Detaching AC from MC Rate Decoupling

Lowers consumption, therefore results in lower emission

Facilitating two-way communication

Increase Reliability More accurate pricing structures,

hence lower prices for consumers

August 2003 Lasted 3 days Affected 50 million 10 million Canada 40 million in U.S Eastern US and Canada Detroit to New York City and Toronto $10 billion (USD) in economic loses 3,000 fire calls in NYC alone 11 deaths

Interconnects – regions of AC connectivity – strictly regulate frequency (60 Hz)

Frequency is dependent on load (demand) and supply.

When there is an overload frequency drops

Transformers and Generators both break down when the AC Frequency changes

Generators speed up when frequency drop, overheat

Current increases and causes Transformers to overheat and explode…

Distributed Energy Systems generate emergency power onsite when supply drops, causing a dip in frequency

But there still is a lack of communication about the real demand

SubstationPrivately Owned Power Plant (generation)

Meter

Independent Generators

Independent System Operator Managed

Investor Owned Utility Managed

Generation

Transmission Distribution

Market Structure

SCADA

AMI

Smart Grid

FERC/PUCs

PUCs

• Smart Grids• AMI (Advanced

Metering Infrastructure)

• PEM (Personal Energy Management)

Prices reflect average, not marginal costs Consumers have little incentive to

constrain electricity use when conservation is required

Quantity demanded exceeds quantity available

Create incentives for decreased electricity consumption during peak periods

Real-time market information on prices and quantities demanded and supplied

Provide incentives to reduce consumption during peak use periods

Regulates supply on each transmission line through prices

Encourages increased use in rarely used lines and decreased use in overcrowded lines

Encourages increased use during non-peak periods

Imagine a toll road where "permits" are auctioned off.  • The price each person is willing to pay will

depend on the number of people on the road• Drivers will pay less for a crowded than a less

congested road• End result is traffic from otherwise crowded roads

shifts to less crowded roads and congestion is reduced for everybody.

 Similarly, spot pricing on a Smart Grid encourages consumers to use less crowded transmission lines.• Electricity flow shifts from overused to underused

lines• Events leading to the 2003 blackout don't occur.

EU looking to implement single-grid by 2020• Italian Government owned Utility furthest

ahead with 30 million “smart-meters”• New Zealand and Australian private

market conducting smart-meters in most provinces

World’s 1st Smart Grid – Boulder, Colorado

Tennessee Delaware Utah Vermont Idaho Connecticut

Iowa Virginia West Virginia Kentucky Montana

Modify EPACT 1252-11 Directed States to either adopt or decline time based

rate schedules to enable: Real-Time/Dynamic Pricing via Customer Interface Demand Response

Address the concerns of the States Deciding not to Adopt EPACT 1252 11

Cap & Trade Strong implications toward energy

degregulation Price Premium on Coal Provides incentives for RTP Alternative Energy Energy Efficiency

With Real Time Pricing – preliminary steps must be taken Guaranteed Rate of Return for installing

infrastructure Decoupling (Volume based to Congestion

based) Protection for Public Purpose Programs

Low-Income Seniors