New England Power System

Massachusetts Technology
Collaborative
 Before Deregulation
z Electrical utilities established as vertically
integrated “natural monopolies” serving captive
markets
z Regulated retail prices allow utilities to recover
costs of adding new plants from customers
z Regulators and utilities determined allowable
expenses, which determined customer rates
z Annual reviews by regulators designed to control
costs
z Sharp retail price differences from state to state
 Electricity Providers
z InvestorOwned Utilities
z Municipal Systems
z Rural Cooperatives
z Federal Systems (TVA, e.g.)
 MA Restructuring Act

z Passed by MA Legislature in 1997

z Opened MA Electric Utility Industry to Competition
z Renewable Energy Trust
z Renewable Portfolio Standard
 What Is Deregulation?
z Allows electric generators & marketers
besides local utility to compete to sell
electricity
z Retail prices are deregulated to reflect
conditions in the wholesale market
z Distribution remains regulated
z About half of U.S. states have at least
partially deregulated electricity markets
Renewable Portfolio Standard
z Administered by Division of Energy Resources
z Requires that electricity suppliers provide retail customers
with minimum levels of electricity generated from "new"
renewable energy sources
z Facility must have begun commercial operation after
December 31, 1997 to qualify.
z Resources which are eligible for RPS as new renewables
include:
z solar z fuel cells using renewable fuels
z wind z landfill gas
z ocean thermal, wave, and tidal, z "low emission" biomass
Renewable Portfolio Standard
Year Percent of Sales Estimated Annual Energy
(Start Date) From New From New Renewables
Renewables (GWh*)

2003 1.0% 450

2004 1.5% 685
2005 2.0% 927
2006 2.5% 1,176
2007 3.0% 1,433
2008 3.5% 1,696
2009 4.0% 1,986
Annually +1% per year *One gigawatt-hour
Thereafter until ended by (GWh)=one million
DOER kilowatt-hours
 Renewable Energy Trust
z Administered by MA Technology Collaborative
z Fostering market sustainability
– Increasing demand & shifting consumption to a
greater reliance on renewables
– Increasing supply of electricity generated from
renewables to meet this growing demand
z Increasing the overall level of economic activity &
expanding the renewable energy sector in
Massachusetts
Current MA Energy Portfolio
 Eligible Technologies
z Solar photovoltaic z Waste-to-energy
z Solar thermal electric z Naturally flowing
energy water & hydroelectric
z Wind turbine z Low emission,
z Ocean Thermal advanced biomass
z Ocean wave or tidal z Storage & conversion
z Landfill gas z Fuel cells
 Major Program Areas

z Premium Power/Distributed Generation

z Green Buildings
z Solar-To-Market Initiative
z Green Power
Premium Power/DG
z Fuel Cells
z High Reliability
z High Quality
z Co-Gen Potential
z Data Centers
z Hospitals
z Banks
Green Buildings
z Energy Efficient
z Resource
Conservation
z Materials
z Siting
z Healthy Environment
z Renewable Energy
Technologies
Solar-To-Market

z On or near-site
z Small scale
z Regulatory Barriers
z Costly
z Lack of Infrastructure
Green Power

z Large Scale >1MW

z Renewable Energy
z Supplied to Grid
z Premium Product
z Greenhouse Gas
Offset
Power Distribution Systems
 What Is The Grid?
z Network linking transmission systems of
local utilities
z One of the largest and most complex objects
ever built
z Three major U.S. grids:
– Rocky Mountains westward
– Most of Texas
– East of Rocky Mountains & Northern Texas
How The Grid Works
Quebec Interconnect
 Characteristics of the Electric
Power Market
z Product must always be manufactured
exactly when needed
z Demand fluctuates significantly
z Transmission system’s load and its capacity
to handle the load are in constant flux
z Congestion at any point affects all other
parts of the system
 System Interdependences

z Electric power flows through the grid as dictated

by impedances in transmission lines, location
where electricity is injected by generators and
removed by the loads
 Congestion

z The real cost of supplying power fluctuates

dramatically with capacity, load and conditions on
the grid from moment to moment
Key Players
 Utilities
z Operated as government-mandated monopolies
before deregulation
z Exclusive rights to own & operate plants
z Vertically integrated: plants, wires, meters
z Broken up to foster competition
z Today they are regulated companies selling power
to customers
z Many have sold generating capacity
z Deliver power generated by others (“wires companies”)
 Wires Companies
z Former utilities that sold their power plants
but retained their transmission and
distribution lines
z Now only sell power
z Lines must be open to all competitors in
power market
z Regulated by Federal Energy Regulatory
Commission (FERC)
 Merchant Power Companies
z Companies that make electricity and trade it
on the open market
z Generally do not deliver to customers
z Many started out as Independent Power
Producers (IPPs)
z MPCs expected to control over 25% of all
US power plants by the end of 2002
 Electricity Traders
z Middlemen who buy and sell power on the
open market
z Looking to buy low and sell high
z Since it cannot be stored, electricity is
world’s most volatile commodity
z Most active US “spot market”: electricity
that can be delivered between 6 a.m. & 10
p.m. the following day
 Power Pools
z State-operated centralized wholesale
marketplace for electricity
z Buyers purchase electricity as a group at a
fixed price each day
z The pool “stacks” sellers offers from
cheapest to most expensive
z Buying begins at the cheapest level and
continues up the scale until demand is met
 New England Power Pool
z Formed in 1971
z Voluntary association of entities that are
engaged in the electric power business in
New England
z Participants include investor-owned utility
systems, municipal and consumer-owned
systems, joint marketing agencies, power
marketers, load aggregators, generation
owners and end users
 Independent System
Operators (ISOs)
z “Air traffic controllers” of the electric grid
z California, New England, New York, Mid-Atlantic
z Utilities own the wires, ISOs run them
z Ensures generators equal access to grid
z Monitor & control flow of power around the
region
z Electricity’s physical properties make it
difficult to control
 ISO New England

z Established July 1, 1997

z Manages the New England region's electric
bulk power generation and transmission
systems
z Administers the region's open access
transmission tariff
NE Transmission
System
 Regional Transmission
Organizations (RTOs)
z In 1999 FERC ruled that all US Investor
Owned Utilities (IOUs) must cede control
of transmission lines to ISOs
z Proposal to merge ISOs into four regional
transmission organizations would oversee
those transmission lines
z Northeast, Southeast, Midwest, West
z More efficient/cost-effective than ISOs
 Regulators
z Federal Energy Regulatory Commission
z Set rates in wholesale electricity markets & enforcing fair and
reasonable prices
z MA Division of Energy Resources
z Implements energy policies that ensure an adequate supply of
reliable, affordable and clean energy for the businesses and
residents of Massachusetts.
z MA Dept. of Telecommunications & Energy
z Ensures that electricity consumers are provided with the most
reliable service at the lowest possible cost
Questions