Vermont Power Supply The Very Big Picture · 3/29/2005  · 177 Water St. Gardiner, Maine USA 04345 Tel: 207.582.1135 Fax: 207.582.1176 50 State Street, Suite 3 Montpelier, Vermont

Website:http://www.raponline.org

The Regulatory Assistance Project177 Water St.

Gardiner, Maine USA 04345Tel: 207.582.1135

Fax: 207.582.1176

50 State Street, Suite 3Montpelier, Vermont USA 05602Tel: 802.223.8199Fax: 802.223.8172

Vermont Power SupplyThe Very Big Picture

Richard SedanoMarch 29, 2005

Introduction

Regulatory Assistance ProjectRAP is a non-profit organization, formed in 1992, that

provides workshops and education assistance to state government officials on electric utility regulation. RAP is funded by the Energy Foundation, the US EPA and the US DOE.

Richard Sedano was Commissioner of the Vermont Department of Public Service, 1991-2001, and presently serves on the Montpelier Planning Commission

Electric IndustryPolicy Goals

ReliableSafeSustainableEnvironmentally SoundConsistent

AdequateSecureEfficient (Fair)AffordableEncourage Economic Vitality

Keep These in Mind as You Listen to Speakers

Where we are – Undiversified, Committed with Efficiency

Vermont is different from New England

Summer 2003 MW

Very Commodity (Gas and Oil) Heavy

What to do?

You are here

New England faces a gap around the same time

Consumption!

GWh

From the DPS Electric Plan

DOE EIA

Summer Growth Is Key to Forecast of Demand

MW

Load Center

New Projects

Added projects will be needed if load continues to grow

Natural Gas Cost UP!

http://www.naruc.org/associations/1773/files/david_biegler_agf_w05.pdf

The Crystal Ball on Price Is Foggy

Big spread

A Carbon Gap: What are the economic implications?

U.S. DOE EIA 2005 Annual Energy Outlook

1990 level

Efficiency is cheaperPower Costs vs. Efficiency Vermont Costs for 2002 & 2003

NE-ISO Average Monthly Price

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Jan-0

2

Feb-

02

Mar-02

Apr-02

May-02

Jun-0

2

Jul-0

2

Aug-0

2Sep

-02

Oct-02

Nov-0

2Dec

-02

Jan-0

3

Feb-

03

Mar-03

Apr-03

Cen

ts p

er K

illow

atth

our

EfficiencySavings:

1 cent/KWh(Jan 2002),more than

6 cents/KWh(Mar 2003).Currently

3.6 cents/KWh

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

DPS: "MAXIMUM ACHIEVABLE SAVINGS" FROM ENERGY EFFICIENCY

0

1000

2000

3000

4000

5000

6000

7000

8000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

GW

h

30%(2175GWh)

Existing Policy

Potential

Customer Generation is Efficient

The US Status Quo

Challenges for VermontPower Supply ReplacementMaintaining environmental qualityLowering costs

Pressure on low income customers due to higher energy costsPressure from large businesses due to prevailing rates

Vermont Yankee specific issues (fuel, license)Degree of control of our destinyWind sitingPlanning to integrate power, efficiency, and transmission

Degree of Control of Vermont’s Destiny

What can Vermont do?Developing in-state resources driven by planning

Efficiency to put the breaks on load growthClean, small scale and customer-sited generationWind, to the extent it meets other objectivesBy the way, this brings economic growth for Vermont

Reduce need for new power linesContinue significant use of long term contracts

“Control” not the issue, rather external forces risky

Regulatory Challenges

Watch the clock (timing matters)Right balance of incentives for utilities

Right means consistent with the public interest (changes needed!)Not: best short run deal for utilities or consumers

Keep doing well what Vermont already does well (see goals)