 Detaching AC from MC  Rate Decoupling  Lowers consumption, therefore results in lower emission  Facilitating two-way communication  Increase Reliability  More accurate pricing structures, hence lower prices for consumers

 August 2003  Lasted 3 days  Affected 50 million  10 million Canada  40 million in U.S  Eastern US and Canada  Detroit to New York City and Toronto  $10 billion (USD) in economic loses  3,000 fire calls in NYC alone  11 deaths

 Interconnects – regions of AC connectivity – strictly regulate frequency (60 Hz)  Frequency is dependent on load (demand) and supply.  When there is an overload frequency drops

 Transformers and Generators both break down when the AC Frequency changes  Generators speed up when frequency drop, overheat  Current increases and causes Transformers to overheat and explode…

 Distributed Energy Systems generate emergency power onsite when supply drops, causing a dip in frequency  But there still is a lack of communication about the real demand

Substation Privately Owned Power Plant (generation ) Meter Independent Generators Independent System Operator Managed Investor Owned Utility Managed GenerationTransmissionDistribution Market Structure SCADAAMI Smart Grid FERC/PUCsPUCs

Smart Grids AMI (Advanced Metering Infrastructure) PEM (Personal Energy Management)

 Prices reflect average, not marginal costs  Consumers have little incentive to constrain electricity use when conservation is required  Quantity demanded exceeds quantity available  Create incentives for decreased electricity consumption during peak periods

 Real-time market information on prices and quantities demanded and supplied  Provide incentives to reduce consumption during peak use periods  Regulates supply on each transmission line through prices  Encourages increased use in rarely used lines and decreased use in overcrowded lines  Encourages increased use during non-peak periods

Imagine a toll road where "permits" are auctioned off. The price each person is willing to pay will depend on the number of people on the road Drivers will pay less for a crowded than a less congested road End result is traffic from otherwise crowded roads shifts to less crowded roads and congestion is reduced for everybody. Similarly, spot pricing on a Smart Grid encourages consumers to use less crowded transmission lines. Electricity flow shifts from overused to underused lines Events leading to the 2003 blackout don't occur.

 EU looking to implement single-grid by 2020 Italian Government owned Utility furthest ahead with 30 million “smart-meters” New Zealand and Australian private market conducting smart-meters in most provinces  World’s 1 st Smart Grid – Boulder, Colorado

 Tennessee  Delaware  Utah  Vermont  Idaho  Connecticut  Iowa  Virginia  West Virginia  Kentucky  Montana  Modify EPACT  Directed States to either adopt or decline time based rate schedules to enable:  Real-Time/Dynamic Pricing via Customer Interface  Demand Response  Address the concerns of the States Deciding not to Adopt EPACT

Cap & Trade  Strong implications toward energy degregulation  Price Premium on Coal  Provides incentives for RTP  Alternative Energy  Energy Efficiency

 With Real Time Pricing – preliminary steps must be taken  Guaranteed Rate of Return for installing infrastructure  Decoupling (Volume based to Congestion based)  Protection for Public Purpose Programs  Low-Income  Seniors