Donna Painter, Executive Consultant February 27, 2013
Transmission What is it and How has it Evolved Legislation and Regulatory Impacts What is Next for AMEA and Others
Transmission System High voltage lines used to move electricity from power plants to load centers over long distances Distribution System Low voltage lines used to move electricity from load centers to businesses and homes
AMEA transmission costs $20 million/year 10% of Annual budget Transmission congestion can Contribute to local delivery issues for Participants Impact the deliverability and cost for future alternative resources May provide a future investment opportunity for AMEA
System designed to serve localized individual utility loads, not national grid Alabama Power Company (state of AL) Georgia Power Company (state of GA) Progress Energy (west coast of FL) Florida Power & Light Co. (east coast of FL) Other countries established one entity responsible to build and operate national grid
1896 first A/C line built in US (NY) 1932 8 companies controlled 75% of grid 1960 20,000 miles 1969 60,000 miles 2009 370,000 miles/520 companies
12 Total US* - $ Billions 11.3 10 8 6 6.9 8.5 4 2 0 2.4 2.5 1995 2000 2006 2008 2011 Investment in the South Region Texas to Virginia ranged from 33% to 40% of the total US.
11,500 Total US * - Miles 9,500 7,500 5,500 3,500 1,500-500 * Projected
Capital intensity & life similar to national highway and railway Redundant network architecture (for reliability) similar to telecom. & natural gas pipelines Permitting & planning challenges comparable to highways Control system comparable to air traffic control Most complicated ownership and regulatory structure
1970s Supreme Court upheld Gainesville s right to interconnect with Florida Power & FP&L Paved way for small (TDU) utilities to connect to the grid 1993- Florida Municipal Power Agency Network service requested and denied from FP&L FMPA submitted FERC complaint for network service FERC grants network service and orders parties to negotiate terms & price Filing established basis for FERC Order 888 (1996)
1978 - Fuel Use Act of 1978 - Required transmission owners to interconnect with co-generators and IPPs 1992 -Energy Policy Act of 1992 FERC allowed to order wholesale transmission service to be provided 1996 - FERC Order 888 Transmission must be offered at standard terms & conditions and cost based rates
Wide scale blackouts 1996 CA and northwest 1965, 1977 and 2003 northeast 2003 blackout 50 million without power 1.5 million without water Closed 12 major airports Extensive economic losses
2000 -FERC Order 2000 Encourage formation of Regional Transmission Organizations (RTO) 2005 -Energy Policy Act of 2005 Transmission incentive pricing & mandatory reliability standards (NERC) 2007 - FERC Order 890 Transmission planning, pricing and other reforms
2007 - Southeastern Regional Transmission Planning (SERTP) Process Formed in response to FERC Order 890 2011 - FERC Order 1000 Requires regional transmission planning, needs driven by public policy requirements and allocation of cost to those that benefit 2013 - SERTP submitted a regional transmission planning process and cost allocation
Required Southern Company to permit third party s to use its system First Come, First Served basis Postage Stamp or single rate to use entire system Eliminates pancaked charges Standard terms & conditions ( OATT ) APC Unbundles Transmission Service AMEA purchased this service Access to APC system only
AMEA new PR agreement in 2006 AMEA begins purchasing transmission service under Southern OATT AMEA Santee Cooper power purchases Postage stamp rate under Southern s OATT made this purchase more economical for AMEA Under APC transmission tariff, AMEA would have incurred transmission service charges over AL and GA transmission systems.
Regional Transmission Organization (RTO) Formation Utilities required to create or join a RTO, unless barriers exist Examples of compliance efforts: SeTrans RTO sponsors Cleco, Dalton Utilities, Entergy, GA Transmission, JEA, MEAG, Sam Rayburn G&T, Southern Co. and Tallahassee GridSouth CPL, Duke and SCANA GridFlorida FPL, Progress Energy, FL & TECO MISO 1 st approved RTO PJM 1 st fully functional RTO (oldest power pool)
Mandatory reliability standards North American Electric Reliability Corporation (NERC) Responsible for developing and enforcing standards Allows for fines & penalties Owners, Operators & Users of transmission system must register and comply: Generation Owner & Operator AMEA Transmission Owner & Operator Load Serving Entity AMEA Distribution Provider
Encouraged the expansion of transmission grid Provided for transmission incentive pricing Designation by DOE of highly congested transmission corridors to facilitate permitting and construction of new facilities Framework for establishing long term transmission rights
FERC Order 1000 Regional planning Public policy requirements must be planned for (e.g. renewables) With neighboring utilities With utilities in the broader region Cost Allocation Payment responsibility aligned with those that benefit Permits new players e.g. LS Power Example project in Minnesota CapX2020
For Southern Company Transmission expansion to: Accommodate nuclear and renewables Address retirement of coal facilities Accomodate participation in Southeastern Regional Transmission Planning Process (SERTP) Regional issues Entergy election to join RTO Merger by other utilities e.g. Duke Power Maintain reputation as a low cost, high reliability provider
Transmission Owner Sponsors GA Transmission Corporation MEAG Power SMEPA Power South Dalton Southern Company Developed a 10 year expansion plan 250 miles of 500 kv facilities Evaluating transmission interface capabilities
Potential Stakeholder participation in SERTP Increased understanding of potential transmission projects and related impacts Increased understanding of impacts of regional cost allocation on Southern transmission rates Transmission ownership opportunities Future opportunities like CapX2020 Joint ownership among IOUs, Munis, and Cooperatives Potential to lower AMEA future transmission costs through No payment of federal income taxes Lower borrowing costs
Transmission 101, prepared by Alison Silverstein, April 2011 Transmission Investment Trends and Planning Challenges, Johannes Pfeifenberger, Brattle Group, August 2012