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Transmission Planning White Paper Page I Transmission Planning White Paper January 201 4 Navigant Consulting, Inc. For EISPC and NARUC Funded by the U.S. Department of Energy Disclaimer This material is based upon work supported by the U.S. Department of Energy, under Award Number DE-OE0000316. This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. The authors would like to thank NARUC and EISPC for their support and funding of this white paper, and the guidance and input provided by the members of the EISPC Studies and White Papers Workgroup. Ralph Luciani Maggie Shober Navigant Consulting, Inc. January 2014 This white paper was prepared for EISPC and NARUC on terms specifically limiting the liability of Navigant Consulting, Inc. (“Navigant”). Navigant’s conclusions are the results of the exercise of its reasonable professional judgment based upon information believed to be reliable. This white paper is provided for informational purposes only. Navigant accepts no duty of care or liability of any kind whatsoever to the reader or any other third party, and all parties waive and release Navigant for all claims, liabilities and damages, if any, suffered as a result of decisions made, or not made, or actions taken, or not taken, based on this white paper. Use of this white paper by reader for whatever purpose should not, and does not, absolve reader from using due diligence in verifying the white paper’s contents. Transmission Planning White Paper Page i Table of Contents 1 Introduction ....................................................................................................................... 1 2 Why Has Transmission Become So Important? .......................................................... 5 2.1 Historical Development ..................................................................................................................... 5 2.1.1 Early History ......................................................................................................................... 5 2.1.2 Initial Transmission Planning and the Formation of Tight Power Pools ...................... 6 2.1.3 Northeast Blackouts of 1965 and 2003 and the Creation of NERC and Reliability Standards ............................................................................................................................... 7 2.1.4 Emergence of Open Access to the Transmission System ................................................ 8 2.1.5 Formation of ISOs and then RTOs ...................................................................................... 9 2.2 Transmission System Structure and Planning Today .................................................................. 10 2.2.1 Use of DC on the Transmission System ........................................................................... 10 2.3 New Expectations for Transmission ............................................................................................... 11 3 Federal Energy Regulatory Commission Policy and Rules .................................... 13 3.1 FERC Jurisdiction and Legal Requirements .................................................................................. 13 3.2 FERC Policy to Prohibit Discriminatory Use of the Transmission System ............................... 13 3.3 Regulatory Authority and the Overlap Between Wholesale and Retail Markets .................... 14 3.4 FERC Transmission Investment Incentives ................................................................................... 15 3.5 FERC and Broad Regional Transmission Planning ...................................................................... 15 3.6 NERC Rules ....................................................................................................................................... 17 3.7 Related DOE Policies ........................................................................................................................ 17 4 Process for Building a Transmission Line ................................................................. 18 4.1 Role of State Authorities .................................................................................................................. 18 4.2 Role of Federal Authorities .............................................................................................................. 20 4.3 Role of Planning Coordinators ........................................................................................................ 21 4.4 Role of Utilities .................................................................................................................................. 22 4.5 Role of Merchant Transmission Developers .................................................................................. 22 4.6 Impact on Roles from FERC Order No. 1000................................................................................. 23 5 Transmission Planning .................................................................................................. 24 5.1 Interrelated Nature of Transmission Planning ............................................................................. 25 5.2 Reliability and Efficiency in Transmission Planning ................................................................... 25 5.3 Risk Analysis in Transmission Planning........................................................................................ 26 5.4 Transmission Planning and Intermittent Resources .................................................................... 27 5.5 Current and Future Transmission Planning Models .................................................................... 28 6 Paying for Transmission ................................................................................................ 30 6.1 Rate Recovery .................................................................................................................................... 30 6.1.1 Retail Rates for Transmission ............................................................................................ 30 6.1.2 FERC OATT Wholesale Rates for Transmission ............................................................. 31 Transmission Planning White Paper Page ii 6.1.3 The Path from Transmission Line Costs to Rates ........................................................... 32 6.2 Pancaked, License Plate, and Postage Stamp Rates ..................................................................... 34 6.3 Regional Transmission Cost Allocation ......................................................................................... 35 6.3.1 Order No. 1000 Regional Transmission Cost Allocation Considerations ................... 37 7 Physical and Technical Characteristics of Transmission ........................................ 38 7.1 Physical System ................................................................................................................................. 38 7.1.1 Transmission lines .............................................................................................................. 38 7.1.2 Transformers and Substations .......................................................................................... 39 7.1.3 Communications, Monitoring, and Control Systems .................................................... 39 7.2 Key Technical Aspects in Reliably Operating the Transmission System .................................. 39 7.2.1 Frequency, Voltage, Current, and Power ........................................................................ 39 7.2.2 Limits and Regulation ........................................................................................................ 40 7.2.3 Ancillary Services ............................................................................................................... 41 7.3 Power Flow and Modeling .............................................................................................................. 42 7.4 Next Generation Transmission System .......................................................................................... 42 7.4.1 Advanced System Monitoring, Visualization, and Control .......................................... 42 7.4.2 Advanced Materials and Superconductors ..................................................................... 43 7.4.3 Cyber Security ..................................................................................................................... 44 8 Action Items for State Officials .................................................................................... 45 8.1 Meaningful State Involvement in Broad Regional Transmission Planning .............................. 45 8.2 Encourage Continued Improvement in Jurisdictional Utility Planning Practices
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