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Strategic Thinking About Vermont’s Electricity Future

Strategic Thinking About Vermont’s Electricity Future. Michael H. Dworkin, Chairman Vermont Public Service Board University of Vermont April 20, 2004. Presentation Outline. Three Good Things (and One Bad) Vermont’s Electric Energy Needs Major Options -- and Some Pros and Cons of Each

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Strategic Thinking About Vermont’s Electricity Future

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  1. Strategic Thinking AboutVermont’s Electricity Future Michael H. Dworkin, Chairman Vermont Public Service Board University of Vermont April 20, 2004

  2. Presentation Outline • Three Good Things (and One Bad) • Vermont’s Electric Energy Needs • Major Options -- and Some Pros and Cons of Each • Future Policy Options – Federal, State, and the PSB

  3. Three Things to be Proud of • Since 1984 peak demand in VT has risen by 132 MW, allmet 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

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

  5. 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

  6. Vermont’s Electric Needs • 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

  7. 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 Major Options: Some Pros and Cons

  8. Efficiency and Conservation • Should be cost-effective • Probably won’t meet all new demand • Keeps jobs and $ in VT • Excellent climate-change effects

  9. 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 Major Options: Some Pros and Cons

  10. 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

  11. 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 Major Options: Some Pros and Cons

  12. 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

  13. 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 Major Options: Some Pros and Cons

  14. 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

  15. 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 Major Options: Some Pros and Cons

  16. 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)

  17. 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 Major Options: Some Pros and Cons

  18. 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

  19. 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 Major Options: Some Pros and Cons

  20. 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 $

  21. 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 Major Options: Some Pros and Cons

  22. 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

  23. 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 Major Options: Some Pros and Cons

  24. 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

  25. 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 Major Options: Some Pros and Cons

  26. 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.

  27. 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

  28. 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)

  29. 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)

  30. 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

  31. Three Key Goals for All of Us • Reliable, efficient, cost-effective electric power • Build jobs in VT Renewables and Efficiency Sectors: Create our “tool & die industry” for the 21st century. • Build towards real power options for Vermont by 2012

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