1. ISO-NE RTEP04 PUBLIC MEETING Boston, MA September 9, 2004 Larry Mansueti Office of Electric Transmission and Distribution U.S. Department of Energy Comments of the U.S. Department of Energy

2. August 14, 2003 Blackout Source: NOAA/DMSP

3. Effects of the Blackout August 14, 2003 Blackout 2x Size of largest previous blackout in North America (in MW lost) 8 U.S. states affected 1 Canadian province affected 3 Deaths 50 Million people without electricity $4.5 - $10 Billion in U.S. economic losses. 12 Airports closed 23 Cases of looting in Ottawa 250+ Power plants shut down 9,300 Square miles affected 61,800 MW of power lost 1.5 Million Cleveland residents without water

4. U.S.-Canada Power System Outage Task Force Final Report of Task Force included 46 recommendations Trim your trees, train your operators, and ensure that your systems work, and the risk of blackout is greatly reduced. –Jimmy Glotfelty, DOE, in IEEE Spectrum, Aug. 2004

5. Key Accomplishments Since the Blackout Massive joint U.S.-Canada-NERC- investigation identified the causes of the blackout NERC and Task Force issued recommendations Direct causes of blackout were addressed through remedial action under NERC oversight by June 30 NERC conducted 23 readiness audits of control areas and reliability coordinators in the Eastern Interconnection Virtually all grid operators received five days of emergency preparedness training before June 30 U.S. and Canada established Bilateral ERO Oversight Group to ensure coordinated response to reliability governance concerns Government agencies tracking progress on implementing the Task Forces recommendations NERC extended life of its Urgent Action Standard 1200 to August 2005 and is developing a successor version This report can be accessed at http://www.electricity.doe.gov/news/blackout. cfm?section=news&level2=blackout

6. …it's clear that the power grid needs an overhaul. It needs to be modernized. As we go into an exciting new period of American history, we want the most modern electricity grid for our people… we need more investment; we need research and development… George W. Bush September 15, 2003 Office of Electric T&D Mission: Electricity Modernization

7. National Transmission Grid Study 51 Recommendations The National Interest in Relieving Transmission Bottlenecks Next Steps Toward Relieving Transmission Bottlenecks Relieving Transmission Bottlenecks By Completing the Transition to Competitive Regional Wholesale Electricity Markets Establishing RTOs Increasing Regulatory Certainty and Focus Relieving Transmission Bottlenecks Through Better Operations Pricing Transmission Services to Reflect True Costs Increasing the Role of Voluntary Customer Load Reduction, and Targeted Energy Efficiency and Distributed Generation Using Improved Real-Time Data and Analysis of Transmission System Conditions Ensuring Mandatory Compliance with Reliability Rules Relieving Transmission Bottlenecks Through Effective Investments Implementing Regional Transmission Planning Accelerating the Siting and Permitting of Needed Transmission Facilities Ensuring the Timely Introduction of Advanced Technologies Enhancing the Physical and Cyber Security of the Transmission System DOE's Commitment and Leadership Topic Completing Market Transition 12 Improving Operations 12 Investing Effectively 23 Other 4

8. Office of Electric T&D Electric Systems RD&D Transmission Reliability Electric Distribution Transformation Electricity Storage Superconductivity OETD RD&DAnalysis Electricity Policy Modeling and Analysis Provide Check/Balance to the FERC Electric Markets Technical Assistance Electricity Exports Including Presidential Permits Power Marketing Administration Liaison Electric Power Systems Operations and Analysis

9. OETD Funding Profile Congressionally Directed (earmarks) FY02 – 25,209 FY03 – 30,437 FY04 – 25,750 * Includes 4,905 for blackout studies ActivityFY02FY03FY04FY05 Req. Superconductivity 31,99138,80134,12945,000 Transmission Reliability 18,25721,57611,76010,720 Electric Distribution 10,79111,07214,5635,459 Energy Storage 9,0988,9909,0154,000 Elec Mkts Tech Assist 2,8404,8166,925*5,000 GridWise ---5,000 GridWorks ---5,500 Exports ---1,201 Construction --736- Program Direction -3,1293,6909,000 Totals72,97788,38480,81890,880 ($000)

10. DOE, through a rulemaking, will determine how to identify and designate transmission bottlenecks that significantly impact national interests. www.ntgs.doe.gov or www.electricity.doe.gov DOE National Transmission Grid Study Language on Bottlenecks

11. DOE Bottleneck Work – Next Steps Delayed by funding and blackout investigation Will identify National Interest Trans. Bottlenecks regardless of energy bill fate Preliminary scoping work complete Technical conference held July 15, 2004 Federal Register Notice seeks public comment on process. Comments due Sept. 20 DOE presently considering balance between using existing regional bottleneck data vs. DOE identification using raw data Path forward influenced by public comments! www.electricity.doe.gov/bottlenecks

12. U.S. Transmission Capacity: Present Status, Future Prospects Study Prepared by Eric Hirst Consultant in Electric-Industry Restructuring Bellingham, WA Eric@Ehirst.com www.Ehirst.com funded by U.S. Dept of Energy & Edison Electric Institute also at www.electricity.doe.gov

13. Eric Hirst Report: Reviewed 20 Transmission Plans NPCC –ISO New England –National Grid –NY ISO MAAC –PJM SERC –Two reports FRCC – nothing available Midwest: ECAR, MAIN, MAPP –Midwest ISO –ATC –MAPP –MN electric utilities SPP plan ERCOT plan WECC –SSG-WI study –AZ assessment –California ISO Other studies –BPA projects

14. Eric Hirst Report: Transmission Plans Review Quality and relevance of plans quite variable Transmission planning and expansion varies greatly Best plans: ISO New England, National Grid, Midwest ISO, American Transmission Company, ERCOT, SSG- WI

15. Comments on RTEP04 Draft Report Administration fully supports regional coordination and planning through…voluntary RTOs. --- Statement of Admin. Policy, Sept. 10, 2003 –Commend ISO-NE on development and release of RTEP04 Need for greater grid investment to ensure reliability and economic benefit –RTEP04 shows the need for greater investment –Continue pressure to make it happen Natural gas –RTEP04 points out major risk from gas dependence –Continue your work on sorting out planning connections on gas/electricity

16. Comments on RTEP04 Draft Report –Dont forget demand-side: Greater energy efficiency and conservation are vital near-term and long-term mechanisms for moderating price levels and reducing volatility. --- Natl Petroleum Council Natural Gas Rpt Non-transmission alternatives –Are they adequately treated in RTEP04? –Inclusion noted in SW CT RFP –Should they be treated equally? Socialize like transmission? –Governance role of new Sector Six good Overall: RTEP04 highlights important issues for New England

17. Back-up Slides

18. Blackout Report: Several Areas of Parallel Action Fix direct causes of blackout Conduct readiness audits elsewhere Tighten and restate existing standards Develop new standards on key subjects Improve government oversight, prepare for implementation of U.S. legislation Improve emergency preparedness training Improve real-time tools for operators

19. OETDs Portfolio of RD&D HTS tape to HTS cable Advanced Conductors Interconnection Device Novel storage concept Diamond Sensor 2kWh Superconductor Flywheel Demonstrator Superconducting Substation Supervar System Ultra capacitors ETO DC to AC inverters

20. DOE Eastern Interconnection Phasor Project Phase I 30 Instruments, most are already installed but not connected Work out communications issues Transfer software tools to users Establish relationships Phase III More than 350 Instruments Projected benefits from previous slide realized Vendors participating at all levels Inexpensive instruments and communications available Phase II ~75 Instruments Immediate benefits from previous slide realized All major corridors covered Data available to research community to begin work on projected benefits

21. Preliminary DOE Work on Transmission Bottlenecks Scoping and planning studies to support DOE identification of national-interest transmission bottlenecks DOE natl lab/expert group (CERTS) has prepared 4 reports (listed below): Survey of current transmission bottlenecks, as reported by ISOs – J. Dyer, Electric Power Group Review of commercially available transmission bottleneck analysis techniques/models – P. Sigari, KEMA Assessment of tools under development by national labs that might be available to support bottleneck assessment – S. Thomas, et. al, Sandia Natl Lab Review of recent reports of congestion costs – B. Lesieutre/J. Eto, Lawrence Berkeley Natl Lab