SMART GRID A Regulatory Perspective

Matt Baker

Commissioner

Colorado Public Utilities Commission

2

Colorado Energy Sales

by Type of Utility

Cooperative

28%

Investor-Owned

55%

Public

17%

Types of Colorado Electric Utilities

3

Electric Generation Fuels in Colorado1990-2008

Colorado Electric Generation

by Fuel Source 1990-2008

Coal

Hydro

NG

Renewable

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Gig

aw

att

ho

urs

4

History of Colorado’s RPS

• Amendment 37 (2004)– Voter initiated; 10% renewable energy by 2020;

separate solar requirement; net metering

• HB 1281 (2007)– 20% renewables by 2020; 10% for municipal utilities

and cooperatives; solar requirement

• HB 1001 (2010)– 30% by 2020; carve out for DG of 3% by 2020

(~650 MW PV)

5

Xcel Energy

• ~7000 MW peak load

• 2004-present– 1,200 MW wind capacity– 60 MW solar capacity

• By 2015– Additional 750 MW wind capacity– >250 MW new solar thermal– >160 MW new photovoltaic

6

PUC Smart Grid Activity

Smart Grid Defined

Source: Electric Power Research Institute. “The Green Grid: Energy Savings

and Carbon Emissions Reductions Enabled by a Smart Grid.” May 2008.

Overlay of Bi-Directional Communication and Control Mechanisms onto the Electricity Grid

Marriage of Electricity Grids with Information Technology

Involves the entire electricity value chain: Generation Transmission Distribution Consumption

Smart Grid is an enabler: Demand Response Efficiency Renewable Integration (central and distributed) Plug-in Hybrid Electric Vehicle (PHEV) Integration Consumer Choice

What is Smart Grid? A Broad Definition:

Smart Grid Enabled System

Electricity providers will have greater access to real-time information about the state of the system from generation to consumption

Electricity providers will have greatly increased ability to control both supply and demand

Consumers will have information about the cost and environmental attributes of their electricity and the ability to automate efficiency

Department of Energy, National Energy Technology Lab http://www.netl.doe.gov/moderngrid/opportunity/vision_characteristics.html

21st Century Electricity System

• Information rich

• Distributed design and operation

• Clean tech priority

• Ubiquitous storage

• Automated operations

• Highly differentiated energy services

Source: Steve Hauser, NREL

Transitional Challenges

Complex array of potential technology choices.

Smart Grid technology (equipment and software) will be a moving target in the near term.

Industry consolidation already occurring. Attrition likely as dominant providers emerge.

Interoperability standards are critical.

Consumer education and adoption extremely important, very uncertain.

Regulatory landscape Balkanized regulations (Federal, State, local) will lead to

deployment and integration challenges.

The Built Environment

• How can smart grid lower costs?

• What revenue centers will it provide?

– HVAC

– Energy management

– Energy production

– PHEVs . . .

• How do codes and regulations enable progress?

– Implications to utility law?• vertically integrated versus componentized approach?

Urban Context

• T&D efficiency gains– i.e., distribution automation

• Building energy efficiency• Microgrids

– small, integrated energy systems in which generation and load are co-located

– can operate in parallel with the grid or intentionally islanded

• Energy Storage– Utility scale or localized

• Renewables Integration• Electric Vehicles

– Vehicle to Grid (V2G)– Charging infrastructure– Parking

Z. Ye, et al. Facility Microgrids, National Renewable Energy Laboratory http://www.nrel.gov/docs/fy05osti/38019.pdf at 1.

Smart Grid: Regulatory Evolution

• Regulatory landscape must keep abreast of innovation

– Should promote -- not stymie -- investment

• Investors

– Who has the expertise?

– Who takes the risk?

– Who owns smart grid infrastructure components?

• What codes, standards will apply?

• How to ensure cyber security?

Regulatory Incentives

• As with EE and DSM, utilities need incentives to invest in technology that decreases sales

– Decoupling

– Dynamic rate structures

– But cost recovery for infrastructure investments

• Which investments require a CPCN?

• Which do not?

• Who pays?

– Minimize risk to ratepayers

Conclusions: Going Forward

• Smart grid offers promise and benefits

– But also some risks

• Do what makes economic sense now

– T&D upgrades are cost effective

• Come to us with pilots

• Allow third parties to work with business owners and homeowners to achieve greatest gains

Questions?