Transcript Railbelt Reliability, Efficiency, Open Access Transmission

Status update on the Railbelt Unified
System Operator (USO) Initiative
House Energy Committee
January 29th, 2015
Reliability, Efficiency, and Open Access Transmission
Chugach Electric Association, Inc.
The Railbelt
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The Railbelt is changing
We now have five G&T utilities and regional challenges that
cannot easily be resolved within the current structure
The Railbelt's future would be significantly enhanced by:
• A technically experienced stake-holder driven entity with responsibility for
efficient least-cost economic generation dispatch
• A single uniform transmission rate across the Railbelt
• A business structure that supports interregional transmission infrastructure
development
• Consistent non-discriminatory open access transmission rules
• A regional approach to reliable power delivery
Chugach Electric Association, Inc.
Historically three generation and transmission (G&T) utilities
with regional responsibility, and voluntary compliance
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Railbelt 1985-2013
3 vertically integrated utilities
Reliability rules unanimously
adopted with voluntary
compliance
Alaska Intertie Agreement
“utility users only”
Bradley Lake Agreements with
transmission access
Minimal changes to Generation
& Transmission (G&T) system
Utility owned & operated
generation
Chugach economically
dispatched HEA, MEA, SES &
Chugach retail plus GVEA
economy
Chugach Electric Association, Inc.
1985 2013
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Current Railbelt structure
Addition of 2 new vertically
integrated utilities
Lack of system-wide economic
dispatch wastes fuel, increases
costs and emissions
Reliability and interconnection
standards are not uniformly
implemented
New open access tariffs and
agreements introduce new
transmission users
Regional transmission congestion
and access issues
Hurdles to IPP and renewable
integration
Significant new generation at
regionally sub optimal locationserosion of stability margins
Need to unbundle transmission
costs to address reserve sharing
without transmission rights
Chugach Electric Association, Inc.
2014
-2015
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Inefficiencies of current structure
-Uneconomic dispatch wastes fuel and increases emissions
-Increased barriers to IPP project integration
-No business case for regional expansion of transmission
-Lost regional economic opportunities i.e. mines, pump
stations, etc.
-Decreased reliability i.e. "more outages to customers”
-Inequitable distribution of system reserve and other costs
-Transmission congestion wastes fuel
-Increased losses - wastes fuel
Chugach Electric Association, Inc.
-Increased difficulty in regulating renewable nondispatchable resources
-Inefficient use of hydroelectric resources
-Increased cost of regulatory oversight
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USO
• A single
unified
system
operator
Chugach Electric Association, Inc.
Unified Railbelt Operations
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The Railbelt would benefit from a
Unified System Operator (USO)
- Stakeholder governance
- Ensures system-wide economic dispatch
- Develops and administers a system-wide
transmission rate
- Under RCA jurisdiction
- Develops and administers reliability &
interconnection standards
- Plans and conditions projects
- Monitors standards compliance
- Possesses regulatory compact to ensure rate
recovery
-No stranded investments
Chugach Electric Association, Inc.
- Ensures non-discriminatory open transmission access
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Benefits of Unification
- Efficient least-cost economic dispatch saves tens to
hundreds of millions of dollars annually
- Enhanced non-dispatchable renewable resource
integration
- Privately funded business structure for regional
transmission project development
- Enhanced regional economic development… lower
cost power and added construction jobs
- Increased reliability
- Regional planning relieves transmission congestion
- Hydro reservoir optimization
- Simplified regulatory environment
Chugach Electric Association, Inc.
- Open access transmission reduces barriers to IPP
project integration
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AEA Railbelt Integrated Resource Plan –Transmission Update
Production costing modeling benefits
Business and finance models to achieve benefits
Regulatory Compact and organization
Current Status
Chugach Electric Association, Inc.
Analysis and initiative status
update
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$55
Annual Benefits
of Economic
Dispatch
(millions)
Annual Railbelt
Transmission
Cost (millions)
$50
Confidential - Executive Session
Material
Economic dispatch alone could provide
nearly enough benefits to offset all
transmission costs today
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Intertie Costs $880
million or $80 to
$90 million per year
Additional
Economic Dispatch
Benefits $75-140M
per Year*
Confidential - Executive Session
Material
Analysis indicates that benefits could offset
regional intertie construction
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* Fuel and Variable O&M benefit
alone, excludes reliability, capacity deferral, and economic growth
But, current business model does not support
transmission expansion
Intertie
benefits are
regional and
not utility
specific
Capital
required is
beyond the
ability of any
single utility
Confidential - Executive Session Material
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Chugach Electric Association, Inc.
Unified system operations are common in the
Lower-48 and Canada
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Regulatory compact is key…
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Administer a universal tariff subject to RCA review and approval
Ensure system-wide economic dispatch
Implement non-discriminatory open access
Develop reliability standards
Develop planning and interconnection protocols and standards
Monitor reliability compliance
Plan and condition projects
RCA recognizes the USO’s stakeholder developed planning and
reliability protocols
RCA assures timely project cost recovery for USO-approved
transmission projects and pre-USO existing investments
RCA ensures stakeholder representation on USO board, but recognizes
that that industry technical experts must operate the Grid
Chugach Electric Association, Inc.
RCA assigns authority to the USO to:
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RCA
USO Governance
• Utilities
• IPPs
• Consumers
• Economic Development Councils
• Renewables
• Industrials – & mines
• Other Stakeholders
USO
Coop’s
Municipals
AEA
Investor
Owned
IPPs
Other
Transmission
utility
Chugach Electric Association, Inc.
USO Organization
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Current Status
ARCTEC is seeking input and support from all stake holders to develop a
consensus scope and form for a USO type organization
Awaiting scope of Informational/Regulatory docket procedures to address restructuring due- Feb 11, 2015
Awaiting proposed statutory changes required by the RCA for USO
implementation
Numerous resolutions have been passed in support of unified system
operations and revised transmission ownership and construction by various
boards including ARCTEC, Chugach, MEA, &GVEA
AEA must evaluate how state assets (Alaska Intertie and Bradley Lake) would be
folded into such a business model
Chugach Electric Association, Inc.
Awaiting RCA report on USO model
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Must have a regional
perspective and hold a
regulatory compact to:
• Achieve economic
dispatch
• Maintain reliability
• Implement nondiscriminatory open
access
• Implement a single
transmission rate
• Represent the interests
of all stakeholders
Will:
Promote funding
of improvements
and accrue the
benefits of
economic dispatch
through private
capital markets
Will :
Facilitate private
investment that will
create jobs for
decades:
• Infrastructure
development &
construction
• Long term O&M
• Increased
economic activity
through
competitive energy
costs
Will:
Reduce
litigation &
regulatory
costs
Will:
Facilitate
renewables
integration
Chugach Electric Association, Inc.
The restructured Railbelt …
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