1 DOE Office of Electricity Delivery and Energy Reliability David Meyer May 2005 Developing Policy Options To Enhance Security of Energy Supply for Electricity Generation 2 Premises Rising natural gas prices, security issues focus new attention on relations between policy concerns and energy markets Resource endowment affects policy concerns and policy options Risk exposure varies with resource endowment and geography Security of supply should affect, not determine, policy choices 3 Need for Situation Assessments Assessments should be both national and sub-national Should be done in context of existing policy processes and concerns E.g., in U.S. context, consonant with Interim National Infrastructure Protection Plan (issued Feb. 2005) 4 Interim National Infrastructure Protection Plan Plan establishes U.S. framework for Identifying critical infrastructure and key resources Assessing vulnerabilities Prioritizing corrective actions Implementing corrective actions Plan identifies 17 sectors, 10 to be addressed directly by Dept. of Homeland Security, and 7 to be the responsibility of other federal agencies (e.g., Energy Dept.) Plan focuses chiefly on protection of existing infrastructure DHS and sector-specific agencies (e.g., Energy) are responsible for providing guidance on design of new infrastructure 5 Sector-Specific Guidance from DHS and DOE DOE published interim energy-sector infrastructure protection plan DHS published Guidance on Risk Analysis and Safety Implications of a Large Liquefied Natural Gas (LNG) Spill Over Water Other studies planned or in preparation 6 Need for Regional Energy Planning In U.S. Two-thirds of U.S. now covered by Regional Transmission Organizations (RTOs) RTOS are responsible for coordination of transmission planning Regional generation planning also needed, but not part of RTOs mission Likely to be coordinated by state-based organizations with same footprint as RTOs Generation planning being done in western U.S. -- other areas considering how to start Security concerns must be included 7 Federal Policy Initiatives Strong support for Federal siting of LNG facilities Development of new nuclear capacity, wind, other renewables, clean coal capacity Modernization of grid and development of new transmission capacity 8 Policy Options re Security of Supply Policy options emerge naturally from the methodical process outlined above. Examples: To enhance security of LNG supply, set portfolio diversity requirements for importers Build infrastructure physical security requirements into application criteria market players must meet General strategy: Set appropriate security criteria and rely on markets to find ways of meeting them efficiently 9 Questions?