NERC

System Planning

• Then– Integrated

– Transmission to get local generation to local loads

– Generation to meet fixed reliability targets

– Long pay backs

– Expenditure ‘smoothing’

– Generation expansion process slow

• Now– Fractured

– Transmission to connect new generators

– Generation planned to maximize profits

– Short paybacks

– Loss of fuel diversity

– Lots of generators being built quickly

New Gas-Fired Capacity Added During 1998 to 2007 as a Percent of 1998 Total Capacity

New England

Changein %

40 and Above20 to 400 to 20

Changein %

40 and Above20 to 400 to 20

40%

34%66%

33%108%

47%

44%

28%

69%

57%

51%183%

50%61%

37%26%24%

24%

17%33%

41%

50%34%53%

24%

28%

21% 54%13%

39%

8%40%

63%

35%

78%

20%

8%

9%11%

5%16%

System Operations

• Then– Bundled

– High degree of coordination

– Few wholesale transactions

– Limited entities

• Now– Illegal to discuss

transmission with generators (unless in public forum)

– Many, many transactions

– Numerous entities

How is Electricity Traded?

• Then– Economy sales used

‘split savings’– Emergency

transactions were generally capped at a fixed rate

– Number of and distance of transactions generally small

– Typically two parties

• Now– Charge what the

market is willing to pay

– Lots and lots of transactions

– Distance not an issue (contractually)

– As many as 17 parties

Electricity Transactions

• Must define and register all entities and their roles

• All transactions must be electronically ‘tagged’

• Reliability Coordinators formed to oversee wide area transactions

NERC

• Then– Fixed number of

entities

– Peer pressure, voluntary compliance to rules

– Reliability chosen over commerce

• Now– More players almost

daily

– Need for mandatory compliance – legislation pending

– Reliability important to all (but big $ sure is tempting to some….)

Reliability Implications of the ‘New World’

• Mixed results– Breakdowns in California, Pacific Northwest,

Desert Southwest– Smooth transition in PJM and Texas– Lots of generators being built

Maintaining System Reliability

• Peer pressure no longer sufficient

• Reliability rules must be mandatory– But must not limit market response

• NERC continually assesses current and future system reliability