EPAct 2005

1
EPAct 2005 Regulatory Issues
Ed Gray National Electrical Manufacturers
Association July 2006
2
Key EPAct 2005 Provisions(All strongly NEMA
advocated)

• Mandatory enforceable transmission standards
  (NEMA part of drafting coalition)
• Federal backstop siting
• Advanced transmission technologies (NEMA drafted)
• Incentive-based rates (NEMA drafted)
• 15 year transmission asset tax life (in tax
  title)
• Numerous product efficiency standards (NEMA
  drafted)

3
Reliability Standards

• FERC final rule adopted 2/2/06
• Establishes independent Electric Reliability
  Organization
• ERO responsible for standards and enforcement
• NERC approved as ERO July 20, 2006
• Cost of compliance can be recovered in rates
• This only covers operational reliability, not
  adequacy
• FERC intends to have standards in place for
  summer of 2007, many now inadequate
• NEMA commented to FERC on standards 7/7/06

4
Federal Backstop Siting

• DOE to designate National Interest Electric
  Transmission Corridors by one year from 8/8/05.
  NEMA has commented many times, most recently on
  3/1/06. DOE to base study on existing regional
  transmission plans.
• DOE website online http//www.electricity.doe.gov/
  program/electric_oa_policy_energy_epacthome.cfm?se
  ctiondivisionslevel2oandm_policy_energy
• AEP has announced 3 Billion transmission line
  from WV to MD and NJ referring to several EPAct
  2005 provisions

5
Federal Backstop Siting

• FERC must issue rules for the siting application
  process (NEMA reviewing draft)
• FERC may issue permits for construction or
  modifications in DOE designated NIETCs if
• States have not, cannot, or will not act to
  approve lines
• Facilities will used for interstate commerce
• Proposal is in the public interest
• Facility will significantly reduce interstate
  congestion

6
Advanced Transmission Technologies

• FERC is to encourage (how and when is not in
  EPAct 2005. NEMA asked that this be done via ROE
  adders)
• (1) high-temperature lines (including
  superconducting cables)
• (2) underground cables
• (3) advanced conductor technology (including
  advanced composite conductors, high-temperature
  low-sag conductors, and fiber optic temperature
  sensing conductors)
• (4) high-capacity ceramic electric wire,
  connectors, and insulators
• (5) optimized transmission line configurations
  (including multiple phased transmission lines)
• (6) modular equipment
• (7) wireless power transmission
• (8) ultra-high voltage lines
• (9) high-voltage DC technology

7
Advanced Transmission Technologies

• (10) flexible AC transmission systems
• (11) energy storage devices (including pumped
  hydro, compressed air, superconducting magnetic
  energy storage, flywheels, and batteries)
• (12) controllable load
• (13) distributed generation (including PV, fuel
  cells, and microturbines)
• (14) enhanced power device monitoring
• (15) direct system state sensors
• (16) fiber optic technologies
• (17) power electronics and related software
  (including real time monitoring and analytical
  software)
• (18) mobile transformers and mobile substations
  and
• (19) any other technologies FERC considers
  appropriate.
• FERC intends to treat these as examples in rate
  proceedings

8
Incentive-Based Rates

• On July 20, 2006, FERC published a final rule on
  incentive-based (including performance-based)
  transmission rates that
• Promotes reliable and economically efficient
  transmission generation by promoting capital
  investment in enlargement, improvement,
  maintenance operation of all transmission
  facilities
• Provides a return on equity that attracts new
  investment
• Encourages technologies that increase capacity
  efficiency
• Recovers costs for meeting reliability standards
  and federal siting

9
Transmission Assets Tax Life

• Life for transmission assets 69 kV or more
  contracted for and placed in service after
  4/11/05 is reduced to 15 years from 20 years
• Transmission distribution assets need to be
  split (distribution assets still have 20-year tax
  life)
• Transmission assets are from generator bus bar
  to, but not including, the distribution substation

10
Acronyms

• FERC-Federal Energy Regulatory Commission-independ
  ent agency responsible for rate regulation of
  electric transmission
• NERC-North American Electric Reliability
  Council-responsible for reliability of the
  electric transmission system in Canada and the
  USA
• ERO-Electric Reliability Organization presumably
  transitioning from NERC
• LVDT, MVDT, liquid-filledLow voltage dry-type,
  medium voltage dry-type, liquid-filled
  distribution transformersthese are to be
  considered for energy efficiency standards by
  EPAct 1992