Grid Modernization in Minnesota

Presentation for More Than Smart Webinar

Chris VillarrealMinnesota Public Utilities Commission

August 4, 2015

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Chris joined the Minnesota PUC in May 2015 as its Director of Policy. In this role, Chris will provide policy research and assistance to the Commissioners and analyze policy considerations for future and on-going policy development, including on issues such as grid modernization and cybersecurity. With the Minnesota PUC, Chris is active in the PUC’s on-going data privacy docket, as well as the e21 Initiative.

Chris is an active participant in many national grid modernization efforts, including NIST Grid 3.0 and the Smart Grid Interoperability Panel. Chris is on the Board of Directors for the Smart Grid Consumer Collaborative, and is also on the Board of Directors and the Executive Committee for the North American Energy Standards Board (NAESB). At NAESB, Chris chairs the Energy Services Provider Interface (ESPI) Task Force which is the standard that supports Green Button. Prior to joining the Minnesota PUC, Chris spent the previous 9 years at the California Public Utilities Commission as a Senior Regulatory Analyst. At the California PUC, Chris worked on a variety of CPUC proceedings, including on Smart Grid, data privacy and data access, cybersecurity, demand response, and rate design. Chris also authored several White Papers on topics such as pre-pay, cybersecurity, and microgrids. Before the CPUC, Chris worked in Washington, D.C. as an energy law paralegal focusing on FERC matters. Chris has a B.A. in History from Baylor University.

Chris VillarrealDirector of Policy Minnesota Public Utilities Commission

Public Utilities CommissionRegulates

Permitting for power plants, pipelines, transmission lines

Local and in-state long distance telephone companies Investor-owned electric and natural gas utilities – rates

and services5 Commissioners

Appointed by the Governor Serve staggered terms Full time employment

50 staff

3mn.gov/puc 651-296-0406 1-800-657-3782

Minnesota Electricity Overview 5 IOUs, serve 1.5 million customers (about 65% of total sales)

Average cost is under $.09/kwh Xcel is largest utility, serving Twin Cities

Majority of electricity generated by coal, with nuclear, natural gas, and renewables.

26,000 AMI in Minnesota Power territory under ARRA grant Utilize Integrated Resource Plans to ensure utility meets customer needs at

reasonable cost Department of Commerce

Oversees Conservation Improvement Programs CIP has spending and savings goals

Clean Power Plan

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Why Minnesota? Time

Not in reaction mode Can get out front

Goals RPS Solar growing

Location Not a coastal state Vertically-integrated

Collaboration

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E21 Initiative Multi-stakeholder effort Not a Minnesota PUC initiated effort

PUC is an observer Recognizes that grid and customer expectations are changing Maintain utility revenues “Develop a more customer-centric and sustainable

framework for utility regulation….” http://www.betterenergy.org/projects/e21-initiative

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Goals of Phase 1Recognize that utility business is changing Shift from traditional utility business model (few

options) to new model (many options)Shift from traditional cost of service regulation…

Rewards sales of electricity and new capitalAnd to performance based

Meet agreed-upon outcomes based on a set of metrics or goals

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Phase 1 ReportDecember 2014 Released Phase 1 Report4 Recommendations

Performance-based Ratemaking Customer Option and Rate Design Reforms Planning Reforms Regulatory Process

Grid Modernization Need for proactive planning for new distribution grid Future discussion

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A few details of Phase 1 Report Multi-year, performance-based ratemaking framework 15 year Integrated Resource Analysis

Replace existing integrated resource plan Develop methods to determine value of grid and DER services Consider time variant rate structures Initiate a distribution planning process More efficient regulatory process More regulatory staff

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Phase 2 Started in March 2015 Develop details to implement Phase 1 recommendations Created three subgroups

Performance-based ratemaking goals and metrics Integrated Resource Plan Grid Modernization

Monthly meetings for full group More frequent meetings for subgroups

Identify national trends and its impact in Minnesota Speakers from Synapse, RAP, and California ISO

Goal is for new report in December 2015 PUC remains involved in effort as an observer

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Meanwhile, at the MN PUC Opened proceeding on grid modernization in June 2015

(15-556) Three public meetings scheduled

September 25: Minnesota’s utility distribution systems October 30: National efforts on grid modernization and best

practices November 20: Stakeholder perspectives, including current

distribution planning processes and suggested next steps Staff Report in mid-February 2016 on next steps

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Framing for MN PUC Process The Minnesota PUC’s grid modernization initiative will be

designed to address the following key questions: 1. Are we planning for and investing in the distribution system that we will need in the future? 2. Are the planning processes aligned to ensure future

reliability, efficient use of resources, maximize customer benefits, and successful implementation of public policy?

3. What commission actions would support improved alignment of planning for and investment in the distribution system? Other state policies

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Future Electric Grid Tomorrow’s grid will:

Be more distributed, flexible, intelligent, real-time controlled, autonomous, open and secure

Be cleaner and reliable Operate resiliently against attack and natural disaster.

Tomorrow’s distribution system will: – Enable a high level of integrated Distributed Resources, both supply and demand side,

with active participation by consumers; Manage two way flows of electricity; Provide for seamless integration and interoperability of varied systems and components; Implement modern distribution management systems (DMS) including advanced control

and communications; Be planned in coordination with resource and transmission planning; could incorporate

stakeholder informed planning scenarios.

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ConclusionPro-activeGrid and customer demands are changingDistribution grid planning processes becoming

more importantMinnesota is positioned to be a leader in this

national discussionCome and participate!

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Questions?Thank you!

Chris VillarrealDirector of PolicyMinnesota Public Utilities Commission651-201-2222chris.villarreal@state.mn.us

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