1. Miles Keogh, NARUC August 24, 2011 Smart Grid: Federal Inputs and State Perspectives in the U.S.

2. 2 Disclaimer: None of this is NARUC official policy. These are probably my opinions, but only mine. Perspectives of the Commissions are as varied as the number of Commissioners & their staffs. NARUC & its Grants & Research NARUC members are the PUCs of the 50 States, DC, USVI, Puerto Rico, and Guam Grants & Research Dept. engages in research for Commissioner interest; ~ $3M per year (with ARRA) Provides link to other Private and Public sector stakeholders –Electricity Delivery Working Group, –National Council on Electricity Policy, –National Action Plan on Energy Efficiency, –Intelligrid Advisory –Other issues and sectors

3. 3 On the menu Defining Smart Gird State / Fed History Fed Funding, State Action What’s Next? What Can / Should We Be Asking?

4. 4 What the heck IS the Smart Grid? NARUC produced a Smart Grid primer in 2009 Focus is on Definitions, Key Regulatory and Policy Issues.

5. 5 It’s not just the grid + internet For our primer we needed a definition The smart grid takes the existing electricity delivery system and makes it “smart” by linking and applying seamless communications systems that can: –gather and store data and convert the data to intelligence; –communicate intelligence omnidirectionally among components in the “smart” electricity system; and –allow automated control that is responsive to that intelligence.

6. 6 Lots of components Appliances, cars, storage, and everything facing inward from the meter, to the… Distribution side of the meter to the… Transmission substation to the… Integration of generation and resources (which may be inside the meter!)

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8. 8 Federal Involvement, State Actions In 2007, the Energy Security & Independence Act added a new “must consider” PURPA standard for Smart Grid Consideration must be complete in 2010 – 2011 So this is something the Feds have wanted the States to consider for some time State actions: –California –New York –Vermont –Texas –Boulder, Colorado

9. 9 If It Wasn’t Adequately Considered Before… “President Obama has announced the largest single grid modernization investment in U.S. history, funding a broad range of technologies to spur the nation’s transition to a smarter, stronger, more efficient and reliable electric system… The $3.4 billion in investments are part of the American Reinvestment and Recovery Act, and will be matched by industry funding for a total public-private investment worth over $8 billion.” “Secretary Chu announced that the Department of Energy is awarding $620 million for projects around the country to demonstrate advanced Smart Grid technologies and integrated systems… These 32 demonstration projects, which include large-scale energy storage, smart meters, distribution and transmission system monitoring devices, and a range of other smart technologies, will act as models for deploying integrated Smart Grid systems on a broader scale. This funding from the American Recovery and Reinvestment Act will be leveraged with $1 billion in funds from the private sector to support more than $1.6 billion in total Smart Grid projects nationally.” Of ARRA’s $787 billion, $45 billion went to the Department of Energy, with 11.5 intended for the grid and around $4 billion for smart grid.

10. 10 Categories of Stimulus Funding As an ARRA pot this area awarded 3.375 billion to matching grants that are to be co- funded by ratepayer funding. Also another billion to demonstration projects, storage projects, Phasor Measurement Unit / Synchrophasor deployment

11. 11 Smart Grid Investment Grants:

12. 12 Investment Grant Project Types Advanced Metering Customer Programs & Services Equipment Manufacture Distribution Systems Transmission Systems

13. 13 The Breakdown Is Significant

14. 14 Regional Technology Demonstrations Demonstrate smart technologies including advanced digital technologies, microprocessor-based measurement & control technologies, communications, computing and information that provide regional solutions and best practices to improve system reliability, security & efficiency. $435,900,287 awarded

15. 15 Storage Demonstrations Utility- Scale Energy Major, utility-scale, energy storage installations that establish utility technology cost/benefit, validate system reliability, durability & adaptability via advanced battery systems, ultracapacitors, flywheels & compressed air systems. Demonstration areas include: wind & PV integration, upgrade deferral of transmission assets, congestion relief and system regulation. $184,826,277 awarded

16. 16 PMUs Leverage capabilities of synchrophasors via installation and network of multiple high-resolution, time- synchronized grid monitoring devices, collect and analyze data, and use of data to create wide-area information that results improved operations and planning, particularly in local or regional operational issues that pose reliability concerns.

17. 17 Thinking about value Much discussion on cost and on benefit components: –Outage management –System optimization –Customer empowerment and demand response –Enabling electromobility Each has a cost and a possible benefit “High-value” and “low value” don’t capture time and uncertainty, however, so instead we hope Commissioners will consider: –Direct value applications –Option value applications

18. 18 Smart Grid can enable the reduction of ~5-9% of 2005 GHG emissions © 2009 Silver Spring Networks | Company Confidential Enabling renewable integration and transport electrification are key Smart Grid applications for combating climate change 18 Smart Grid GHG abatement potential Gton CO2e 7.2 5%9% Elec- tricity Do Not Reproduce Confidential Per Peter Yeung,SSN

19. 19 Dramatic reduction in tailpipe emissions Reduction in petroleum imports of >50% Reduction in peak loads – lowering prices for consumers Improved grid reliability Increased grid security Positive environmental impact Enable new products, services and competitive retail markets Anticipate and respond to system disturbances (self-heal) Perform continuous self- assessment, respond faster by supplementing human operators. Operate resiliently against attack and be less vulnerable to natural disaster Equivalent of $1.00 per gallon for gasoline Provide prices and opportunity to buy when KWh prices are low and sell when high Home back-up power and mobile resource Protecting against power losses and avoiding costly interruptions and spoilage Reducing the cost of electricity during peak power periods, Customer choice from products to services Enhanced system reliability Enable active participation by consumers power quality at different prices Consumers access to information, control and options that allow them to better manage energy and environmental costs Minimizing energy transmission losses Improving the efficiency of the electricity grid. Increased efficiency of power delivery Extended asset life Seamlessly integrate generation and storage options Operate efficiently to improve load factors, lower system losses, and improve maintenance. Grid operators have new resource options to provide energy, capacity and ancillary services

20. 20 Are we considering Direct and Option Value? Roughly 12% of investment grants have gone to T & D applications of Smart Grid Vast majority has gone to some version of meter deployment The funds must be matched Approvals to date: –Maryland –Colorado –California –New York –Texas –Vermont –Oklahoma

21. Smart Rates Digital price signals that can be communicated or broadcast electronically Signals that can be acted upon by automated customer controls, smart appliances and energy management systems Signals that integrate prices and incentives 21

22. Difficult cases 22 California: Bakersfield and Consumer Revolt Colorado: Smart Grid City Maryland: BG&E Hawaii: PSC rejection

23. Basic Questions What problem(s) are you trying to solve: manage future costs, improve reliability, or integrate renewables ? Which customer(s) are you trying to serve: society, end- user (rate payer) or the utility ? How is the “Smart Grid” different from what you’ve already been doing ? What are the smart grid costs and benefits? Where do you start and what information do you need to proceed: [1] Pilot programs or [2] Transition Plan ? 23

24. 24 What else should we be asking? What will customers want? What will they put up with? What is the best way to manage the integration of both smart grid and of other new technology (such as PHEVs, distributed energy resources, etc.)? Does Smart Grid make us more secure or less? Willa “Modern Grid” require new or amended rules? (addressing incentives, rate recovery of premium, etc.) Will those rules affect the market and regulatory tools available to us without upsetting their current functions? Given other upward pressure on electricity prices, how can we make smart grid a factor in relieving that pressure, or at least find synergy with other needed investments?

25. Miles Keogh Director, Grants & Research NARUC 202-898-2217 mkeogh@naruc.org