RD393 - Study on Inclusion of Conservation Efforts in Transmission Line Applications - 2008

  • Published: 2008
  • Author: State Corporation Commission
  • Enabling Authority: By letter dated February 11, 2008, the Honorable William J. Howell, Speaker of the House of Delegates of the Virginia General Assembly, forwarded a study request on behalf of the House Rules Committee.

Executive Summary:
By letter dated February 11, 2008, the Honorable William J. Howell, Speaker of the House of Delegates of the Virginia General Assembly, forwarded a study request on behalf of the House Rules Committee to the State Corporation Commission (“Commission”). Specifically, the Commission was requested to determine whether and to what extent the calculations of generation and load demand in electric utility applications for approval to construct high voltage transmission lines should include a review of the ongoing conservation efforts set forth in certain Virginia statutes, federal acts, and other official directives. In response, the Commission requested its Staff to perform the study and prepare this report.

Due to the extensive challenges currently associated with the provision of a secure, reliable, and environmentally sensitive energy supply at affordable prices, the federal government and many state governments, including Virginia, have recently established aggressive energy conservation and renewable energy resource goals and strategies. These conservation efforts are expected to play an increasingly important role in meeting the future energy needs of the nation, which raises the study question relative to the appropriate consideration of these resources in the transmission system reliability planning process.

For purposes of the requested study, the Commission Staff specifically focused on whether the load forecasts in transmission line applications should be adjusted by projections of incremental peak load demand reductions associated with the energy conservation efforts stemming from: 1) the Virginia energy conservation goal, and 2) § 102 of the Federal Energy Policy Act of 2005 (“EPAct 2005”) and Title IV, Subtitle C, §§ 431–441 of the Energy Independence and Security Act of 2007 (“EISA”).

Most of the electric utility transmission systems east of the Rocky Mountains in the United States and Canada are interconnected. Therefore, each of these transmission systems is potentially subject to catastrophic impacts arising from disruptions on any of the other interconnected transmission systems. Due to the public interest importance of maintaining reliable electric service across the country, the North American Electric Reliability Corporation establishes and enforces federally mandated electric transmission reliability standards. Such standards include requirements that transmission systems be assessed annually in order to determine system vulnerabilities and needed enhancements with sufficient lead time to implement such solutions.

In making such assessments, it is a standard industry practice to use conservative study assumptions relative to the inclusion of future demand side management (“DSM”) and generation resources. A reasonable degree of specificity and certainty with respect to the measurability, amount, timing, and location of these resources is typically required. Given that the Speaker’s letter directed the Commission not to make recommendations that would “increase reliability risk of the transmission network,” the Commission Staff believes that a conservative planning approach should be maintained.

At present, there are a number of factors that would make projections of the amounts, timing, and location of future incremental peak demand load reductions associated with Virginia and federal energy conservation efforts highly uncertain and, therefore, lacking the specificity needed for evaluating peak loadings on specific transmission facilities. Among these factors, both the Virginia and federal goals are targeted at energy conservation, as opposed to reducing peak demand, which is the focus of transmission system reliability planning. Additionally, the effort to develop and implement programs to achieve the Virginia energy conservation goal is in its infancy, with DSM pilot programs currently underway to acquire information needed to facilitate such efforts; and the federal energy consumption reduction requirements, also in the implementation process, are applicable to agency total energy usage, not simply electricity usage.

Rather than improving the results of system assessments, the inclusion of such uncertain projections could increase system reliability risk by delaying the timely recognition of needed enhancements and the development and implementation of appropriate solutions. Additionally, the load forecasting process, though not directly adjusting projected load to reflect future incremental levels of DSM, incorporates actual achieved levels of DSM into load forecasts over time; and these forecasts are currently considered in the evaluation of need for new transmission facilities.

Finally, it is important to note that the recently amended § 56-46.1 of the Code of Virginia provides the Commission with the clear statutory authority and responsibility to verify the reasonableness of load flow studies and contingency analyses presented by applicants to justify new transmission line proposals. In accordance with this authority and responsibility, the Commission specifically considers the reasonableness of such studies presented in transmission line applications, including the load forecast and generation resource assumptions. Should these studies or their underlying assumptions fall short of the reasonableness standard, the Commission may take appropriate corrective action.

For the reasons described above, the Commission Staff makes no recommendation for legislative action in this report.