an electric industry perspective...2015 plan 70+ utilities committed 800+ plug-in vehicles $90+...

David K. Owens

Aryeh B. FishmanAssociate General Counsel, Legal Regulatory Affairs

Edison Electric Institute

AGA/EEI Public Utility Accounting Courses August 22, 2016

Atlanta, GA

An Electric Industry Perspective

Customer

Value-Focused

Modern, Reliable

Grid

Even Cleaner

Customer-Driven

Industry HallmarkSafe ReliableAffordableClean

Our Messages

Presenter

Presentation Notes

We know that “Safe, reliable, affordable and increasingly clean electricity” is the industry mantra. And customers respond particularly well to messages focused on reliability and affordability. We are not moving away from those messages, but we now need to build on that messaging platform and take it to the next level. Our research reinforces that positive customer-centric messaging is most effective. We need to establish and demonstrate that our industry is value-focused. And we need to define that our energy future will be delivered by a modern and reliable grid, will be customer-driven, and will be even cleaner. Innovation is a theme that will be woven throughout each area. We recognize that each utility is different and messages vary by geography – for example, rates and fuel mixes differ by region so messages about affordability and clean energy resonate differently– and we know we will need to adjust to the local interests of companies. Our messages will be broad, but also futuristic and aspirational. NEXT SLIDE

Value-Focused Electricity’s

value Industry

footprint (economic impact, jobs)

CapEx Workforce

development Community

giving/support

A Modern, Reliable Grid Grid security Grid technologies Grid investments Tech partnerships Smart grid

deployment

Even Cleaner Ongoing fleet

transition Emissions

reductions Renewables

leadership and investment

Importance of fuel diversity

Customer-Driven Efficiency and

conservation programs

Electric transportation

Tech/start-up partnerships

Customer partnerships

Presenter

Presentation Notes

Here are examples of the types of messaging and issues that we will focus on under each of the four main message buckets. Working with our company advisory group, we have created a messaging architecture that includes issues that are broad enough for all companies, again recognizing regional and geographic differences. We are also working with the group to identify proof points – fact-based data - that will support our messages.

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As of 2014, industry CO2 emissions were 15 percent below 2005 levels Nearly 1/3 of U.S. power generation came from zero-emissions sources

U.S. Power Sector CO2 Emissions Declining

Source: Developed from U.S. Energy Information Administration, Monthly Energy Review March 2016

Presenter

Presentation Notes

The reality is that electricity is already even cleaner. Every utility today is transforming itself for the future, and one-third of U.S. power generation (32.3 percent) comes from zero-emissions sources (nuclear and renewables). Based on preliminary data, power sector CO2 emissions in 2015 were approximately 20% below 2005 levels, and were at their lowest level since 1993. In addition, between 1990 and 2015, emissions of NOx were cut by 79% and SO2 emissions by 86%, during a period when electricity use grew by 36 percent.

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Executive branch not going quietly into the night• Methane and HFC regulations; impacts on human health report,

CAFE standards, efficiency standards, etc.

• Paris Agreement likely will enter into force this year

• Next administration may continue, expand carbon efforts

Congress continues to be divided• Partisan oversight hearings; appropriations efforts

States moving forward at various speeds• Stakeholder dialogs continuing, even if informally• Some may pursue new carbon policies, regardless of CPP

Prudency suggests planning for future carbon policy, even in face of uncertainty

Carbon Policy Landscape

Presenter

Presentation Notes

Executive branch (other actions include): Finalized GHG standards for new and existing fossil-based power plants, though rule for existing plants currently stayed Clean energy/RE development (federal lands, R&D funding, ARPA-E, etc.) Climate resilience push (e.g., energy sector voluntary partnership) National climate assessment Paris Agreement U.S., China and others to sign at UN ceremony on Earth Day U.S.: 26-28% below 2005 by 2025 (economy-wide) Next Administration Likely address fracking regulations Need additional measures to meet Paris pledge Congress: partisan efforts face Presidential veto States Minnesota has completed outline of state plan Pennsylvania officials say will submit state plan in September WA has several carbon policy initiatives in play: state to release revised climate proposal; carbon tax ballot initiative being launched

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Some Clean Energy Challenges

Wholesale Electricity Markets are not Working• Low natural gas prices and subsidies for renewable

technologies are distorting RTO/ISO markets and forcing some nuclear facilities to retire prematurely.

Investor Initiatives are Emerging Focused on Reporting of Fossil Fuel Exposure• Initiatives seek to affect access to capital for

companies with significant coal-based holdings, including the electric power sector.

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Electric Power Companies Are Leading the Way on Solar Power

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EV Public-Private Partnership

“EV Everywhere-Utility Partnership”

Actions include:• Research to demonstrate

value proposition• Education and outreach

campaigns• Collaboration across federal

government to support fleet electrification

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Leading by Example

Fleet Electrification Initiative

2015 Plan

70+ utilities committed 800+ plug-in vehicles

$90+ million investment 740+ charging ports

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Growing EV Momentum

“Electrification is going to play an important role in our future.” – Ford CEO Mark Fields, on investing $4.5 billion in electrification by 2020

“It’s really providing that technology for everyone, not just the elite.” – General Motors CEO Mary Barra, on launching the $30,000 Bolt EV

“I think electrification is not a question of ‘I want it or don’t want it.’ Electrification is happening.” – Nissan CEO Carlos Ghosn

“We are, in full force, joining the electric revolution.” – Audi of America President Scott Keogh, on announcing at least 25% of U.S. sales will come from electric vehicles by 2025

422,677

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2011 2012 2013 2014 2015 2016

Cumulative PEV Sales

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Utility Development of EV Infrastructure

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The Electrification Opportunity

New solutions for our customersUtilities as “fuel” providers: infrastructure, energy advisors, system integration

Distribution grid of the futurePlug-in vehicles as grid assets: demand response, renewable integration

SOURCE: EPRI, Environmental Assessment of a Full Electric Transportation Portfolio

Grow load for our businessAdds 5% in 2030, 13% in 2050 vs. baseline

Clean the transportation sectorReduce GHGs 48% - 70% vs. today

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The Electric Distribution System in Transition

Source: The Edison Foundation Institute for Electric Innovation, Thought Leaders Speak Out: Key Trends Driving Change in the Electric Power Industry, December 2015

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Projected Functional CapEx

$95.2 B

as of October 2013 as of September 2015

$108.6 B

6% 6%7% 5%

12% 12%

17% 18%

21%26%

37%

32%

$0 B

$20 B

$40 B

$60 B

$80 B

$100 B

Generation

Distribution

Transmission

Gas-Related

Environment

Other

2013P 2015P

Notes: Total company functional spending of U.S. Investor-Owned Electric Utilities. 2015P total does not sum to 100% due to rounding. Projections based on publicly available information and extrapolated for companies not reporting functional detail (1.3% of industry).

Source: EEI Finance Department, company reports (September 2015).

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Presenter

Presentation Notes

We are emphasizing that our industry is modernizing the power grid, providing clean energy, and focused on innovative customer solutions We are reinforcing key QER 1.1 themes: The Value of the grid should be properly recognized Reliability is mission number one for our industry Our industry plays a critical role in the future, and we are focused on proper integration of resources and Investment.

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State Initiatives

New York: “Reforming the Energy Vision” (REV)

California: Distributed Resource Plans Minnesota: “e21 Initiative” Massachusetts: Grid Modernization Plan Hawaii: Power Supply Improvement Plan Illinois: Energy Infrastructure Modernization

Act

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Grid Evolution Requires Increasing Investment

Grid Technologies Digitization Data Analytics Distribution system sensing and monitoring Controls to enhance operational efficiency and

to integrate new resources to improve reliability and grid resiliency, achieve power supply diversity, and achieve evolving clean energy goals.

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Distributed Energy Resources (DER) as an Integrated Part of the Grid

Requires- Visibility- Controls- Assessment of Grid Benefits/Grid Impacts- Clarity/Transparency- Interoperability and a holistic approach which recognizes the grid as an essential platform. Collaborative planning is important.

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The Threat Landscape

Source: The Chertoff Group

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Approach to Grid Security

Standards

Physical

Cyber

Industry-Government Partnership

Electricity Subsector Coordinating Council

(ESCC)

Electricity Information Sharing & Analysis

Center (E-ISAC)

Partnerships with federal, state, & local

governments

Incident Response

Grid Resiliency

Mutual Assistance

Spare Equipment Programs

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Cyber & Physical Security

Securing and protecting our nation’s critical electric grid assets are top industry priorities.

Security of the electric industry is regulated—critical electric grid assets are subject to mandatory, enforceable cyber and physical security standards.

Industry and government collaboration is essential. Exercises are taking place nationally and regionally to prepare for extraordinary scenarios.

The industry is making significant investments to protect the most critical assets.

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Complimentary Spare Equipment Programs

The Spare Transformer Equipment Program (STEP) provides a ready mechanism for participating utilities to share assets in the event of deliberate destruction.

SpareConnect provides an online tool for participating utilities to network with other SpareConnect members to share transmission, generation step-up (GSU) transformers, and related equipment— including bushings, fans, and auxiliary components.

Grid Assurance is a newly-proposed, utility-based initiative that plans to establish a pool of critical spare equipment, including transformers.

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National Response Event (NRE) Structure and Functions

EEI Utility Member CEOs

National Response Executive Committee (NREC)

National Mutual Assistance Resource Team (NMART)

Regional Mutual Assistance Groups (RMAGs)

• Provide general NRE oversight• Resolve issues identified by the NREC• Interface with industry and government partners

• Initiates the NRE and resource allocation process• Manages the issue resolution process • Reports to the EEI CEOs• Chair co-locates with the NRE EEI Liaison during NRE

• Conducts the resource allocation process • Lead co-locates with the NRE EEI Liaison and NREC Chair

during NRE

• Maintains baseline resource availability information• Gathers and consolidates participating utility information in

support of the allocation process• Matches allocated resources to specific requesting utilities

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Currently illegal to commercially fly Unmanned Aircraft Systems (UAS or Drones) without securing a Section 333 Exemption from the FAA

Currently illegal to commercially fly UAS Beyond Visual Line Of Sight (BVLOS)

EEI Members have interest in using BVLOS for: Transmission and Distribution line inspections Damage assessment after storms Security

What is EEI Doing? UAS Workroom Met with FAA Administrators Section 333 Exemption Template; 14 members filed; 13 granted; 1 pending Coordination with EEI, APPA, & NRECA Whitepaper With Sharper Shape created the EEI Sharper Utility BVLOS Demo Project

EEI’s Unmanned Aircraft Systems

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The ESCC is the principal liaison between the electric sector and the federal government for coordinating efforts to prepare for, and respond to, national-level disasters or threats to critical infrastructure.

The ESCC facilitates and supports policy and public affairs-related activities and initiatives designed to enhance the reliability and resilience of the electric grid. The ESCC is not operational.

The ESCC is considered a model for how critical infrastructure sectors can more effectively partner with the federal government.

Electricity Subsector Coordinating Council (ESCC)

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Supply Chain Cyber Risk Management

On July 21, FERC issued an order directing NERC to develop a reliability standards that addresses supply chain risk management for industrial control system hardware, software, and computing and networking services associated with BES operations (Order No. 829) Standard must address:

(1) software integrity and authenticity; (2) vendor remote access; (3) information system planning; and (4) vendor risk management and procurement controls

Sets the goals (“what”) with flexibility on “how” to achieve goals

NERC has one-year from effective date to submit a standard (Rule effective Sept. 27)

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FAST ACT

Signed into law Dec. 4, 2015 SEC. 61002. RESOLVING ENVIRONMENTAL AND GRID RELIABILITY

CONFLICTS – resolves conflicts between orders to maintain reliability and federal, state and local environmental laws and regulations

SEC. 61003. CRITICAL ELECTRIC INFRASTRUCTURE SECURITY AUTHORITY TO ADDRESS GRID SECURITY EMERGENCY - Following

Presidential declaration, Secretary of Energy may issue orders for emergency measures to protect or restore reliability of critical electric infrastructure or defense critical electric infrastructure – 180 days to establish rules for exercise of authority

DESIGNATION OF CRITICAL DEFENSE FACILITIES – 180 days for DOE to identify and designate facilities

PROTECTION AND SHARING OF CRITICAL ELECTRIC INFRASTRUCTURE INFORMATION – FOIA exemption – FERC has one year to promulgate a rule

SEC. 61004. STRATEGIC TRANSFORMER RESERVE – Submit a plan to Congress within one year

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FAST Act – CEII

FERC issued NOPR June 16, 2016 (RM16-15) Comments due Aug 19)

What is Critical Electric Infrastructure Information? Proposed regulation now covers Critical

Electric/Energy Infrastructure Information (CEII) Procedures for FERC determining that documents are

in fact CEII Procedures for FERC protecting that information Procedures for FERC sharing the information and

determining who to share with Sanctions for unauthorized release of CEII

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FAST Act – Other

SEC. 61003. CRITICAL ELECTRIC INFRASTRUCTURE SECURITY AUTHORITY TO ADDRESS GRID SECURITY EMERGENCY

- Following Presidential declaration, Secretary of Energy may issue orders for emergency measures to protect or restore reliability of critical electric infrastructure or defense critical electric infrastructure – 180 days to establish rules for exercise of authority – awaiting publication of draft procedures

SEC. 61004. STRATEGIC TRANSFORMER RESERVE – Submit a plan to Congress within one year DOE progressing Analytical study by Oak Ridge National Lab EEI spare transformer survey Non-public workshop

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Access to NERC Databases

Issued June 16, 2016 (RM15-25) Over objections of industry, FERC requires NERC to

provide Commission and Commission Staff with access, on a non-public and ongoing basis, to certain databases compiled and maintained by NERC (1) the Transmission Availability Data System, (2) the Generating Availability Data System, and (3) the protection system misoperations database

Implementation stayed until effective data of CEII rule

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DERs + Bulk Power System = ?

NERC held a workshop 8/2 – 8/3 Emphasis needs to be on information exchange and

transparency across the transmission/distribution interface: Transmission Planner can plan (impact is on load estimates

as seen by the transmission system; load characteristics for dynamic studies, understanding net impact of underfrequency and undervoltage load shedding from the point of view of the Bulk Power System)

Transmission Operator can operate (DA and RT load forecasts)

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Increased Requests to Interconnect Renewables

Presenter

Presentation Notes

ERCOT’s generation-interconnection status report shows more than 10,000 MW of wind generation due to come online through 2018. The interconnection queues probably foretold the increase in renewables.

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Some policy objectives

Preserve the safety, reliability, and service quality of electric power system.

Treat all customers equally in a non-discriminatory manner.

Provide transparent and consistent technical requirements, procedures, and agreements to make interconnections as predicable, timely, and reasonably priced as possible.

Presenter

Presentation Notes

This is a test, a sort of “what doesn’t belong” test. The first two are classic policy goals for interconnections. The third, I believe, is what developers and ultimately FERC are seeking. What do we think about these goals?

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Tech Conference Issues

Current state of interconnection queues. Transparency and timing in generator interconnection

study process. Certainty in cost estimates and construction time. Other interconnection coordination and management

issues. Interconnection of storage devices.

Presenter

Presentation Notes

State of interconnection queues: We suggested that FERC examine the current state of interconnections, and they did so by focusing on how well are queues working, what are the metrics to evaluate performance, and what are the areas for improvement. There was particular focus on the fact that projects in the queue contributing most significantly to queue backlogs are geographically concentrated. There was also an effort to understand whether there are best practices that should be incorporated across regions. It’s worth noting that the Commission has apparently been looking at its 2008 guidance on Interconnection Queuing Practices, where it stated that reforms could be made without tariff changes such as increasing staff, adopting more efficient modeling for feasibility/SIS and performing a single system impact study for a cluster of interconnection requests. Transparency and timing: what causes delays? Are costs consistent between markets? Do ICs have access to models, assumptions, costs estimates, etc., and if so when in the process? How are triggers for restudy determined, and are they staged in the OATT? Certainty in costs: when are cost and construction schedule estimates provided to ICs, and how accurate? How to other queued facilities impact on cost estimates? Other Interconnection coordination and management issues: how should interconnection requests be coordinated with other affected systems? What kind of changes should be allowed to a request without changing its queue position? How to manage effect of project withdrawals? What are technologies or tools that can improve efficiency and accuracy?

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Individualized Customer Services

PAST

PRESENT

Source: The Edison Foundation Institute for Electric Innovation, Thought Leaders Speak Out: Key Trends Driving Change in the Electric Power Industry, December 2015

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Drivers for Utility Automated Communications

Key Drivers Changing Customer Needs and Expectations

(e.g. greater control of energy use and costs, independence and resiliency)

Increasingly, customers are giving up landlines in favor of wireless options

Utilities need to use advanced communications technologies to contact their diverse customers with time sensitive information

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Curtailment calls Used to alert customers of curtailments due to power/natural gas

availability. Outage callbacks Used to deliver outage updates and service restoration confirmation Fieldwork Used to notify customer about work activity. Collection calls Used to alert customers with past-due accounts and that they are in

danger of disconnection Time-of-use and critical peak alerts Used to provide price signals to customers General customer notifications Used to provide price signals to customers

Utility Uses of “Robo Call” Technologies

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Per EEIs Petition, FCC clarifies energy utilities can generally send automated, non-telemarketing calls/texts to customer’s wireless number that are “closely related to” utility service. - FCC interprets “closely related” narrowly. - Scope of consent determined upon facts of each situation.

Did not reach question of whether utility calls covered by emergency exception as requested.

8/4 Declaratory Order

Presenter

Presentation Notes

P 30 clarifies that “closely related to the service includes those calls to: warn about planned or unplanned service outages, provide updates about service outages or service restoration, ask for confirmation of service restoration or information about a lack of service, provide notification of meter work, tree-trimming, or other field work that directly affects the customer’s utility service. warn about the likelihood that failure to make payment will result in service curtailment, but not debt collection calls that occur after service termination, notify customers that they may be eligible for subsidized or low-cost service due to certain qualifiers such as age, low income status, or disability, and provide information related to potential brownouts from heavy energy usage

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Conclusion

The integrated grid is the backbone of our economy. Electric utilities are making investments for a modern reliable grid to meet the growing demands of our digital society.

Electric utilities are empowering customers with more choices and control, while ensuring that our electric supply is safe, reliable, affordable, and clean.

Regulation is evolving to ensure a diverse and resilient integrated electric grid, as well as the deployment of new technology and innovation that will benefit ALL customers.

Grid security is a top industry priority!

The Edison Electric Institute (EEI) is the association that represents the U.S. investor-owned electric industry. Our members provide electricity for 220 million Americans, operate in all 50 states and the District of Columbia, and directly employ nearly 500,000 workers. Safe, reliable, affordable, and clean electricity powers the economy and enhances the lives of all Americans.

The EEI membership also includes dozens of international electric companies as International Members, and hundreds of industry suppliers and related organizations as Associate Members.

Since 1933, EEI has provided public policy leadership, strategic business intelligence, and essential conferences and forums for the energy industry.

For more information, visit our Web site at www.eei.org.

an electric industry perspective...2015 plan 70+ utilities committed 800+ plug-in vehicles $90+...

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