Grid Modernization: Basic Technical Challenges Advocates Should Assert Unleashing Latent Value in Distribution Utility Businesses NASUCA Annual Meeting Orlando November 13, 2018

Preview Introduction to the Wired Group Grid Modernization Justifications/Questions to Ask Is there really a problem? How extensive is the problem? What’s the least expensive way to solve the problem? Who should pay to address the problem? Best Practices in Grid Modernization Opportunity: Grid Modernization Working Group Copyright 2012-2018 Wired Group. All Rights Reserved

Wired Group Background Leading Advocate experts on grid modernization plans & performance Comprehensive, objective evaluations of smart grid deployments SmartGridCity™ for Xcel Energy (2010) Duke Energy Ohio for the Ohio PUC (2011) (California DRA, Southern California Edison, smart meters only, 2012) Findings: Plans always overstate benefits to customers Plans always understate costs to customers Copyright 2012-2018 Wired Group. All Rights Reserved

IOU Grid Modernization Justifications To improve reliability and/or resilience To reduce reliability risk of distributed generation Is there really a problem? How extensive is the problem? What’s the cheapest way to solve the problem? Who should pay to address the problem? Advocate Grid Modernization Questions Copyright 2012-2018 Wired Group. All Rights Reserved

Is There Really a Problem? Fitchburg G&E DG: 3.1 MW Fitchburg G&E System Peak: 85 MW Copyright 2012-2018 Wired Group. All Rights Reserved

Is There Really a Problem? PG&E DG Proposal: “In this rate case we’ll spend $40 million to add relays on the high voltage side of substation transformers equipped with single-phase fuses to prevent DG-related problems during transmission-level outages. About 30% of our substations are of this design. We’ll do 1/3 now, and 1/3 in each of the next 2 rate cases.” Discovery Round 1: “What is this problem, exactly?” Round 2: “What chain of events is required to cause an outage?” Round 3: “What probability is associated with each event in the chain?” Link in the Chain of Events Required to Create the Problem (Confidential) Probability as characterized by PG&E (Confidential) Probability per witness Stephens’ experience A occurs Low, Medium, or High 0.006 B occurs 1.000 C occurs 0.500 D occurs 0.010 E occurs 0.100 Total: the probability of all of the above to occur collectively to manifest the problem PG&E’s installation of substation relays avoids 0.000003 (probabilities multiplied) Copyright 2012-2018 Wired Group. All Rights Reserved

Is There a Problem? To What Extent? “Tests of grid tied inverter systems at NREL suggest that the fault current time period is 0.06 – 0.25 cycles. This time period is typically within the subtransient reactance values for trip times for circuit breakers, and therefore can possibly be ignored.” Keller, J & Kroposki, B. “Understanding Fault Characteristics of Inverter-Based Distributed Energy Resources”. NREL Technical Report TP-550-46698. January, 2010. P. 38. Copyright 2012-2018 Wired Group. All Rights Reserved

What’s the Cheapest Solution? Non-Wires Alternatives? SoCal Edison Proposal: “We’ll spend $81 million to increase DG capacity on 74 circuits, so that we can solicit DG projects from third party developers. This may help us defer or avoid circuit/substation upgrades”. Note: The $81 million did not include carrying charges, premature retirement of equipment with book value remaining, or the cost of energy from the DG projects. In discovery round 1, SoCal Edison identified the circuit/substation upgrades which might be deferred or avoided. In discovery round 2, SoCal Edison estimated the cost of the identified upgrades which might be deferred or avoided at $40 million (!) Copyright 2012-2018 Wired Group. All Rights Reserved

What’s the Cheapest Solution? Undergrounding? Dominion Proposal Deemed cost-effective by law up to a cost of $20,000 per undergrounded customer/$750,000 per mile* 4,000 miles (benefitting only 6.9% of 2.25 million customers) $3 billion/$1,333 per customer, not including carrying charges! Storm restoration reduction estimate: 40% (for 6.9% of customers to be undergrounded). So, a 10-day outage becomes 6 days. Statewide SAIDI improvement 3-12 minutes (2016 SAIDI: Dominion = 132 minutes; US IOU Average 120 minutes) No aesthetic benefit; 95% of poles/wires remain (telco, cable TV) * A natural gas-fueled residential stand-by generator (11kW), with battery, costs $3,687 with shipping Copyright 2012-2018 Wired Group. All Rights Reserved

Who Should Pay to Address the Problem? Utility-scale Solar Farm Sample SoCal Edison Charges per California PUC’s Rule 21: To developer: $250k (at cost) to design & construct interconnection To rate base: $10M to upgrade circuit to get power to market Copyright 2012-2018 Wired Group. All Rights Reserved

Best Practices for Grid Modernization Start with “No Regrets” Foundational Software to improve grid state visibility, grid state modeling capabilities, and distribution energy efficiency Advanced Distribution Management Systems (ADMS) Distributed Energy Resource Management Systems (DERMS) Integrated Volt-VAr Optimization (IVVO for Conservation Voltage Reduction) Expand Capabilities to Grid on an As Needed Basis (Remote-controlled Equipment, Circuit Ties, Sensors, Comm’s: circuit-by-circuit/sub-by-sub) Insist Upon a Transparent Grid Planning Process which uses risk- informed decision support project prioritization and selection software Measure Performance to ensure benefits anticipated in the project prioritization and selection process are actually delivered. Copyright 2012-2018 Wired Group. All Rights Reserved

Measuring Performance? Consider Benchmarking! Copyright 2012-2018 Wired Group. All Rights Reserved

Grid Modernization Working Group Goal: Reduce Grid Modernization Cost & Risk Objective: Slow distribution rate base growth Strategy: Develop & share a body of knowledge Lessons Learned Best Practices Experiences (operating, regulatory, market, etc.) Tactics: Website? Guidance Document? Conference Calls? Internal? Public? Copyright 2012-2018 Wired Group. All Rights Reserved

Paul Alvarez, President, Wired Group Thank You! Paul Alvarez, President, Wired Group palvarez@wiredgroup.net Mobile 720-308-2407 Office 303-997-0317, x-801 www.wiredgroup.net Copies of Smart Grid Hype & Reality are being made available to NASUCA members at no charge; simply e-mail Paul Alvarez with preferred mailing address and number of copies desired Copyright 2012-2016 Wired Group. All Rights Reserved