strategic thinking about vermont’s electricity future michael h. dworkin, chairman vermont public...

Strategic Thinking AboutVermont’s Electricity Future

Michael H. Dworkin, Chairman

Vermont Public Service Board

University of Vermont

April 20, 2004

Presentation Outline

1) Three Good Things (and One Bad)

2) Vermont’s Electric Energy Needs

3) Major Options -- and Some Pros and Cons of Each

4) Future Policy Options – Federal, State, and the PSB

Three Things to be Proud of Since 1984 peak demand in VT has risen by 132 MW, all

met by new, in-state renewables

• 40 MW - small hydro, IPP, WEC, GMP • 88 MW - McNeil and Ryegate wood chip plants• 6 MW - Searsburg wind project• Small landfill gas projects – Brattleboro and Burlington

Vermont’s energy efficiency efforts, including Efficiency Vermont, have saved over 87 MW of demand

Bottom line – current portfolio mix is very high renewables, and America’s lowest in CO2

But… At a PriceRemember! Price does not equal Cost, Rates do not equal Bills

TotalAverage Revenue (cents) per Kilowatthour, YTD December, 2001

9.6 10.010.7 11.0 11.0 11.1

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CT ME VT RI NH MA

Vermont’s Electric Needs 1,000 MW peak demand now

Growing at about 2 MW per year since 1992; 100 MW 1984-92, But 550 MW will need to be replaced in 2012 - 2015 timeframe!!

Current Sources Vermont Yankee - about 30% demand and 36% energy

• Contract Expires 2012 Hydro Quebec - about 30% demand and 32% energy

• Contract expires from 2012 to 2020, most expiring in 2015 Independent Power Producers - about 10% demand and 5%

energy (all renewable) • Contracts expire 2008 to 2020+

Other sources - about 30% of demand and 27% of energy

Residential Electricity Use kWh per customer per year, 1940-2001

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USA New England Vermont

Net Metering Statistics 108 applications, 107 approved

• 80 photovoltaic only

• 28 wind or wind and photovoltaic

– 24 uncontested – only 4 contested applications

– 3 approved by Board

– 1 denied by Board – because it was proposed directly in front of a neighbor’s picture window - denial upheld by Supreme Court

Vermont’s Electric Needs

Major Options: Some Pros and Cons

Efficiency and Conservation

VT Yankee Shift to Fossil Plants New Cogen in VT Spot Market

Major In-State Renewables

HQ Connecticut River

Dams Small Distributed

Generation Blended Balance

Efficiency and Conservation Should be cost-effective

Probably won’t meet all new demand

Keeps jobs and $ in VT

Excellent climate-change effects

Power Costs vs. Efficiency Vermont Costs for 2002 - 2/2004NE-ISO Average Monthly Price

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EfficiencySavings:

from1 cent/KWh(Jan 2002),

to more than6 cents/KWh(Jan 2004).

Delivered Cost of Wholesale Power * Wholesale Spot Market Price Efficiency Vermont, Contract Price

Vermont Yankee VY license extension still unresolved Assumes new VY contract acceptable Waste disposal issues still unresolved Effect of NRC safety rulings still unknown Price should probably be competitive Good climate change effects, compared to

others Some jobs and $ in VT



VT Yankee Shift to Fossil

Plants New Cogen in VT Spot Market





Out-of-State Fossil Plants

Price probably competitive; but could be volatile

Very poor climate-change and health effects

Exports jobs and $ Moderate transmission constraints

VT Gas-Fired Cogen Plants

Siting may be difficult Requires new gas pipeline capacity Price could be high and volatile Keeps some jobs and $ in VT Poor climate-change effects Could have high efficiency, if part of

district heating project

Spot Market Purchases

May have high price risk (or at least may be highly volatile)

Poor climate-change effects Exports jobs and $ (most large scale

supply out-of-state)

Major In-State Renewable Plants – Combination Wind, Biomass

Possibly higher, but predictable cost Less exposure to vagaries of market and fossil price

changes Availability of sufficient biomass resources may be an

issue Keeps jobs and some $ in VT (could help stimulate in-state

renewable businesses) Excellent in terms of climate-change effects Some already at proposal stage (proposed wind, and WEC

landfill gas, investments) Limited in-state hydro site options; but retrofit potential

looks significant

HQ System Power

HQ’s path to expansion is unclear, given internal Quebec issues

Price may be competitive Good climate-change effects Exports jobs and $





HQ Connecticut

River Dams Small Distributed


Connecticut River Dams

Stable price (FDR’s lesson) Environmentally neutral, assuming

someone would operate them Known technology; limited cost risk Purchase price unknown, size of offered-

asset unknown; each could be determinative

Small-Scale Distributed Generation

Price may be issue Probably won’t meet all new demand Will siting issues limit broad wind

deployment?? Good to excellent climate policy Good for jobs and $ in VT

Blend Incremental Capacity from Several of Above

Some new transmission may be required Advantages and disadvantages blended Key is how to weight the blending! We CAN tip it towards price stability,

low pollution, independence, and job creation: through far more renewables and efficiency.

Road to the Future: Federal, State, and PSB Policy Options

Federal Policies Ensure that wholesale markets let renewables

compete: Standard Market & Interconnection Rules National Renewable Portfolio Standard Continued federal funding of renewables research,

including biomass gasification Encourage creation of a “Green Buildings” Incentive

Program (new construction program that incorporates renewables)

Tax credit program for renewables, including extension of wind production tax credit

State Policy Options

Vermont Renewable Energy Fund could:• Provide equipment buy-down $• Give production credits ($)• Provide low interest loans• Focus on: job training, education, and project

guidance

Pass a Renewable Portfolio Standard• 15 States with RPSs: AZ, CA, CT, HI, IA, MA, ME,

MN, NV, NJ, NM, NY, PA, TX, and WI; (PSB recommendation to Vt legislature)

Public Service Board Options Reactivate utility Integrated Resource Planning: Plan

replacement of existing and new supply Encourage utilities to adopt voluntary “Green Tags”

programs• Example: NativeEnergy and GMP

Review proposed utility “Green Pricing” programs• Example: CVPS proposal now pending

Explore Renewable Funds with residual receipts from Vermont Yankee sale (already $1.345 million, might be several million more)

Public Service Board Options (cont.)

Activate Vermont disclosure statute Brochure to help site small wind turbines Explore more net metering

• Farm Group Net Metering

Recognize value of commercial-scale wind• Board has said it will consider societal benefits of wind

production when deciding whether an adverse aesthetic impact is “due” or “undue”

• Motion to reconsider that concept is now before the Board

1) Reliable, efficient, cost-effective electric power

2) Build jobs in VT Renewables and Efficiency Sectors:

Create our “tool & die industry” for the 21st century.

3) Build towards real power options for Vermont by 2012

Three Key Goals for All of Us

strategic thinking about vermont’s electricity future michael h. dworkin, chairman vermont public...

Documents

vt slide

energy slide

mw of demand

psb slide

co2 slide

major options

new demand

conservation vt yankee