EPRI puts grid enhancement price tag at $220-billion; DOE pushing advances
Platts T&D - 02/10/2004
| Transforming the existing transmission and
distribution infrastructure into a fully functional delivery system that
incorporates modern technology could cost as much as $220-billion, an
Electric Power Research Institute official said last week, adding that
securing the funding for it remains a problem because retail customers do
not see the benefits of an improved grid. The Bush administration is trying to do its part on moving to a smart grid, a Dept. of Energy official said in a separate speech last week. As part of a new initiative, DOE may ask the Federal Energy Regulatory Commission to issue a rulemaking to help incorporate new technologies on the grid, said Jimmy Glotfelty, director of DOE's Office of Electric Transmission and Distribution. A more robust T&D grid that incorporates new technology would enhance reliability, increase transmission capacity and enhance productivity in the economy, producing benefits amounting to $674-billion, according to Clark Gellings, vice president of power delivery and markets for EPRI. The grid today uses technology that is 40 years old and contains numerous inefficiencies, Gellings said at an Infocast conference in Washington. For instance, there are 152 different communication protocols used by companies that operate the grid today. "Let's agree on one" and take other steps to improve operations such as upgrading control area computer systems and improving monitoring of grid conditions, Gellings said. Productivity losses associated with transmission constraints and other grid issues cost the U.S. economy about $118-billion a year, but in surveys consumers have said they are only too willing to pay some 15% of that to improve the delivery system, Gellings said. "The reality is that investment is needed" but customers and regulators cannot agree on who should pay for it, he said. Gellings said retail customers aren't aware of the technologies that can improve the grid and lead to significant benefits largely because state regulators have not pushed utilities to adopt them. Regulators today have not shown any interest in new transmission and distribution technologies "and that lack of interest concerns me," because there needs to be better education about the benefits of grid enhancements, Gellings said. A state regulator from Georgia took issue with Gellings' comments, asserting that regulators today are following many more issues than they have in the past and are facing budget constraints that limit their resources. "We have more on our plates than we have had in the past" and it is often hard to add costs for retail customers when the benefits are not clear, said Stan Wise of the Georgia Public Service Commission, who also serves as president of the National Assn. of Regulatory Utility Commissioners. Federal and state regulators need to cooperate to induce companies to adopt "smart grid technology" for transmission and distribution facilities, said Kevin Kelly, director of policy analysis and rulemaking within FERC's Office of Markets, Tariffs and Rates. One way to do that is assuring companies that if they spend money they can recover their costs over time, but many states have adopted rate freezes that hinder utility investment since they limit cost recovery, Kelly said. At DOE, the department is working with the Federal Reserve Bank, FERC, state regulators and the utility industry on various initiatives aimed at improving reliability of the grid, Glotfelty said. Speaking at a DOE conference, Glotfelty said the grid is a vital cog in the change to a digital society, and DOE has several initiatives that should be the subject of a rulemaking at FERC. DOE can provide analysis of the initiatives, which would make adoption of a rulemaking easier to swallow, he said. "Right now FERC has a credibility problem" in Congress because of the concern over the agency's standard market design proposal, Glotfelty said in reference to state and regional objections to the idea of nationwide market rules. A FERC rulemaking on some of DOE's ideas is "one procedural option" that is being considered as the commission examines its authority on transmission reliability in light of the pending energy bill, said Shelton Cannon, deputy director of FERC's Office of Markets, Tariffs and Rates. Another initiative involves seeking input from the Federal Reserve, which might have ideas on how to make sure the U.S. economy benefits from transmission improvements, Glotfelty said. Further, he said, Congress responds whenever Federal Reserve Chairman Alan Greenspan speaks. "We're trying to get the Federal Reserve more interested in the economic value of this delivery system" and what transmission congestion costs the economy every year, Glotfelty said. State regulators have authority over utilities' new reliability measures, such as improved grid monitoring tools and superconducting transmission lines, and DOE will work with the industry and the North American Electric Reliability Council to promote adoption of them, Glotfelty said. Improved training of control area operators is a significant issue, and although NERC listed improvements in a series of recommendations last week, Glotfelty said he was uncertain whether they go far enough |