Strategic Thinking About Vermont

1
Strategic Thinking AboutVermonts Electricity
Future

• Michael H. Dworkin, Chairman
• Vermont Public Service Board
• University of Vermont
• April 20, 2004

2
Presentation Outline

• Three Good Things (and One Bad)
• Vermonts Electric Energy Needs
• Major Options -- and Some Pros and Cons of Each
• Future Policy Options Federal, State, and the
  PSB

3
Three Things to be Proud of

• Since 1984 peak demand in VT has risen by 132 MW,
  all met by new, in-state renewables
• 40 MW - small hydro, IPP, WEC, GMP
• 88 MW - McNeil and Ryegate wood chip plants
• 6 MW - Searsburg wind project
• Small landfill gas projects Brattleboro and
  Burlington
• Vermonts energy efficiency efforts, including
  Efficiency Vermont, have saved over 87 MW of
  demand
• Bottom line current portfolio mix is very high
  renewables, and Americas lowest in CO2

4
But At a PriceRemember! Price does not equal
Cost, Rates do not equal Bills
5
Vermonts Electric Needs

• 1,000 MW peak demand now
• Growing at about 2 MW per year since 1992 100 MW
  1984-92, But 550 MW will need to be replaced in
  2012 - 2015 timeframe!!
• Current Sources
• Vermont Yankee - about 30 demand and 36 energy
• Contract Expires 2012
• Hydro Quebec - about 30 demand and 32 energy
• Contract expires from 2012 to 2020, most expiring
  in 2015
• Independent Power Producers - about 10 demand
  and 5 energy (all renewable)
• Contracts expire 2008 to 2020
• Other sources - about 30 of demand and 27 of
  energy

6
(No Transcript)
7
Vermonts Electric Needs

• Net Metering Statistics
• 108 applications, 107 approved
• 80 photovoltaic only
• 28 wind or wind and photovoltaic
• 24 uncontested only 4 contested applications
• 3 approved by Board
• 1 denied by Board because it was proposed
  directly in front of a neighbors picture window
  - denial upheld by Supreme Court

8
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

9
Efficiency and Conservation

• Should be cost-effective
• Probably wont meet all new demand
• Keeps jobs and in VT
• Excellent climate-change effects

10
(No Transcript)
11
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

12
Vermont Yankee

• VY license extension still unresolved
• Assumes new VY contract acceptable
• Waste disposal issues still unresolved
• Effect of NRC safety rulings still unknown
• Price should probably be competitive
• Good climate change effects, compared to others
• Some jobs and in VT

13
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

14
Out-of-State Fossil Plants

• Price probably competitive but could be volatile
• Very poor climate-change and health effects
• Exports jobs and
• Moderate transmission constraints

15
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

16
VT Gas-Fired Cogen Plants

• Siting may be difficult
• Requires new gas pipeline capacity
• Price could be high and volatile
• Keeps some jobs and in VT
• Poor climate-change effects
• Could have high efficiency, if part of district
  heating project

17
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

18
Spot Market Purchases

• May have high price risk (or at least may be
  highly volatile)
• Poor climate-change effects
• Exports jobs and (most large scale supply
  out-of-state)

19
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

20
Major In-State Renewable Plants Combination
Wind, Biomass

• Possibly higher, but predictable cost
• Less exposure to vagaries of market and fossil
  price changes
• Availability of sufficient biomass resources may
  be an issue
• Keeps jobs and some in VT (could help stimulate
  in-state renewable businesses)
• Excellent in terms of climate-change effects
• Some already at proposal stage (proposed wind,
  and WEC landfill gas, investments)
• Limited in-state hydro site options but retrofit
  potential looks significant

21
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

22
HQ System Power

• HQs path to expansion is unclear, given internal
  Quebec issues
• Price may be competitive
• Good climate-change effects
• Exports jobs and

23
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

24
Connecticut River Dams

• Stable price (FDRs lesson)
• Environmentally neutral, assuming someone would
  operate them
• Known technology limited cost risk
• Purchase price unknown, size of offered-asset
  unknown each could be determinative

25
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

26
Small-Scale Distributed Generation

• Price may be issue
• Probably wont meet all new demand
• Will siting issues limit broad wind deployment??
• Good to excellent climate policy
• Good for jobs and in VT

27
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

28
Blend Incremental Capacity from Several of Above

• Some new transmission may be required
• Advantages and disadvantages blended
• Key is how to weight the blending!
• We CAN tip it towards price stability, low
  pollution, independence, and job creation
  through far more renewables and efficiency.

29
Road to the Future Federal, State, and PSB
Policy Options

• Federal Policies
• Ensure that wholesale markets let renewables
  compete Standard Market Interconnection Rules
• National Renewable Portfolio Standard
• Continued federal funding of renewables research,
  including biomass gasification
• Encourage creation of a Green Buildings
  Incentive Program (new construction program that
  incorporates renewables)
• Tax credit program for renewables, including
  extension of wind production tax credit

30
State Policy Options

• Vermont Renewable Energy Fund could
• Provide equipment buy-down
• Give production credits ()
• Provide low interest loans
• Focus on job training, education, and project
  guidance
• Pass a Renewable Portfolio Standard
• 15 States with RPSs AZ, CA, CT, HI, IA, MA, ME,
  MN, NV, NJ, NM, NY, PA, TX, and WI (PSB
  recommendation to Vt legislature)

31
Public Service Board Options

• Reactivate utility Integrated Resource Planning
  Plan replacement of existing and new supply
• Encourage utilities to adopt voluntary Green
  Tags programs
• Example NativeEnergy and GMP
• Review proposed utility Green Pricing programs
• Example CVPS proposal now pending
• Explore Renewable Funds with residual receipts
  from Vermont Yankee sale (already 1.345 million,
  might be several million more)

32
Public Service Board Options (cont.)

• Activate Vermont disclosure statute
• Brochure to help site small wind turbines
• Explore more net metering
• Farm Group Net Metering
• Recognize value of commercial-scale wind
• Board has said it will consider societal benefits
  of wind production when deciding whether an
  adverse aesthetic impact is due or undue
• Motion to reconsider that concept is now before
  the Board

33
Three Key Goals for All of Us

• Reliable, efficient, cost-effective electric
  power
• Build jobs in VT Renewables and Efficiency
  Sectors
• Create our tool die industry for the 21st
  century.
• Build towards real power options for Vermont by
  2012