2011 Spring NKAW David KOwens.pdf

8/14/2019 2011 Spring NKAW David KOwens.pdf

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Electricit Industr andIts

CustomersDavidK.Owens

ExecutiveVicePresident

E isonE ectric

Institute

EEINationalKeyAccountsWorkshop ,

Atlanta,GA


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CapEx

EnvironmentalChallenges

SmartGrid

Snapshotof

Industry

Challenges


3/30

ChangingElectricUtilityan scape

WearenolongeraDecliningCostIndustry

OurLeadership

on

Technology

is

Faultering

OurWorkforceisAgingandourChildrenareLessEducated

SlowerElectricityDemandGrowthwillAlterourBusinessModel

Increasin

Concernsabout

the

Environment

has

Chan ed

our

PowerSupplyMix

Shortterm:RelyonEnergyEfficiency,RenewablesandNaturalGas

Mediumterm:

Targets

should

be

harmonized

with

the

development

and

commercialdeploymentofadvancedtechnologiesandmeasures(e.g.NuclearEnergy,AdvancedCoalTechnologieswithCarbonCaptureand

, ,


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Industr

Ca ital

Ex enditures($Billions) U.S.ShareholderOwnedElectricUtilities

83.0 82.8 83.3 85.0

82.6

80

85

90

59.9

74.1.

60

65

70

43.041.1

48.4

40

45

50

= ro ectedSource: SNLFinancial,companyreportsandEEIFinanceDept.

30

2003 2004 2005 2006 2007 2008 2009 2010p 2011p 2012p 2013p

Note: Startingin2008,theuniverseofcompaniesdropsfrom69to63,removingsixcompaniesthat didnotfileForm10KwiththeSEC.


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ActualandPlannedTransmissionInvestment

y

are o er

wne

t t es

20042013

p = preliminary

Note: The Handy-Whitman Index of Public Utility

ons ruc on oss use o a us acua nvesmen

for inflation from year to year. Forecasted invest-

ment data are adjusted for inflation using the

GDP Deflator.

*Planned total industry expenditures are preliminary

and estimated from 91% response rate to EEIs

Electric Transmission Capital Budget & Forecast

urvey. cua expen ures rom s nnua

Property & Plant Capital Investment Survey andFERC Form 1 reports.

Source: Edison Electric Institute, Business

Information Group.

2010 by the Edison Electric Institute. All rights

.


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Industr

Faces

Difficult

DecisionsToInvestorNottoInvest?

Deferor

cancel

infrastructureElectric

reliabilitycould

enhancecurrent

liquidityosition

e mpac e wheneconomy

anddemand

OpportunitiesHi herfinancin

declining

commodityandin ut

costs

costs


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THEN largeTHEN largeperiodicprojectstoperiodicprojectstosupportstrongloadsupportstrongload Sales GrowthSales Growthinfrequent,butinfrequent,butmajor,ratemajor,ratecasescases CostsCosts

NOWNOWOngoingOngoinginvestment wellinvestment well CostsCostsandslowersalesandslowersalesgrowthrequiresgrowthrequiresongoingrateongoingrate Sales GrowthSales Growth


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PerCustomer

RegulatoryLagCapitalInvestment

Return

CostofCapital CreditWorthiness


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Overviewof

the

Solution

totransitions

rate

changes,

mitigate

regulatory

Futuretestyear

Tracker/ridermechanisms

CWIPinratebase

Formularateplans

Mechanismsto

ensure

fixed

cost

recovery

Performancebasedrateplans(ratecaps,revenuecaps)


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ConsumerBenefits

ear erm smoo ngra e ra ec or es oavo

rateshock

acceptthanlargestepincreases

reasonableterms,highlevelsofreliabilityand


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ElectricPower

SO2 an NOX Em ss ons


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Continueenvironmentalimprovements

Maintainsystemreliability

a nta n ue vers tyopt ons

Developanddeploynewtechnologies

Obtainaccesstocapitalandcostrecovery

Negotiatemyriadpoliticallandscapes


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PossibleTimelineforEnvironmentalRegulatory

Requirements

for

the

Utility

IndustryOzone (O3)

Begin CAIR

SOx/NOx

Transport Rule

proposal issued

CAIR/Transport

Effluent

Guidelines

proposed rule

Water

Effluent GuidelinesFinal Transport

Rule Expectedase

Seasonal

NOx Cap

ev se

Ozone

NAAQS PMTransport

Rule

SO2 PrimaryNAAQS

SOX/NOx

SecondaryNAAQS

(CAIR Replacement)

CAIR

Vacated

expected Final rule expectedEffluent Guidelines

Compliance 3-5 yrsafter final rule

(CAIR Replacement)

Ozone

NAAQSRevision

2

Primary

NAAQS

CAIR

Remanded

rule

expected316(b) Compliance

3-4 yrs after fi nal rule

2

Regulation

(PSD/BACT)

GHG NSPS

Final

'08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Begin CAIR Next PM-CAMR & HAPS MACT316 b

Begin ComplianceFinal Transport RuleOzone

Phase I Annual

SO2 Cap2.5

NAAQS

Revision

Delisting

Rule

vacated

Compliance 3 yrs

after final rule

Begin CAIR

Phase I

proposedrule

expected

Requirements

under Final CCB

Rule (ground

water monitoring,

double liners,

closure, dry ash

Proposed

Rule for

Rule for

CCBs

Mgmt

Phase II

Reductions

ranspor

Rule

GHG NSPS

Proposal

PM/PM2.5

proposed

rule

-- Adapted from Wegman(EPA 2003) Updated 01-12-11

Hg/HAPS

final rule

expected

nnua x

Capconversion)

Ash

s

Management

CO2

Phase I

Reductions


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PotentialImpactsofEnvironmentalRegulationson

t eU.S.

Generat on

F eet

Mo e ng

Framewor


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, ,

mercury,

etc.),

water,

and

coal

ash

in

or

around

2015 Willrequireretrofit,retirementorreplacementofsubstantialportionofexistingcoalfleetinshortperiodoftime

Couldcostupto$200billioninCAPEXby2015

Industryalready

has

capital

expenditures

of

$80

billion

annually

,

Absenceofcarbonpolicyincreasesrisk ofstrandedinvestments Changeseconomicoutlookandimpactsoncoalfleet

Congressunlikely

to

pass

climate

legislation

this

year;

prospects

for

curtailing

EPA

activity

veryuncertain

Needresolutiontohel smoothtransitionofcurrentcoalfleet Needplanningandinvestmentcertaintytomeetfuturedemand;ensureindustrycanmeet

regulationswhilemaintainingsystemreliability


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next~10

years

in

the

most

cost

effective

and

reliabilitysensitivemanner

Lookattraditionalpollutants;CO2performancea

nicebyproduct

Methodicalretrofitsoverareasonabletimeline

Steadyimprovementsinfleetenvironmentalfootprint

Deploymentofadvancedcoaltechnologies


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Getting

the

charging infrastructure readyAdvocatin incentives for urchaseanduseofPEVs

Educating customers

and

stakeholdersEnhancing electrictransportationoptionsthrough

utilityfleets


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21/30

,

negativeelectricity

demand

growth,

deficit

concerns

and

sustainedhighunemploymentisslowingdownthe

deploymentofsmarttechnology:

MajorconsumergroupssuchasAARPareraisingobjectionstothesmartrid

due

rimaril

to

economic

concerns

ProspectsofadditionalfederalfundingsuchastheARRAprogramarevirtuallynonexistent

gridinvestments

challenging

need

for

many

smart

grid

investments

basedonpotentialcustomerbillimpacts

focusingonlowcapitalintensiveinvestments


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ven ecurren econom cenv ronmen , erea y s

thatthe

further

modernization

of

the

grid

is

dependent

oncontinuedutilit investmentininfrastructure

Investmentbythirdpartiescannot berelieduponinthe

currenteconomic

environment

Ourchallengein2011willbetoensurethatchangestotheregulatorystructureorgovernmentpoliciesare

madethat

will

support

and

encourage

continued

IOU

investmentingridmodernization


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KeyEmergingSmartGridRegulatory

Issues

ec no og ca o so escencer s an rea men

oflegacy

investments

Trendtowardsafterthefactprudencereviewsto

determine

cost

recovery

for

smart

grid

nves men s

Needforalternativeregulatoryparadigmsthat

willsupport

IOU

investment

in

smart

technologies


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EEIMembersareModernizing

theGrid

AsofJune2010


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so e ruary4,2011, mem ers avespen

approximately$577

million

(~30%)

of

awarded

smart

grid

ARRAfunds,a$58millionincreaseoverJanuary7,2011

EEIiscollaboratingwithDOEinanalyzingmetrics,

businesscases,

and

an

array

of

benefitssocietal,

economic,operational,andconsumerrelatedforthe141

smartgridprojectsundertheSmartGridInvestment

Program


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TransformingTheCustomer/Utility

Relationship

any mem ercompan esarepursu nguseo new

informationtechnologies

to

supplement

traditional

call

centerfunctions

IntegrationofAMI,advancedDistributionManagementSystemsandCustomerRelationshipManagementSystemsintoaseamless

integratedsystem

that

will

push

information

out

to

the

customer

outageinformation,energyusage,pricealertsthatsupporta

multiplicityofgoals

Willusemultiplemodesofcommunicationthatwillmeetthe

individualcustomers

needs

Platformforbuildingamorepositiverelationshipwiththe

customerinahightechworld


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MultipleChannelUtility/Customer

Engagement

Useofadvanced

customerservice

channelstodelivercustomer ene ts,choiceandcontrol

issueresolutionto

proactiveinformationtransfer

Informationpushversuspullcustomerserv cemo e


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EEICIOExecutiveAdvisory

Committee

,

EEIrecently

created

anew

EAC

that

brings

Focusing

on

providing

p0licy

input

on

such

ec no ogy ssuesas:

Smartgridimplementation

Interoperabilitystandards

Cybersecurityissue

Dataaccessandprivacy


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SummaryofKeyChallenges

SmartGrid

A ress ngcuts nARRA un ng

Ensurin thatc bersecurit isato riorit andisaddressedatfederalandstatelevel

,

,

supportforgridmodernization


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ang ng us ness o e

withEPA

Regulation,

Carbon

Policy,

Financial

Reform

,

Changing

Regulatory

Model

withEnergyEfficiency,RES,SmartGridandCyberSecurity

ChangingIndustryStructure

withRenewables,

Distributive

Resources,

Micro

grids,

and

RightofFirstRefusal

2011 Spring NKAW David KOwens.pdf

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Transcript of 2011 Spring NKAW David KOwens.pdf