EECS4460.1610.19.19.pptx
Power System Management
EECS 4460/5460-901
Lecture #16
Electricity Public Policy Issues
1
Historically, public policy, legislation and regulation have dramatically influenced the electric utility business in the U.S.
Power generation, supply and the markets
Transmission and distribution
Rates and pricing
Monitoring and improving best practices
Many policy and related changes have occurred due to the state of the economy, financial drivers, technological improvements, business trends and even by specific events
Managing the growth of the system
Improving efficiency (lower costs) and reliability
Reducing the environmental impact
Responding to weather-related and operational events
Public Policy and Electric Utilities
An early example of this phenomena:
Public Policy and Electric Utilities
| Event/ Era | Industry Actions | Legislation/ Regulation |
| The Great Depression | Declining growth and revenue Financial collapse of holding companies Restructuring ...more | Public Utility Holding Company Act (1935) Rural Electrification Act of 1936 ...more |
The current business and operational environment for electric utilities in the U.S. has resulted from some key “events or eras” over the past fifty years
Public Policy and Electric Utilities
| Event/ Era | Industry Actions | Legislation/ Regulation |
| 1965 Northeast Blackout 30MIllion people 8 states Relay failure Cascade tripping | Reliability councils formed Analytical improvements Protective system improvements | Minimal |
| 1970’s-80’s Energy Crisis Oil embargo Rationing Economic “stagnation” Recession and inflation | Cancelled plant construction Fuel switching from oil Rate increases | Trans-Alaska pipeline authorized DOE established Fuel economy standards Political pressure for conservation and alternative fuels – PURPA |
Oil Prices and the Energy Crisis
Oil prices from 1861 through 2015
Created market for power from non-utility producers - “IPP’s”
Increased support for cogeneration – utilities must buy
Ended promotional rate structures (“volume discounts’)
Hydropower supported -“renewable” energy
Implementation left to the states
Purchase power agreements between IPP’s and utilities
Public Utility Regulatory Policies Act of 1978 (PURPA)
Public Policy and Electric Utilities
| Event/ Era | Industry Actions | Legislation/ Regulation |
| 1979 Three Mile Island Nuclear plant partial meltdown Media and public reaction | Established INPO Accredited training Redesigns and delays Emergency planning | NRC regulatory changes Redesigns Training rules |
| 1980 Worlds First Wind Farm 20 30kw turbines New Hampshire Bankruptcy in 1996 | Research and development | Proposals |
| 1981 Solar One 10MW Thermal solar tower in California Operated to 1986 | Research and development | Proposals |
Public Policy and Electric Utilities
| Event/ Era | Industry Actions | Legislation/ Regulation |
| 1986 Chernobyl Nuclear Accident Power surge and steam explosion Radioactive release Contamination Fatalities | Formed WANO (World Association of Nuclear Operators) More pressure on nuclear | NRC review Minimal |
| 1990’s Continued Focus on Energy Minimal growth UK Deregulation Academic writing DOE activity | Increased conservation programs Financial restructuring Mergers and consolidation | National Energy Policy Act (1992) FERC Order 888 (1996) States deciding to deregulate generation |
Promotes wholesale competition through open access to transmission
Requires public utilities to file open access non- discriminatory transmission tariffs
Allows for stranded cost recovery for costs associated with open access
Widely believed that generation can be openly competitive
FERC Order 888 of 1996
Thus, interstate transmission service is under FERC jurisdiction
Authorized tax credits for wind and solar
Funded clean coal initiatives
Loan guarantees for advanced nuclear, carbon capture and renewables
Ethanol increases in gasoline
Exemptions from water regulations for fracking
Grants for biomass
Incentives for oil and gas drilling
Sets federal standards for grid reliability
Additional incentives for nuclear
Changed and standardized daylight-saving time
Transfer of regulation of utilities from SEC to FERC
PUCHA reform
Energy Policy Act of 2005
Public Policy and Electric Utilities
| Event/ Era | Industry Actions | Legislation/ Regulation |
| California Energy Crisis (2000-03) Load growth in the 90’s State restructuring bill in 1996 Market begins 1998 Price caps Market manipulation Heat waves Transmission congestion Prices very high | Plants sold to IPP’s Major blackouts in 2000-01 SDG&E complaint filed in August 2000 PG&E bankruptcy in April 2001 Enron bankruptcy in December 2001 Arthur Anderson demise Prison terms and fines | Multiple FERC investigations SEC scrutiny and reform Sarbanes-Oxley Act of 2002 Public Company Accounting Oversight Board Disclosures |
“There are no accounting issues, no trading issues, no reserve issues, no previously unknown problem issues. I think I can honestly say that the company is probably in the strongest and best shape that it has probably ever been in.
—Kenneth Lay answering an analyst's question on August 14, 2001.[11]:347
Much has been written about Enron….
Public Policy and Electric Utilities
| Event/ Era | Industry Actions | Legislation/ Regulation |
| 2003 Northeast Blackout Hot weather, high loads, 8/14/2003 Loss of generation Monitoring systems fail @MISO and FE Tree contacts and lines tripping Voltage instability Cascading failures 256 power plants offline 50M customers 61,800MW lost load | Independent NERC investigation U.S.-Canada Task Force Substantial facility upgrades Improvements in “Situational awareness” Operator training and certification System protection coordination improvements Revisited communication protocols Establish standing framework for outages IT and cyber security | Energy Policy Act of 2005 NERC Standards become mandatory Regional reliability councils become compliance enforcers NERC is the North American ERO (Electric Reliability Organization) |
North American Electric Reliability Corporation (NERC) Initial Actions
Modified its governance to meet the independence requirements of the reliability legislation by appointing an independent Board of Trustees.
Developed a funding model to ensure that adequate resources will be available to develop and implement reliability rules.
Implemented an American National Standards Institute-accredited standards development process that is fair, open, balanced, and inclusive.
Substantially revised and strengthened its existing reliability standards and is developing and implementing new standards.
Established a program to monitor and enforce compliance with NERC and regional reliability standards, and publicly discloses violations of those standards.
Reorganized and is expanding its staff to enhance its organizational effectiveness
NERC Regional Entities
Compliance and Enforcement across Regional Entities
Coordination through a variety of technical committees
Reliability assessment and performance analysis
EMP Task Force
Changing resource mix - Inverter based resources
Natural gas interdependency
Risk analysis and assessment
Risk based Compliance
Supply chain risk mitigation
System operator certification; training and education
Emphasis on Critical Infrastructure Protection standards
Electricity ISAC (Information Sharing and Analysis Center)
Cyber and physical threats, warnings and assessments
Coordinates incident management
NERC Today
Continuous Improvements in Cyber Protection
Major Interconnections
Within the Regions are Balancing Authorities 135 Total
The U.S. Transmission Grid
Threats to the Grid are Well Known – GIC example
Adequate real time reserves
Unplanned plant outages
Excessively hot or cold weather
Fuel supply shortages
Operating with intermittent resources (separate lecture)
Functions:
Contingency analysis and communications
Coordination with system operators, suppliers and governmental agencies
Grid - Power Supply Reliability Issues
Criteria: Adequate and reliable transmission grid
Operate system within the limits
“Situational Awareness” with contingencies
Coordinate planned outages and maintenance
Respond to unplanned line or plant outages
“Black start” capability
Functions:
Transmission operator – functionally operates the grid
Model and monitor contingencies (“N-1’)
Contingency analysis and communications
“SCADA” – Supervisory Control and Data Acquisition"
Grid - Utility Operational Fundamentals
Public Policy Continued
RTO’s and ISO’s
Merchant generation
Renewable policies
Business Structures
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