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Issues Affecting the Electricity T&D System in North America

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

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  1. 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

  2. Personal Background Retired President, now Independent Consultant SPC

  3. Why Visit Southern California?

  4. System Development Challenge Balancing the policy drivers Reliable Supply Consumers Acceptable Environmental Prices Sustainability

  5. 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

  6. 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

  7. Forecast Demand From David Hughes - NRCan

  8. From David Hughes - NRCan

  9. NE - Reliance on Natural Gas Original Slide from ISO-NE

  10. 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 - ?????

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. DOE NIETC East

  18. Transmission Projects SPC NIETC Hydro Renewable Market

  19. 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

  20. “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

  21. Moving to the T&D Future

  22. 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

  23. Time For Action! “When you get to the fork in the road, take it!” Yogi Berra

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