • Canada – 20% from 2006 by 2020 • G8 – 50% from 2006 by 2050 (Electricity??) • USA - ?????
Renewable Development • Major wind increases • Texas, California, Mid West, Alberta, Maritimes • Many aggressive state RPS requirements • Partly climate change strategy • Partly hedge on fossil fuels • Possible national RPS of 20% • Integration issues need resolution • Transmission access and delivery • Distributed distribution connections • Balancing
Relative Transmission Costs • Transmission benefits are large yet costs are relatively small Total Electricity Cost Transmission 6-10% Distribution 15-30% Generation 60-75% Transmission Distribution Generation
Transmission Benefits • Increased Reliability • Lower system losses • Lower rates for end use customers • Reduced congestion • Improved competition • Greater supply diversity • Lower emissions • Environment siting of generation • National security
Transmission Development • Investment has lagged load growth • Significant congestion has resulted • Regulatory changes have not helped • OATT physical rights • Locational pricing and financial rights • Minimum interconnection standards • Reliability margins have shrunk • 2003 blackout focused attention
Transmission Questions • Why no investment? • Why continued congestion? • Some reasons • Cost differential across the congested interfaces • Winners and losers • Disproportionate value • Intra-state concerns • State versus regional interests
New Transmission Paradigm • Energy Policy Act 2005 • Add Section 219 to Federal Power Act • Provide incentives for transmission development • DOE identification of “National Interest Electricity Transmission Corridors” (NIETC) • FERC incentive rule issued July 20, 2006 • Higher ROE • 100% CWIP • Recover prudent pre-commercial costs • Approval by state or designation by DOE as NIETC not required but worthwhile
Transmission Projects SPC NIETC Hydro Renewable Market
Mandatory Reliability Standards • FERC empowered through Energy Policy Act • Approve standards • Issue sanctions up to $1,000,000 per day • Actions are a response to 9/11, 2003 Blackout and security concerns • NERC designated “Electric Reliability Organization” • Consequences? • Increased reliability • Increased equipment, labour and related costs
“Smart” Grid • Transmission actions • Reduce reliance on SPSs • Increase demand response for market and control • Improve SCADA systems • Distribution actions • Real time monitoring • Two way smart metering and load control • Feeder balancing • Enhanced restoration and service
HR - The Final Challenge • Work force is old and retiring (CEA Study) • 50% of transmission workers will retire in 10 years • Only 7% of trades below age 30 • Looming shortfall at a time of significant growth with new technologies • Challenge is huge • Transfer existing experience and knowledge • Train new workers with new and old skills • Work smarter • Do more with less
Time For Action! “When you get to the fork in the road, take it!” Yogi Berra