Transmission As Enabler

1
Transmission As Enabler

• Delivering Benefits to Customers
• Janet Gail Besser, Vice President
• Transmission Regulation and Commercial Services
• Massachusetts Electricity Restructuring
  Roundtable
• Boston, MA
• February 9, 2007

2
Transmissions Role

• Transmission is the critical link for enabling
  competitive electricity markets
• Transmission is a market facilitator, not a
  market product
• Increased transmission investment is required to
  deliver customer benefits both in market and non
  market regions
• Policies that recognize role of transmission as
  market enabler must be implemented to ensure
  reliable and economic system for customers

3
Roadblocks to Adequate Transmission

• Planning and pricing policies that view
  transmission as a market product vs. market
  enabling infrastructure
• Ignore the Commons nature of transmission
• Inappropriately distinguish reliability v.
  economic upgrades
• Accompanied by cost allocation/recovery policies
  that
• Rely on voluntary participant funding
• Attempt to identify specific beneficiaries
• Fail to recognize network benefits

4
Become Roadblocks to Public Policies

• Promoting fuel diversity, renewable energy,
  distributed generation
• Misunderstanding transmission (and
  distributions) role in connecting customers to
  resources
• Historical origin of transmission
• Economic interconnection of remote groups of
  customers, and customers to generation
• Evolving role today
• Economic interconnection of remote resources

5
E.g., Transmission and Wind Energy

• National Grids objective with the recent wind
  paper
• To recognize the increasing public and regulatory
  attention on new cleaner sources of energy, such
  as wind energy, and to explain how transmission
  system changes will be required to accommodate
  these new technologies
• Regulatory and policy desire for cleaner,
  diversified sources of energy
• Reliability and economic consequences of
  over-reliance on certain fuel types
• State Renewable Portfolio Standards (RPS) and
  renewable energy funding mechanisms

6
Need for Effective Regional Planning

• Critical components of effective planning
• Sufficient geographic scope
• Open and transparent process
• Independent entity
• Comprehensive planning criteria, addressing both
  reliability and economic needs
• Including consideration of energy efficiency,
  distributed resources, location-specific remote
  resources
• Authorization for construction
• Cost allocation and recovery methods that
  recognize broad benefits of transmission
• Coordinated with other market rules and processes
  

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Benefits for Customers

• Fully value the benefits of transmission
• Enhanced reliability
• Reduced market power
• Lower overall electricity prices
• Access to lower cost remote resources
• Support for distributed resources
• Environmental improvements
• Access to cleaner, more efficient resources
• Facilitating energy policy
• Renewable portfolio standards
• Fuel diversity

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Upfront Cost Allocation

• Should be clear, well-defined, repeatable
• Avoid case-by-case allocation that invites
  endless debate and litigation
• Costs should be allocated broadly to reflect
• Transmissions widespread benefits
• That transmissions beneficiaries change over
  time

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Conclusion

• Transmission is market enabler, not market
  product
• Inadequate transmission investment is key
  obstacle to delivery of benefits to customers in
  both market and non-market regions
• Policies must recognize role and importance of
  robust transmission infrastructure
• To ensure reliability and long-term resource
  adequacy
• To reduce customer costs
• To advance public policy
• To support and facilitate diverse resource mix

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Questions?
Find Transmission The Critical Link at
http//www.nationalgridus.com/non_html/transmissi
on_critical_link.pdf Find Transmission and Wind
Energy Capturing the Prevailing Winds for the
Benefit of Customers at http//www.nationalgrid
us.com/non_html/c3-3_NG_wind_policy.pdf