Public Power - September 2008 - (Page 14)

10 Questions 6 certain types of resources and that is going to be true across the rest of the country going forward. Coal is going to be a difficult resource to site. Although coal would have been a low-cost option in the past, it really isn’t an option going forward in New England. Probably the cheapest and most cost-effective resource is energy efficiency. With every kilowatt or megawatt that you don’t use, not only are you saving energy, but you are avoiding having to build additional capacity that you otherwise would have put on the system. How important are demand-side resources in your region’s evolving power supply portfolio? I think they are vitally important if you look at the constraints that we have here in New England. We are at the end of the natural gas pipeline and import all of our fuels. Looking to the future, we have to invest heavily in demand-side resources, including energy efficiency, which is a passive resource, and demand response, which is an active resource. In addition to these two large resource areas, the states and investors are planning to invest heavily in renewable resources within New England. One of the advantages of demand resources and renewable resources is that there is an important economic development stimulus created within the region. Instead of exporting dollars out of the region to pay for gas and oil, those dollars can be invested in creating jobs locally. The New England states are among the most aggressive in the nation in terms of specifying a renewable portfolio standard, as well as actual reductions of carbon dioxide. Just recently, Massachusetts put new legislation in place that requires 45 percent of all energy load be met by demand-side and renewable resources by 2020. The breakdown is 20 percent renewable and 25 percent demand-side resources. That’s 11 years from now. We’ve got a long way to go in Massachusetts to meet those targets, but I use that example to illustrate just how high the bar is being 14 SEPTEMBER 2008 7 set by the states. The same is true in the other New England states. The region is going to be moving aggressively to supply energy needs through non-traditional means. We are going to be forced to build the smart grid here in New England because, if you think about our future, it will be about keeping the lights on with non-traditional resources that have limited energy potential. Unlike a conventional generator that can be relied on 24 hours a day to run, many of these resources will be either intermittent or based on the climate in some way—using sun or wind power and so forth. Two challenges have emerged from the states’ pursuit of RPS and reductions of CO2. First, the operational challenge will be for the system operator to balance all these resources and ensure the reliable operation of the bulk power system. Our second challenge will be the financing and construction of the transmission needed to interconnect renewables located far from consumer demand. You mentioned transmission infrastructure. It is undergoing a significant expansion in your region. What kinds of upgrades have been planned and implemented since the RTO began operating? We’ve made an enormous amount of progress in this region. When you look at the dollars relative to the size of the region, it is even more remarkable. To give some history, very little investment in transmission infrastructure had been made in New England for the last 20 years or more, despite a significant increase in demand for electricity within the region. Part of the reason was the financial condition of many of the utilities in the region. They were struggling with this huge debt load from the nuclear buildout and simply didn’t have the money to invest in transmission. The FERC [Federal Energy Regulatory Commission] ordered us to commence with a regional system planning process around 2001 and we became 8 one of the first regions in the country to do this on a systematic basis. We realized very early on in the planning process that the region’s transmission grid needed significant reinforcement. We publish a report every year called the Regional System Plan and we look at different types of projects. Our focus in the last six years or so has been on projects needed to maintain reliability of the bulk power system as measured against NERC and NPCC [Northeast Power Coordinating Council] standards. There are hard and fast requirements against which we benchmark to determine whether the transmission is needed or not. If we determine there is a need, we can request or order the transmission owners to bring forward a project to solve that particular reliability problem. Of course, the states have the final say in the siting of the transmission lines. As of 2007, $1.2 billion worth of transmission has been put into service, with another $3 billion to $4 billion under construction and probably another $3 billion in the planning stage. Ultimately, one of the byproducts of a robust transmission system is a healthy and vibrant marketplace. If you don’t have a robust transmission system, you create constraints and inefficiencies with respect to the operation of the wholesale markets. As New England continues down the path of adding transmission for reliability reasons, we’ve recently embarked on exploring ways to finance and build transmission lines for economic reasons—or, for example, to interconnect the renewable resources. How does ISO New England compare to other RTOs in the nation? What do you see as your strongest features? I typically don’t like to compare since each ISO and RTO is in different stages of development. In New England, we have a very robust stakeholder process. NEPOOL (the New England Power Pool) is our stakeholder body, but it is a separate legal entity from the ISO. We are bound to it by contract and it is the PUBLIC POWER

Table of Contents Feed for the Digital Edition of Public Power - September 2008

Public Power - September 2008 Contents Perspective 10 Questions What’s Good About RTOs? Capturing Coal’s Carbon Carbon Safety Valves Greater Glass, Greater Savings Getting Customers to Embrace Compact Fluorescent Lights LEEDing Green Kansas City Shows How to Build Green For Governing Boards Safety Community Broadband Hometown Connections Parting Shot

Public Power - September 2008

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