# Presentation: 535637

## Energizing the NorthwestToday and Tomorrow September 28, 2004

- Joseph Desmond
- Deputy Secretary of Energy
- State of California

## California’s Energy Plan

- Resource Adequacy
- New Generation
- Repower/retrofit Existing Plants
- Transmission
- Wholesale Market Reform/Competitive Procurement
- Rate Relief
- Increasing Natural Gas Supplies
- Retail Choice (Core/Non-core)
- Renewable Energy
- Energy Efficiency

## (1) Resource Adequacy

- Require minimum 15% reserves margins by all sellers of electricity to avoid energy shortages.
- Governor called upon CPUC in April to accelerate implementation by two years (from 2008 to 2006)
- CPUC responded with new requirements adopting the Governor’s plan
- CPUC now implementing details of resource adequacy rules
- Rules account for all required generation and demand side resources to meet maximum demand
- Other: Administration efforts earlier this summer secured an additional 320 MW in 90 days; Energy task force working to ensure short term supplies available for summer 2005; major new generation projects approved by CPUC

## (2) Transmission

- Pursue all opportunities to enhance and expand the transmission system to reduce congestion costs, improve reliability and access new generation resources.
- Streamline transmission project siting and approval through a transmission Executive Order
- CPR recommendation - Move responsibility for transmission siting from CPUC to the CEC
- Implement policies and rules to enable access to distant renewable resources (both in and out of state)
- Transmission watch list – the top priorities
- Other: More than 2700 MW of new transmission capacity is being added in 2004

## (3) Wholesale Energy Procurement

- An open, competitive procurement process ensures the best possible deal for ratepayers in terms of price, risk, reliability and environmental impact.
- Procurement is the means by which a utility “buys” the power it needs to serve its customers.
- Competitive procurement ensures that utilities will purchase the lowest cost power available in the market.  Long-term contracts result in reduced reliability on the spot market and stable prices.
- Fixes one of the fundamental flaws that contributed to the Energy Crisis (ie. the prohibition of long-term contracts)
- Plan prioritizes energy efficiency, demand response and renewable resources before fossil generation procurement
- Cost Recovery - By following an approved procurement process, utilities are assured a return on their investment
- CPUC is implementing rules; final Commission decision expected by December, 2004

## (4) Rate Relief

- Every effort is being made to reduce energy costs for _all_ California consumers
- FERC refund settlement being aggressively pursued; recent favorable court ruling increases likelihood of higher refunds
- DWR contracts are being renegotiated to lower costs; new contract terms provide greater flexibility and savings
- CPUC directed to implement fair and equitable rate design

## (5) Increasing Natural Gas Supplies

- Ensure adequate supplies of competitively priced natural gas by pursuing increased in-state gas production, pipeline expansion and permitting of new liquefied natural gas (LNG) import terminals
- Interstate LNG Working group formed; coordinating review efforts across agencies for LNG permit applications
- Community education and outreach effort on LNG safety and environmental issues being rolled out
- Working with PUC to ensure Baja LNG will flow to Ca

## (6) Retail Choice (Direct Access)

- Support large customers’ right to choose their energy supplier
- Competition lowers prices; drives innovation; improves customer service
- Prerequisites: No cost-shifting between small and large users; no “stranded” investment
- Reestablishment of Direct Access requires statutory repeal of ban
- Governor offered amendment to AB2006 that would enable Direct Access
-  Will continue to work with legislature to repeal the ban on Direct Access.

## (7) Renewable Energy

- Implement policies and programs to achieve a 20% renewable energy mix by 2010
- Governor called on PUC to accelerate 20% renewable goal to 2010 rather than 2017.  PUC complied and has established as new State policy
- Million solar system initiative launched for residential and commercial photovoltaic systems
- Western Governors Association resolution calls for development of 30,000 MW of new, clean energy sources; western renewable tracking system (WREGIS) under development by Energy Commission
- Other: New CPUC Renewables Advisor position created to manage progress on renewable goals

## (8) Energy Efficiency

- Pursue all cost-effective energy efficiency opportunities
- Governor called for utility procurement plans to prioritize energy efficiency before purchasing new fossil fuel power plants
- A total of $656 million spent on energy efficiency in 2003 amount the IOUs.
- Green Buildings Executive Order (coming soon) will have State lead by example on energy efficiency
- Western Governors Association resolution calls for 20% improvement in efficiency by 2020
- Developing new Zero-Energy New Home (ZENH) initiative in concert solar systems
- Other: New Flex Your Power Now! campaign launched; new building codes (Title 24) and new appliance standards implemented

## Additional Energy Priorities

- FERC Refund Settlement
- DWR Contract Renegotiation
- Energy Agency Consolidation
- Dynamic Pricing/Advanced Metering
- Distributed Energy
- Research & Development
- Updating bi-annual Integrated Energy Policy Report (IEPR)
- Aging Power Plants

## Statewide Outlook

## Electricity Demand Trends

- 2

## Statewide OutlookAdjusted for increased Demand*

- *This Outlook does not replace CEC staff’s previous Outlook.  A new Demand Forecast will be completed
-     for the 2005 Integrated Energy Policy Report and published in Spring 2005.

## Statewide Operating Reserve*Not including emergency response and accelerated programs

- *This Outlook does not replace CEC staff’s previous Outlook.  A new Demand Forecast will be completed  for the
-    2005 Integrated Energy Policy Report and published in Spring 2005.

## Statewide Operating Reserve*Including emergency response and accelerated programs

- Statewide Operating Reserve*Including emergency response and accelerated programs

- *This Outlook does not replace CEC staff’s previous Outlook.  A new Demand Forecast will be completed
-     for the 2005 Integrated Energy Policy Report and published in Spring 2005.

## Summer Peak Day OverviewPeak Demand and Available Resources (Preliminary)

*Mary Jo Thomas, OE*

***Other 9/7/04 Details***
- Interruptions included 200 MW of CPA Load Response Program and 30 MW of SDG&E Demand Response programs.
- Intra-zonal Congestion during hour of peak – 1,275 MW
- Northern Imports (including DC) 5,819 MW – COI fully loaded
- Southwest Imports 3,041 MW – Congestion limited further imports.
- San Diego experienced new all time peak of 3,977 MW*.  *

**Notes:**
Marcie,
This slide does not include interruptible load.  There is 1,300 MW of interruptible load signed up however on May 3rd when we called on it, there was only 720 MW interrupted.

Also, the forecasted peak includes reserves.

## Total Electricity Use per Capita 1960-2000

## Emerging Renewables Program’s Installed Solar Inventory

**Notes:**

The Emerging Renewables Program has provided rebates for the installation of over 10,000 PV systems, for about 40 megawatts of capacity -- enough supply for all of the electricity needs of about 11,000 average California homes. 	
Program paid >$100 Million in last 2 years, $162 Million since program began in 1998. 

The Legislature supports giving the Energy Commission an additional 
$60 million to continue offering emerging technology rebates. (AB 135, Reyes) for funding thru Jan 2007. Difficult to say how long $60M would last; received requests for $20 Million in June ’04 alone. Increased demand occurs when rebates are scheduled to drop in June and December.

## Natural Gas Consumption

## Energy Efficiency

## Efficiency Program Impact 

## United States Refrigerator Use v. Time

**United States Refrigerator Use v. Time**
**Annual drop from 1974 to 2001 = 5% per year**

- 0

- 200

- 400

- 600

- 800

- 1000

- 1200

- 1400

- 1600

- 1800

- 2000

- 1947

- 1949

- 1951

- 1953

- 1955

- 1957

- 1959

- 1961

- 1963

- 1965

- 1967

- 1969

- 1971

- 1973

- 1975

- 1977

- 1979

- 1981

- 1983

- 1985

- 1987

- 1989

- 1991

- 1993

- 1995

- 1997

- 1999

- 2001

**Average Energy Use per Unit Sold (kWh per year)**

- 0

- 5

- 10

- 15

- 20

- 25

**Refrigerator volume (cubic feet)**

**Energy Use per Unit**

**Refrigerator Size **

**(cubic feet)**

**1978 Cal Standard**

**1990 Federal **

**Standard**

**1987 Cal Standard**

**1980 Cal Standard**

**1993 Federal **

**Standard**

**2001 Federal**

**Standard**

**Notes:**
The most effective path toward energy efficiency has been standards for autos, buildings, appliances, equipment,  etc.  The figure shows the remarkable gains in refrigerators.   The red smoothly rising line is the increase in size, and the unit energy use is not corrected for this, nor the fact that we’ve dropped CFC’s.   Since 1975,  refrigeration labels and standards have improved efficiency 5%/year for 25 straight years.  We have now saved 40 1-GW power plants, just due from refrigerators.

## Source: David Goldstein

## Impact of Standards on Efficiency of 3 Appliances

- Source: S. Nadel, ACEEE,
-  in ECEEE 2003 Summer Study, www.eceee.org

**75%**

**60%**

**25%**

## Slide 26

## Utility Programs: at a cost of ~1% of Electric Bill

**GWH Impacts from Programs Begun Prior to 2001**

**0**

**5,000**

**10,000**

**15,000**

**20,000**

**25,000**

**30,000**

**35,000**

**40,000**

**1975**

**1976**

**1977**

**1978**

**1979**

**1980**

**1981**

**1982**

**1983**

**1984**

**1985**

**1986**

**1987**

**1988**

**1989**

**1990**

**1991**

**1992**

**1993**

**1994**

**1995**

**1996**

**1997**

**1998**

**1999**

**2000**

**GWH**

**Utility Programs: at a cost of ~1% of Electric Bill**

**Building Standards**

**Appliance Standards**

**~ 14% of Annual Use in California in 2001**

**Notes:**
Estimate some of the casues of this 2%/year gain.  Each year, the cost of conservation programs, public interest R&D, and standards adds ~1% to electric bills, but cuts 1/2% off the bill.  So an investment of $1 in say 1990 saves $.50 per year for 10 to 20 years.  

Although not depicted on this slide, other policies also have led to electricity savings in California.  For example,  California standards allow electric water heating in homes only when it is cost effective: which is seldom the case.  This has resulted in only limited electricity use for this purpose in California.  Per Capita use is just 200 kWh in California for electric hot water heating while in Florida the use is about 1,200 kWh per person.  

## Transmission

## NTACNorthwest Transmission Assessment Committee 

**Mission**
- NTAC will be the open forum to address forward looking planning and development for a robust and cost effective NWPP area transmission system

## Current Status of NTAC Initiative

- Overall NTAC technical analysis effort is under way
- Alberta ISO has indicated that approximately 1500 MW of Tar Sands capacity will be available to transfer to California
- ISO has initiated the Canada – California study effort to assess AC and DC transmission alternatives between Canada and California
- While NTAC is not performing economic analysis at this time, at the ISO’s request the RMATS study team has agreed to provide the ISO with an RMATS type economic analysis for a Canada – California transmission alternative
- NTAC information can be found at the following web site:
- http://www.nwpp.org/ntac/

## CAISO Is Coordinating

- This Effort

## RMATS - Recommendation 1 Transmission Projects

**RMATS - Recommendation 1 Transmission Projects**

## RMATS - Recommendation 2 Transmission Projects

- Tesla

- Table Mtn.

- Grizzly

- Ashe

- Bell

- Taft

- Missoula

- Great Falls

- Broadview

- Ringling

- Colstrip

- Ant Mine

- Dave Johnson

- LRS

- Cheyenne Tap

- Ault

- Green Valley

- Miners

- Jim Bridger

- Naughton

- Grand Junction

- Emery

- Mona

- IPP

- Red Butte

- Ben Lomond

- Borah

- Kinport

- Midpoint

- Crystal

- Market Place

- 500 kV

- 345 kV

- Adelanto

- Option 1

- Option 2

- Option 4

- Option 3

- Added Phase Shifter

- Noxon

- Hot Springs

**This recommendation requires two 500 kV lines for export**

- Inc. DC

- Options 2-4

- Option 1 Only

- Consistent with Rec 1

*Longer-term export options*

## Canada – California Transmission Alternative

- Tesla

- Grizzly

- Midway

- Vincent

**Alberta**
**Tar Sands**

**AC or DC 500kV Line**

## Looking to the Future

## Looking to the Future

- California is not an island.  We are part of the Western Grid.  Policies will explicitly incorporate a regional perspective.
- We appreciate the energy imports and support from our neighboring states
- CA is not out of the woods, but has turned the corner
- The Future looks bright:
- Energy efficiency, renewables and demand response
- Clean energy technologies
- Improved reliability
- Competitively priced energy

## Energy Efficiency as an Energy Resource

**PNW  **12% Energy Savings

**CA**  20% Peak Energy Savings

- California and the Pacific Northwest Have Aggressive Efficiency Programs That Are Meeting a Substantial Portion of Their Demand

**Source: **Northwest Power and Conservation Council, California Energy Commission** **and California State and Consumer Services Agency

- 10,000 MW Avoided in Last 25 Years

- 2,600 aMW Avoided in Last 25 Years

## Resurgence of Energy Efficiency

- By 2004, Utilities in Many States Are Again Running Various Energy Efficiency Programs

**Sources: **ACEEE and NRDC

**Notes:**
Martin Kushler, Dan York and Patti Witte.  Five Years In: An Examination of the First Half-Decade of Public Benefits Energy Efficiency Policies.  American Council for an Energy Efficient Economy, Report Number U041: April 2004.  (pp. 20.) 

Personal Communication with: Martin Kushler (ACEEE), Cynthia Mitchell (E3: Energy/Environment/Economy,Inc), John Moore (Environmental Law and Policy Center) and Michael Mullett (Mullett, Polk and Associates, LLC): July 2004. 

## Available Reports/Program Details

- Electric Industry – CPUC Information and Programs
- 	http://www.cpuc.ca.gov/static/industry/electric
- CEC’s Integrated Energy Policy Report http://www.energy.ca.gov/energypolicy/index.html
- State of California Energy Action Plan http://www.energy.ca.gov/2003_energy_action_plan/index.html
- CEC’s Renewables Program http://www.energy.ca.gov/renewables/index.html
- CEC’s Public Interest Energy Research http://www.energy.ca.gov/research/index.html
- CEC’s Energy Efficiency Rebates and Demand Reduction http://www.consumerenergycenter.org/rebate/index.php