Hantz A. Présumé Principal EngineerSystem Planning

July 30, 2015

Non-transmission Alternatives

Process

The Vermont Experience

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Overview of Vermont

• Small, rural state, ~625K pop.• 17 distribution utilities

– 1 investor-owned– 2 cooperatives– 14 municipals

• VELCO is the statewide transmission-only entity owned by the distribution utilities (73%) and a public benefit corporation (27%) VLITE

• The VT distribution utilities own generation while the rest of New England has divested

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The Vermont Transmission Grid738 miles of transmission55 substations and switching stationsTies to NY, MA, NH, and Canada

225 MW HVDC Converter to Canada1 STATCOM, 4 Phase Shifting Transformers & 4 Synchronous CondensersVermont is dual peaking

Summer and Winter peak loads vary between 1000 MW and 1050 MWThe Vermont load is roughly 4% of the region’s load

Minimal generation and no true base load units

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ISO-NE is the Planning Authority for New England

• ISO-NE publishes an annual regional system plan– Includes a description of proposed regulated transmission

solutions– Provides sufficient information to allow Market Participants to

propose a market response to identified system needs• ISO-NE NTA studies do not evaluate NTA solution costs nor

feasibility, simply location and amount• Transmission solutions designated as regional benefit

upgrades are funded regionally• Market response solutions are funded by the sponsor

• The FERC authorized ISO-NE to perform three critical roles– Operate the power system, administer the

markets, and conduct power system planning for the region

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Vermont planning policy

Favors least-cost solution (wires or non-wires), and requires collaborative planning & stakeholder engagement

• Legislation (30 V.S.A. § 218c)– Required a 10-year transmission plan at least every three years beginning July

1, 2006, including public outreach process– Goal: Identify potential need for transmission system improvements as early as

possible, in order to allow sufficient time to plan and implement more cost-effective nontransmission alternatives to meet reliability needs, wherever feasible.

• PSB Docket 7081 established stakeholder process through negotiated settlement– Created Vermont System Planning Committee (VSPC)—statewide reliability

planning stakeholder body– Requires 20-year long-range transmission plan– Goal: Full, fair and timely consideration of cost-effective non-transmission

alternatives

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2012 Plan included map roughlydepicting relative benefit to transmission grid of new generation or load reductions by location• Color coding very rough, drawn by

hand

Zones of benefit based onISO-NE VT/NH NTA analysis

Benefits much more precisely analyzed in context of full NTA studies

Provided geo-targeting guidance to stakeholders in 2012

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Vermont NTA analysis process

• Step 1: Screening– All projects are screened during the Long-Range Plan

development using adopted NTA screening tool to determine whether• the problem can be addressed by an NTA in practical terms• there is enough time to implement the NTA• the scale of the NTA would not be too large• the potential savings is worth conducting a more detailed analysis

• Step 2: Full NTA analysis if “screened in”– More detailed analysis evaluating feasibility and relative costs of

NTA resources.– Design the NTA to meet the performance requirements at the

lowest cost• Summer vs winter, on standby or running, short or long duration, etc.

See screening tools at: http://www.vermontspc.com/about/key-documents

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Study tools

• VELCO planning engineers utilize power flow software (PSSE, PSLF) to translate typical study results (% overloads and voltage violations) into data inputs to an NTA study

• Consultant or the NTA study group utilizes proprietary software or Excel workbook tool to evaluate the net cost of alternative resource configurations (ARC)– Several ARCs can be developed in an attempt to create

cost profiles that are better than individual resources– May include hybrid ARCs combining transmission and

NTA solutions• ISO-NE planning engineers utilize PSSE to test

the effectiveness of proposed market responses

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The steps of a full NTA analysis

• VELCO provides information that would be useful to an NTA sponsor– Amount and location of the reliability gap– Timing of the need and longevity requirement based on the growth

rate of the reliability gap– Availability requirement and expected run time

• Whether the reliability concern exists under normal conditions or emergency conditions

• A description of the potential duration and frequency of these conditions• NTA analysis is performed by a study group

– Collaborative process including affected DUs, possibly an NTA consultant, and any interested member of the VSPC, e.g. Public Service Department, Energy Efficiency utility, and generation developers

– Study group seeks input from known energy stakeholders at various stages of the analysis

• Result is NTA is cost-effective and feasible, or not– If no, transmission is pursued– If yes, the NTA solution is proposed to ISO-NE for consideration

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Conditions for ISO-NE consideration of market responses

• Market responses need to have been proposed with some form of obligation that they will perform– Have cleared the Forward Capacity Market (FCM)– Have been selected in, and are contractually bound by, a

state-sponsored RFP, or– Have a financially binding obligation pursuant to a

contract• Only then will ISO-NE incorporate and update

information regarding resources modeled in a subsequent Needs Assessment– Resources are funded by the sponsor/developer

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An example of how the process worksLate 2011: ISO-NE publishes preliminary study showing system concerns in Central VT

Late 2011: DUs & VELCO form study group per VT formal non-transmission alternatives (NTA) process to resolve

April 2012: ISO-NE Solutions Study proposes transmission upgrades to resolve Central VT concerns

At this point, without VT NTA study requirement, atransmission solution would likely have been implemented

Nov 2012: GMP & VELCO present study group results to ISO-NE showing potential for a minor NTA supplemented by existing state energy efficiency and distributed generation programs to postpone Central VT upgrades

Early 2013: ISO-NE reassesses need for Central VT upgrades

Summer 2013: ISO-NE study confirms $157 million Central VT upgrade deferral based on a lower load forecast and resources from the FCM

Verm

ont

Reg

iona

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When EE and expected PV resources applied to gap, transmission upgrade no longer needed

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

0.0

10.0

20.0

30.0

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032

Coincident MW

C-CR Effective MW

C-CR Margin

CR-NR Margin

The remaining gap from 2012 to 2019 could be met by temporary and declining demand response programs

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Observations about VT example & process

• EE plays a big role but fills the gap in combinationwith other resources, which are growing rapidly

• Integrated look at DG & EE is critical: no one element caused the result

• Project need is based on forecast, which has many assumptions; could change rapidly in volatile times; regular reassessment needed

• Benefits of a robust stakeholder process:– Regulatory certainty– Stakeholder buy-in– A little more certainty of the need

• Biggest policy issue: – Networked transmission is funded regionally, but NTAs or

market responses are funded by the project sponsor