MODERN MYTHS

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MODERN MYTHS

• National Summit on
• Energy, Environment and Transportation
• New York City - May 16, 2002
• Richard Sedano

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Introduction

• National Council on Competition and the
  Electric Industry
• formed by government officials in 1994 to assist
  policymakers with the challenges posed by the
  dramatic changes brought about by the
  reexamination of the traditional franchise
  electric system. www.ncouncil.org
• Regulatory Assistance Project
• RAP is a non-profit organization, formed in 1992,
  that provides workshops and education assistance
  to state government officials on electric utility
  regulation. RAP is funded by the Energy
  Foundation and the US DOE.

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CLASSIC MYTHS

• Stories to explain the world around us
• Indicate a world bigger than ourselves
• Highlights best and worst of human traits
• Some are based on truth though many are
  embellished, and some are way off the mark (it
  does matter who writes the History books)

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POPULAR MYTHS

• Everyone is a bit above average
• Climate change can be solved with markets

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MODERN MYTHS

• The Star Wars Saga
• Turbines and Wires

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The Nation Needs More Transmission Lines

• This is probably true, but...
• Congestion can also be addressed by
• siting generation efficiency proximate to load
• pricing and regulation
• Many suggestions for transmission could be better
  satisfied by non-transmission projects

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DSM can replace transmission

• Efficiency can play a greater role in the
  universe
• Delaying need for large capital projects is good
• Lead time, improved planning helps DSM
• Need different relationship among allies in
  planning and resource procurement

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Efficiency UnderutilizedAttributes Unappreciated

• Estimates Half of normal electric usage growth
  can be avoided by energy efficiency
• In Vermont, with 2-3 of annual utility revenues
  directed to energy efficiency, 3-4 times more
  could be spent cost-effectively
• Environment and System qualities often ignored in
  cost-effectiveness tests

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Efficiency Creates Better Options

• By delaying the need for grid investments,
  several good things happen which lower risk
• smaller long term commitments
• more planning time to see and react to need
• allows for more community buy in to investment
• allows for new technology to present improved
  solutions

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Commitment to Planning Essential

• Sustained commitment to efficiency needed to
  create a step change in results
• Longer horizon for short term planning for
  cumulative effects of efficiency
• Planning provides information to direct
  efficiency dollars to the most valuable places --
  regulatory policy must support targeting
  efficiency dollars

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Demand Side Resources Are Afterthoughts

• Planning - Theory
• problems identified -- what is solution worth?
• all resources cost evaluated to determine need
• Planning - Practice
• DSM, when considered, comes in after full
  planning exercise.

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Retail competition means planning not useful

• Not true
• As long as energy policy is affected with the
  public interest, planning will be valuable
• Markets must work in concert with public policy
  goals - planning must guide markets

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Cooperative Commitment to Efficiency

• To be effective as possible, efficiency must be
  seen as a social good by the whole industry load
  serving entities, discos, transcos, RTOs/ISOs,
  regulators, legislators
• Customers should see a united front supporting
  energy efficiency
• extending from customer service to codes and
  standards

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DSM can be rolled out and the completed

• As long as there are
• low income consumers
• new technology
• new construction...
• ...There will be a role for energy efficiency

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Codes and StandardsAllies to Regulated DSM

• Recognize achievements in technology
• Phase out inferior designs
• Relieve pressure from regulators and DSM programs

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You cant build Transmission

• Actually, most transmission line proposals are
  built after a reasonable permit process
• Some cases do go badly
• Process should screen out poorly conceived
  projects
• process problems, especially among states and
  federal land managers can cause avoidable delays

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Distributed Generation compatible with grid

• Some customers can meet their own needs
• Utilities can benefit from community-scale
  generation
• Power can flow two ways
• Issues can be addressed
• interconnection
• operating rules
• regulation

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Distributed Generation is answer to power supply

• Central station generation and power lines
  connecting them will be important for a long time
• Still, DG is an increasingly important answer,
  with potential to grow a lot
• Challenges await in coming up with new ways to
  operate the grid

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If we do need generation, it will be Natural
Gas-fired

• While Natural Gas growth will probably be fast
• Coal grows too with increased utilization and new
  projects

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Energy growth is not needed for economic growth

• This was revealed years ago by crisis-driven
  energy efficiency, and is maintained by
  technology- and policy-driven energy efficiency

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Legislators cant handle complex energy issues

• Yes they can
• But politics do often intrude
• And issues can be complex
• Opportunities for dialogue
• Clear priorities are key

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Price Spikes are inevitable outcomes of markets

• Market prices do vary, sometimes significantly.
• Price spikes of the sort seen in some energy
  markets come from market failures
• inadequate market power balance on customer side
• insufficient incentives among market players to
  include safety valve on inventory

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Internal Combustion Engine is Forever

• Technology will develop
• Policy can hinder or help technology progress
• How will we help it?

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Resources

• http//www.naruc.org/committees/ere/resources.shtm
  l
• http//www.raponline.org
• http//www.starwars.com

• Look for Efficient Reliability Dimensions of
  Reliability
• Look for Profits and Progress through
  Distributed Resources