Unconventional Approaches: 

Part of the Electric Industry’s Resto Upcoming EPA Regulations 

Sue Tierney – Analysis GroupPanel on Infrastructure Reliability and AdequacyAspen Energy Policy Forum: “Changing Currents – Turbulence for the Electric July 5, 2011 – Aspen 
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Overview: Responses to the upcoming E

 The challenge Expanding the toolkit of responses Examples: viable tools – described her

 Energy efficiency (mining resources in new places Demand response (PJM forward capacity auction) Distributed generation (NREL building) Transmission solutions (PEPCO)

 Examples: viable tools – not described 

 Station modernization (Everett “Air Quality Improv Locking in fuel prices (XCEL) Siting policies (NY, CAL)
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

THE CHALLENGEUnconventional Responses to the Upcoming E
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

The challenge: EPA proposals 

EPA has moved forward to propose regulaticourt orders):

 CATR for SO2, NOx Air Toxics (MACT) for mercury, benzene, arsenic, and  316(b) water cooling  No draft regulations for GHG for existing plants

Other context: 

 EPA’s regulations allow for more flexibility than origin Many companies have already invested in env’l equip Many states already have mercury rules stricter than  Some big emitters already under consent decrees to  Many older, inefficient, small, uncontrolled plants alre
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

The Challenge:Estimates of Capacity Retirements Due to EPA 

Many studies that have looked at impacts:

 Most (except BPC) were done prior to issuance of draft rules Most assumed range of scenarios (e.g., base, “moderate”, “strict No studies assumed that there would be robust market response 

measures) in combination with the more moderate cases consist

* Notes: ICF / EEI (5/2010) is based on Scenario 1 (CAIR and MACT); NERC (10/2010) low end based on “moderate” CATR CATR and MACT cases; ICF/EEI (1/2011) based on scenario with CATR and MACT (high flexibility); and BPC (5/2011) based 

0

10203040506070

PIRA (4/2010) ICF/INGAA 

(5/2010)

ICF/EEI 

(5/2010)

Credit Suisse 

(7/2010)

Bernstein 

(10/2010)

NERC 

(10/2010)

CRA (1

high endlow end

EPA CATRProposal
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

EXPANDING THE TOOLUnconventional Responses to the Upcoming E
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Build a new 

to replace 

one’s c

Retrofit a 

power plant 

with pollution 

control 

equipment

Seek a 

-The entire rule, or -The rule’s application - A temporary delay (e

The “Classic”:The tool assumed by many of the studies and some in the industry ......
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

The “Champ”: The tools that are available
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Build a new power plant 

to replace a 

retiring one’s 

capacity 

Retrofit a power 

plant with pollution 

control equipment

Seek surgical delay (from EPA, President) 

in applying a rule to a particular plant 

S. Tierney: The 21st Century Toolkit

Regulators in traditional and restructured states: 

Understand a system’s exposure

-Ask air regulators to identify potentially affected 

plants (based on emissions)- identify plants with potential to retire (e.g., age, 

capacity factor, heat rate, control equipment) 

The “Champ”: The tool we have

Refresh & use competitive procurement 

tools (including long-term capacity 

auctions) to determine retrofit v. new 

build v 3rd party resource mix

State, federal 

regulators: Ask 

TOs/RTOs to 

perform “what if” 

transmission 

studies based on 

lists of plants

Regulators: require 

owners of 

potentially exposed 

plants to state 

intentions, file plans

a

f

Regulators: gear 

up for effective 

siting/ permitting 

processes

Regulators: clarify policies 

for long-term capacity, 

energy and gas contracts

Regulators, RTOs: 

use RMR contracts 

where necessary

Regulators:

Sponsor stakeholder dialogue 

about “what does 

prudency look 

like” given 

uncertainty
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

CASE: ENERGY EFFICIENUnconventional Responses to the Upcoming E
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Energy efficiency opportunities are well documented

 EPRI’s “Prism” study McKinsey’s “Wasted Energy” Study WWF – G8 Energy Efficiency Potential Interacademy Council – “Lighting the Way” Northeast Energy Efficiency Partnership National Academy of Sciences –

America's Energy Future: Energy Efficiency Technologies: Opportunities, Risks, and Tradeoffs (underway)

 National Action Plans for 

Energy Efficiency

But there is still much more to do that is (or will be) cost-effective.
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Coal basins

0%

10%20%30%40%50%60%70%80%90%

100%

In gene

In general, lower electricity prices

Coal country 

% of coal in electric mix
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Retail Sales of Electricity per Dollar of GS

0.00.10.20.30.40.50.60.70.8

WY

WV

KY

MS

AL

SC

AR

MT

LA

OK

ID

ND

IN

TN

MO

NE

OH

IA

GA

KS

NC

TX

FL

AZ

SD

NM

WI

NV

VA

PA

OR

WA

MI

US

UT

MN

Kwh per Chained (2000) Dollar

Source: EIA, State Energy Data System (SEDS), Table R3, available at http://www.eia.gov/emeu/sta

States wHighest - Wyomin- W. Virg- Kentuc- Mississ- Alabam- S. Caro- Arkansa- Montan(Does not in
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

0.002.004.006.008.00

10.0012.0014.0016.0018.0020.00

HI CT NY AK MA NJ NH ME RI MD VT CA DE DC NV FL TX WI PA MI US IL AZ OH AL VA SC MS GA MN NM CO NC IA KS IN 

Average Retail Price Residential (c/kW

$-

$200 $400 $600 $800 

$1,000 $1,200 $1,400 $1,600 $1,800 

MD HI CT TX FL AL DE VA MS SC NV TN AZ GA NC AK NJ US LA MA NY NH AR PA DC KY IN OH OK MO RI OR WV ND SD K

Average Bill - Residential (Annual $

Customuse a loaverage ND, WV

Customers in many states with highprices have lower average bills: CA, IL, DC, NJ, MA, NY
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

MT

WY

ID

WA

OR

NV

UT

CA

AZ

ND

SD

NE

CO

NM

TX

OK

KS

AR

LA

MO

IA

MN

WI

IL IN

KY

TN

MS AL G

OH

MI

AK

HI

States with strong demand-side managem

ACEEE scorecard - 2010

Area of good

potential for much 

greater demandreduction to lower 

customer bills 

(MW and MWh)
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Coal plant capacity –Without emission controls, by state

02468

1012

IL

MI

OH

MO

TX

IN

IA

OK

TN

AL

KY

PA

NC

NE

WV

SC

GA

VA

WI

AR

FL

LA

MS

MD

NY

MN

KS

DE

CO

MA

UT

GW

Coal Units Without 

(Total GW 

Notes:[1] Totals do not include Alaska or Hawaii.[2] Units without emissions are those units without SCR or FGD systems.

Source: SNL data.

States with still-good potential

lower customers’ bills through

demand-side measures 

(and ratemaking policy)
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

CASE: DEMAND RESPONUnconventional Responses to the Upcoming E
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

PJM – Boundaries of transmission opera

ComEd

AEP

Allegheny

AEP

AEP

D

Penele

DPL

ATC

Duquense

PJM capacity = 

41% coal-fired 

(end of 2010)

PJM is FERC-regulated
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

PJM’s forward capacity market (FERC reg

Mechanism used by PJM to assure sufficient capacity future year:  “Reliability Pricing Model” = forward capacity market

 Identification of resource requirements (forecasts of dem

supply (market-based mechanism to identify supply to m

 The “Base Residual Auction” – annual auction to ide

 Which resources will be available in a future year (throug

 Which resources are needed (through those that “clear t

intersection of demand projections and resource offers)

 Which resources will receive compensation in the form o

(with $/MW payments established by the clearing price) “clear”, it does not receive capacity payments)

 Resources eligible to bid (or offer MW of supply)

 Generation (existing and new) Demand-response and energy efficiency
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

PJM’s forward capacity auction (results f

Most recent Base Residual Auction: To procure capacity for the period May 31, 2014 throu Results announced 5-31-2011

 Market-based indications that the region is able to meet 

requirements in 2014/2015

 NOTE: this is the time period when the Utility Toxics Ru

Rule will both be in effect.

 Even though some coal plant offers did not “clear the m

retire), the results show that the region was still able to ssupply of energy resources to maintain reliability. 

 Generators had received guidance to offer capacity with 

compliance with environmental regulations as proposed 

 Robust response from generators and providers of ener

demand-response supply.
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

PJM’s Base Residual Auction (5/2011) fo

PJM, “2014/2015 RPM Base Residual Auction Results”
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

PJM Base Residual Auctions: Offered and Cleared Resources

PJM, “2014/2015 RPM Base Residual Auction Results”

In 2011/2012 forward market:

Offered resources:

99% = generation

1% = demand response 

Of the amounts cleared:

99% = generation

1% = demand response

4% more MW offered than needed

In 2014/2015 forward marke

Offered resources:

90% = generation10% = demand response 

Of the amounts cleared:

90% = generation10% = demand response 

7% more MW offered than 
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Other results of PJM auction 

There are sufficient resources available to federal reliathe period (2014/2015) when the air rules go into effect More than 5 GW of new capacity came into the marke

 New generation (including gas-fired, wind (695 MW), and 

 New demand side resources (EE and DR)

 Generating capacity that failed to clear the auction:

 Included fossil generating units that may eventually retir Largely offset by these new resources

 These results suggest that the tool kit is robust

 More robust that the many studies have assumed 

FERC-regulated RTO markets play an important role 
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

CASE: DISTRIBUTED GEUnconventional Responses to the Upcoming E
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

NREL:Lab of the Future –Zero energy use
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

NREL RSF: How do you get to zero energ

Design-Build Process based on performance criteria Focus first on energy efficiency features.  Then focus on adding renewable energy 

into the equation.

 Then use architecture to support those 

first two goals, rather than the other way around. Design around energy performance requirements. 

 Extensive energy modeling established 

the basic building architecture and structure.

Source: “Lab of the Future,” Bill Glover, Deputy Laboratory Director and Chief Operating Officer, NREL, presentation to NREL External Advisory Council, June 29, 2011
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

What happened: What NREL wanted: Net zero energy goal –with as many of the performance goals as possible LEED Platinum Competitive cost for fs 800 employees

What NREL 

 Net zero enePVs – under bdays early, wiperformance  LEED Platin 220,000 sf a 825 employe

Source: “Lab of the Future,” Bill Glover, Deputy Laboratory Director and Chief Operating Officer, N

Advisory Council, June 29, 2011
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Source: “Lab of the Future,” Bill Glover, Deputy Laboratory Director and Chief Operating Officer, NR

Advisory Council, June 29, 2011
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Comparing the energy use (per sf):

Annual Energy Use Intensity (kBtu/ft2 )

Source: “Lab of the Future,” Bill Glover, Deputy Laboratory Director and Chief Operating Officer, NREL, presentation to NREL External Advisory Council, June 29, 2011
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Distributed generation: 450-kW Roof-Moun

December 2010

Source: “Lab of the Future,” Bill Glover, Deputy Laboratory Director and Chief Operating Officer, NREL, presentation to NREL External Advisory Council, June 29, 2011
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

CASE: TRANSMISSION Unconventional Responses to the Upcoming E
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Options when facilities are needed for loc

Many authorities exist to ensure that there is which local or system reliability will be threaplant closure for environmental, economic o

 EPA’s authority:

 to allow 1-year extension for good cause in the U

(case-by-case basis)

 DOE and EPA authority:

 to enter into administrative orders of consent or c

power plant owners, governing terms and conditireliability purposes, pending compliance with envregulations

Example:

 GenOn (Mirant) plant (Alexandria, VA) – outside o
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Potomac River Gen Station – Alexandria, 
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Potomac River Gen Station – in PJM and 

PRG(482 5 unbetw
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Environmental and reliability issues

Aug. 2005: VA DEQ says PRGS violates local air is

PRGS owner announces intention to retDC (PSC, Off of People’s council) petitioplant open to assure reliability in DC

Nov. 2005: DOE declares reliability ‘emergency’ & o

Dec. 2005: ORNL study to DOE on local reliability i

Jan. 2006: PJM and PEPCO file reliability plan with 

identifies plan including two new 230 kv 

June 2007: Construction of two lines (and other facJuly 2007: FERC finds PRGS shutdown poses no r
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

The “Champ”: The tools that are available
Aspen Energy Policy Forum - Panel on Electric Infrastructure

July 5, 2011

Sue TierneyManaging PrincipalAnalysis Group111 Huntington Avenue, 10th Floor 

Boston, MA 20199stierney@analysisgroup.com

617-425-8114