1. Grid Modernization and the Energy Policy Act of 2005
PSERC Summer Planning Workshop
August 1, 2005
Grid Modernization and the Energy Policy Act of 2005
David Meyer
Office of Electricity Delivery
and Energy Reliability
U.S. Dept. of Energy

2. Overall Office Mission
Office of Electric Delivery and Energy Reliability (OE)
Overall Office Mission
Lead national efforts to modernize the electric grid, enhance security and reliability of the energy infrastructure, and facilitate recovery from disruptions to energy supply.

3. Office of Electricity Delivery and Energy Reliability (OE)
Office of the Director
Resource
Management Staff
Permitting, Siting,
& Analysis
Infrastructure Security & Emergency Response
Research &
Development
Transmission Reliability
Electric Distribution Transformation
Electricity Storage
Superconductivity
GridWorks
GridWise
Infrastructure Security Technology
Visualization and Decision Analysis Tools
Analysis and Modeling
Electric Markets Technical Assistance
Electricity Exports/ Presidential Permits
Power Marketing Administration Liaison
Energy Infrastructure Protection
State/Local Gov’t Partnerships
Training and Exercises
Visualization
Critical/Vulnerability Assessment
Emergency response support
Here’s how we are organized.
Yada yada yada

4. Grid Modernization – A Presidential Priority
“…We have modern interstate grids for our phone lines and our highways. It's time for America to build a modern electricity grid.”
April 27, 2005
President George W. Bush

5. Transmission: Uncertainty Breeds Under-Investment
Uncertainties
Long-Term Under-Investment
Public Interest at Risk
Annual Average Growth Rates in U.S. Transmission Capacity and Peak Demand
Economic growth, jobs creation
Stability of regional wholesale power markets
Consumer electricity bills
Public health and safety
Energy security and reliability
Environmental quality
Industry structure– who will build/own/operate new transmission?
Financial risks and regulatory uncertainties
Protracted siting and permitting processes
States - “Patchwork quilt”
Federal – legislative logjam
Growth Rate (%/year)
Transmission (GW-miles)
Summer Peak (GW)
Source: Hirst, E. “U.S. Transmission Capacity: Present Status and Future Prospects.” June 2004.
Note: Regional circumstances vary – but all regions face transmission shortfalls and need to plan capacity expansion programs

6. Major Congested Grid Paths, 2002
Transmission bottlenecks are extensive.
Several can be classified as “national interest” bottlenecks.
Economic growth and security issues threatened unless they are addressed.
Source: National Transmission Grid Study, DOE, 2002

7. PSA Strategy:
Forge concerted efforts at regional level to modernize nation’s electric grid, using new technologies to best advantage.
Show need for new grid, urgency of using current window of lead time effectively.
Build partnerships with national, regional and state organizations that have key roles in electricity markets; foster regional plans.
Use outstanding experts from labs, universities, other sources to provide objective technical assistance.

8. Energy Policy Act of 2005: Reliability
Creates legal foundation for mandatory and enforceable national electric reliability standards
Establishes FERC jurisdiction for reliability
ERO will develop and propose technically sound standards
FERC will review, approve, and enforce standards
OE will provide technical support to FERC and ERO
Next steps: FERC to issue rules re certification of ERO within 180 days. NERC likely to apply for certification. Regional councils likely to become “regional entities” under ERO.

9. Energy Policy Act of 2005: Transmission Investment
DOE (OE) to do transmission congestion study and designate “National Interest Electric Transmission Corridors (NIETCs)” every 3 years
FERC given backstop siting and permitting authority for facilities in corridors
DOE (OE) to coordinate federal review of non-NIETC transmission projects, at applicant request

10. Regional Energy Planning (1)
Substantial amounts of new generation will be needed in all regions over the next two decades.
Much of this generation will be coal, renewable, nuclear, and Canadian imports – sited distant from load and requiring new transmission capacity.
Result: Regional planning is essential. Time is short. Penalties for inaction could be severe.

11. Expected Capacity Additions by Region and Fuel, 2004-2015 (Gigawatts, EIA, AEO 2005)

12. Expected Capacity Additions by Region and Fuel, 2015-2025 (Gigawatts, EIA, AEO 2005)

13. Regional Energy Planning (2)
OE support for institutionalization of planning in West
FY03-05 multiyear grant to the Western Governors Association
In-kind technical assistance by LBNL and Regulatory Assistance Projects experts to WGA coordination and planning committees
Western Governors approved June 13 resolution calling for a west-wide fee on electricity to fund regional planning (nickel per customer per year)
Supported initial efforts to identify Western “pre-approved energy corridors” across federal lands

14. Regional Energy Planning (3): Rise of Proposed Mega-Projects
Frontier Line Project: ~12 GW (Wyoming coal and wind) to serve loads in Utah, Nevada, California
Northern Lights: Cogeneration at Alberta tar sand sites, other generation to serve loads as far south as Phoenix
Mountaineer Project: Midwestern coal to serve loads in mid-Atlantic region

15. Regional Energy Planning (4): Objectives
An industry-based group (RTO, regional council) should be balanced by some state-based policy group (RSC, other).
Industry group should develop a technically sound conceptual design for next-generation electric infrastructure.
Policy group should identify the major policy obstacles to bringing plan to reality.
OE can assist these processes and solution of policy obstacles – but state-level leadership is essential.

16. Regional Energy Planning (5)
Mega-projects, if they go forward, can become laboratories for many OE/PSERC efforts:
-- Support for open, transparent planning processes; regional cost-allocation plans; regional siting protocols; consideration of non-wires alternatives
-- Use of new OE-supported technologies to best advantage
-- Incorporation of concepts and technologies for improving physical and cyber security of grid