Regional and Multi-Regional Electricity Delivery Infrastructure Planning - Inter-regional Transmission, Seams, and Cost Recovery Issues

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While the Northeast currently boasts one of the most sophisticated energy markets in the United States, continued growth and increased demand in the region is creating the need for new infrastructure and infrastructure improvements. Policymakers recognize that the type of infrastructure that will need to be implemented depends in part on the need to reduce seams that can inhibit energy markets as well as on planned utilization of renewable resources and some states' obligations to meet Renewable Portfolio Standard (RPS) requirements. In addition, the session's moderator, the Honorable David Coen, Member of the Vermont Public Service Board and NARUC Second Vice President, noted that the relationship between the Northeastern United States and its Canadian neighbors would likely become increasingly inter-dependent.

Gordon van Welie, President and Chief Executive Officer, ISO New England, Inc. noted that the region has worked together on regional planning since the late 1960s. Within the past year, ISO New England has been performing scenario analyses to explore what can be done about rising costs and determine how to meet environmental goals. The most promising way to address both issues is through increased energy efficiency and the six New England states are already doing much energy efficiency today. In addition, renewable energy resources and nuclear power will likely play key roles in the future. ISO New England has seven projects under review. ISO New England also wants to develop a framework for economic transmission analysis and is working on the methodology, including revisiting this part of the tariff and determining which projects should be evaluated first. Mr. van Welie discussed three tiers of action: reliability investments, integration of renewable energy resources within New England, and strengthening interconnections with Canada.

The Honorable Jack Keir, Minister of Energy of New Brunswick, Acting Minister of Supply and Services, and Minister responsible for New Brunswick Energy Efficiency and Conservation Agency, discussed New Brunswick's ideal location to become an energy hub for New England. He stated that New Brunswick is a "supply province" that wants to increase its exports. Currently, New Brunswick has diverse generation sources including fossil fuel plants and the New Brunswick Power Corporation's Point Lepreau nuclear plant in addition to 400 MW of wind. Research and studies are also being done for more wind along the coast (as much as 5,000 MW potential) and for wave energy. Minister Keir noted that the number one hurdle to getting supply from New Brunswick to the United States is transmission. New Brunswick is currently conducting a study on whether to add a second reactor to Point Lepreau and the analysis of the business case includes transmission. Minister Keir added that New Finland (neighboring Canadian province) is looking at hydro projects for New England, and that competition is good for New England and New Brunswick.

Laurie Aylsworth, Vice President, Transmission Projects, Engineering and Maintenance, Northeast Utilities System, discussed several challenges facing the Northeast today. The first major challenge is a lack of system planners and engineers in the workforce. Ms. Aylsworth noted that colleges need to get power courses back into the curriculum. The second major challenge is the fact that planning no longer represents just a concern about reliability, but now requires a portfolio of disciplines that look at strategy, cost considerations, and engineering options. In addition, what used to be state/localized planning now comprises a larger geographical area and the planning horizons of the past (i.e., 10-20 years) have been replaced by longer-term horizons (i.e., planning to 2050).  Ms. Aylsworth stated that perhaps there will be a reinvigoration of the movement from deterministic to probabilistic planning, with more data and case studies available today than 10 years ago. Compliance with the Regional Greenhouse Gas Initiative (RGGI) and state RPS also has to be considered, as well as diversity of fuel for security reasons. Ms. Aylsworth concluded by saying that both Connecticut and all of New England are facing potential plant retirements and Canada can provide low carbon resources, but the transmission connections will need to be made.

Angela O'Connor, President, New England Power Generators Association, noted that sustainable, competitive markets are the best solution and that energy and environmental policy must be done in a complementary manner. The seams issue is not a new one for New England, but is now of heightened importance in looking to Canada for low-carbon resources. If looking toward more innovative technologies, Ms. O'Connor noted that the independent power producers in New England could provide such innovation, but they are in need of regulatory certainty. Ms. O'Connor also stated that in addition to New Brunswick, Ontario has stated that it, too, can solve New England's power problems.  Ms. O'Connor concluded that New Englanders should be careful to look to their own region for the renewable (or other) sources needed, and not just rely on Canadian sources.

In response to a question posed by Commissioner Coen regarding queue issues, panelists agreed that when looking at the queue of proposed projects, it is hard to make decisions about which project to allow go forward, since a lot of uncertainty exists. In addition, another challenge with the queue is the concern that a cheaper option is precluded because it is further down in the queue.

During the question and answer period, the panelists discussed that the "highway system" needs to be strengthened to be able to successfully deploy renewable energy resources in New England  and the region needs to decide how best to serve its consumers.

When asked to discuss cost allocation issues in New England, panelists discussed the fact that socialization of costs occurs for reliability upgrades, but necessarily for economic upgrades. Some of the panelists suggested that renewable energy resources should be categorized as economic development and perhaps this should be reflected in the tariff.  When making a decision about a reliability project in New England, panelists agreed that one can quantify and create a solid case for the investment, but when considering economic projects, assumptions are used to determine the potential value and the entire region needs to agree to the project. Mr. van Welie noted that no economic projects will be developed unless there is support from all of New England. From a planning standpoint, the ISO can only do so much for an economic project and then a developer will carry the ball if there is support and economic justification for the project to go forth.