Legislature(2019 - 2020)FBX LIO Conf Rm

08/14/2020 09:00 AM ENERGY

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Audio Topic
09:00:17 AM Start
09:02:21 AM Presentation(s): Sb 123 Implementation by the Rca
10:36:01 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Continued from 8/7/2020 --
-- Teleconference <Listen Only> --
-- Please Note Location Change --
+ Presentations: TELECONFERENCED
- "SB 123 - Opportunities for Alaska" by
Dr. Steve Colt, Alaska Center for Energy & Power
- "Reliability in Wholesale Power Systems" by
Michael Hogan, Senior Advisor, Regulatory
Assistance Project
- "Integrated Resource Planning: An Introduction"
by David Farnsworth, Principal, Regulatory
Assistance Project
-- Testimony <Invitation Only> --
**Streamed live on AKL.tv**
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                       Fairbanks, Alaska                                                                                        
                        August 14, 2020                                                                                         
                           9:00 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Grier Hopkins, Chair                                                                                             
MEMBERS ABSENT                                                                                                                
Representative Ivy Spohnholz, Vice Chair                                                                                        
Representative John Lincoln                                                                                                     
Representative Zack Fields                                                                                                      
Representative Tiffany Zulkosky                                                                                                 
Representative George Rauscher                                                                                                  
Representative Mike Prax                                                                                                        
OTHER LEGISLATORS PRESENT                                                                                                     
Senator Elvi Gray-Jackson (via teleconference)                                                                                  
Representative Chris Tuck (via teleconference)                                                                                  
COMMITTEE CALENDAR                                                                                                            
PRESENTATION(S):  SB 123 IMPLEMENTATION BY THE RCA                                                                              
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
STEVE COLT, Ph.D., Research Professor of Energy Economics and                                                                   
Alaska Center for Energy and Power (ACEP)                                                                                       
University of Alaska Fairbanks (UAF)                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Provided a PowerPoint presentation titled                                                                
"SB 123 Opportunities for Alaska," updated for 8/14/20.                                                                         
SENATOR CATHY GIESSEL                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered  comments regarding the presentation                                                             
provided by Dr. Steve Colt.                                                                                                     
MICHAEL HOGAN, Senior Advisor                                                                                                   
Regulatory Assistance Project (RAP)                                                                                             
Sunapee, New Hampshire                                                                                                          
POSITION STATEMENT:   Provided  a PowerPoint  presentation titled                                                             
"Reliability in Wholesale Power Systems," dated 8/7/20.                                                                         
DAVID FARNSWORTH, Principal                                                                                                     
Regulatory Assistance Project (RAP)                                                                                             
Montpelier, Vermont                                                                                                             
POSITION STATEMENT:   Provided  a PowerPoint  presentation titled                                                             
"Integrated Resource Planning: An Introduction," dated 8/14/20.                                                                 
ACTION NARRATIVE                                                                                                              
9:00:17 AM                                                                                                                    
CHAIR GRIER HOPKINS called the  House Special Committee on Energy                                                             
meeting back to order at 9:00  a.m.  [The meeting was recessed on                                                               
8/7/20]. Representative Hopkins  was present at the  call back to                                                               
order.   Other legislators present  were Representative  Tuck and                                                               
Senator Gray-Jackson.                                                                                                           
^PRESENTATION(S):  SB 123 Implementation by the RCA                                                                             
       PRESENTATION(S):  SB 123 Implementation by the RCA                                                                   
9:02:21 AM                                                                                                                    
CHAIR HOPKINS announced that the  only order of business would be                                                               
the continuation of presentations on  implementation of SB 123 by                                                               
the Regulatory Commission of Alaska (RCA).                                                                                      
CHAIR  HOPKINS said  today's presenters  would  be talking  about                                                               
integrated  resource planning  (IRP)  and reliability  standards.                                                               
He  pointed  out that  the  presentations  are for  informational                                                               
purposes only but may be  helpful to any committee member wishing                                                               
to submit comments to the  RCA as it continues its implementation                                                               
process of SB 123.                                                                                                              
9:03:50 AM                                                                                                                    
CHAIR HOPKINS  introduced the  first witness,  Dr. Steve  Colt of                                                               
the Alaska Center  for Energy and Power (ACEP).   He related that                                                               
Dr.  Colt  is a  research  professor  of energy,  economics,  and                                                               
policy  at the  University  of  Alaska Fairbanks.    Dr. Colt  is                                                               
working primarily on the roles  of prices, incentives, and energy                                                               
policy in supporting and accelerating  a shift toward sustainable                                                               
and  resilient  micro-grid  and  energy  systems  across  Alaska.                                                               
Prior to  joining ACEP, Dr. Colt  spent 34 years as  an economist                                                               
at the  Institute of Social  and Economic Research (ISER)  at the                                                               
University of Alaska Anchorage, where  he served as director from                                                               
2007-2010.   Dr.  Colt has  also  worked for  the public  utility                                                               
commissions in Maine and California.                                                                                            
9:04:34 AM                                                                                                                    
STEVE  COLT, Ph.D.,  Research Professor  of Energy  Economics and                                                               
Policy, Alaska Center for Energy  and Power (ACEP), University of                                                               
Alaska  Fairbanks  (UAF),   provided  a  PowerPoint  presentation                                                               
titled "SB  123 Opportunities  for Alaska,"  dated 8/14/20.   Dr.                                                               
Colt showed  slide 2  and said  ACEP is  a team  of more  than 30                                                               
people  that  includes  undergraduate and  graduate  students  on                                                               
several  campuses  throughout  the   University  of  Alaska  (UA)                                                               
system.   He displayed  slide 3  and noted that  ACEP also  has a                                                               
tremendous network  of partners in  that ACEP likes to  know what                                                               
it  doesn't know  and  brings in  people who  do  know what  ACEP                                                               
doesn't  know.   In  that spirit,  ACEP has  reached  out to  the                                                               
Regulatory Assistance Project (RAP).                                                                                            
DR. COLT  explained that slide  4  sets  the table  for  RAP with                                                               
four questions  that tee  up the  issues that  he thinks  the RCA                                                               
should  be  considering as  it  writes  the  rules for  IRPs  and                                                               
considers reliability  standards.  He  moved to slide 5  and said                                                               
he looks  forward to  hearing the wisdom  from RAP  regarding the                                                               
question,  "How  should  Alaska's reliability  standards  address                                                               
9:06:55 AMAM                                                                                                                  
DR.  COLT turned  to  slide  6, "What  should  RCA consider  when                                                               
setting  rules for  IRP?"   He  explained he  has  teed up  three                                                               
questions in relation  to this.  He brought attention  to slide 7                                                               
and his  first question, "What is  a resource?"  He  said that in                                                               
the  Twentieth  Century  the  IRP process  was  very  much  about                                                               
generation.   It brought in  new kinds  of resources to  the mix,                                                               
getting to a more diverse  set of generation resources, which did                                                               
happen in Alaska.                                                                                                               
DR. COLT moved  to slide 8 and said the  Twenty-first Century IRP                                                               
process  has   evolved  to  specifically   include  transmission,                                                               
distribution, and  storage as a resource.   He turned to  slide 9                                                               
and stated  that flexible  loads, such  as electric  vehicles and                                                               
heat  pumps, have  now taken  center stage.   Flexible  loads are                                                               
coming  on  strong  because  they can  serve  as  resources  that                                                               
regulate renewables, can feed power back  to the grid, and can be                                                               
somewhat graceful about when they  draw power from the generation                                                               
resources.  He  emphasized that to be used  as resources flexible                                                               
loads must be  networked and must be somehow  controllable by the                                                               
system.  The  control doesn't have to be ironclad  and direct, he                                                               
continued,  it could  be indirect  using price  signals and  even                                                               
just the provision  of information to those who are  on the grid.                                                               
He displayed slide  10 and said the IRP  process should emphasize                                                               
the interconnection between the resources  the network.                                                                         
DR. COLT  continued to slide  11 and  stated that people  are the                                                               
most  important resource  that can  be  brought to  bear in  this                                                               
process.  He  recounted that he was asked last  week to elaborate                                                               
on  this assertion  and qualified  that his  statements today  in                                                               
this regard  are his own opinion.   He said people  can bear risk                                                               
and they have always made  decisions that create and shape loads.                                                               
People  can  choose to  consume  electricity  and they  can  also                                                               
choose  to produce  electricity.   People  can  choose to  supply                                                               
investment capital, which  has always been a  scarce resource for                                                               
the Railbelt grid.   People can also help each  other get through                                                               
emergencies  and ride  out rough  spots.   People are  a critical                                                               
resource in any integrated resource planning process.                                                                           
9:10:54 AM                                                                                                                    
DR. COLT  moved to  slide 12 and  discussed his  second question,                                                               
"How can we integrate resources?"   He said the Twentieth Century                                                               
IRP was  focused on  a distinction that  economists like  to make                                                               
between  quantities and  prices  and was  focused on  quantities:                                                               
What to build?   When?  Where?  How to finance it?   He turned to                                                               
slide 13 and  pointed out that to make  progress, great attention                                                               
must  be paid  to the  prices side  of prices  versus quantities.                                                               
There must  be focus on  incentives, markets, and  mechanisms, he                                                               
said.   For example, Dominion  Energy South Carolina has  filed a                                                               
proposal  with  that  state's Public  Service  Commission  for  a                                                               
tariff that  will apply to  storage-plus-renewables, with  an eye                                                               
toward better integrating intermittent solar into its system.                                                                   
DR. COLT drew  attention to slides 14-15 and  discussed his third                                                               
question,  "What  is  Planning?"     He  submitted  that  in  the                                                               
Twentieth Century,  and even into the  Twenty-first Century, what                                                               
was  ended  up with  were  plans.    An Alaska  commissioner,  he                                                               
related,  referred   to  one   recent  plan   as  "a   real  good                                                               
doorstopper."  Planning  was mostly about plans,  but things must                                                               
get beyond  that mentality.   Shared data  is a critical  part of                                                               
good planning,  he advised, and  he hopes the RCA  will emphasize                                                               
some means  for having platforms  where everyone  can participate                                                               
using a common shared set of data.                                                                                              
DR. COLT displayed  slide 16 and concluded his  presentation.  He                                                               
noted that  RAP professional David  Farnsworth was a  lead author                                                               
of "Sustainable Energy Solutions  for Rural Alaska," an excellent                                                               
and current summary of the  challenges faced off the road system.                                                               
He  added  that  Mr.  Farnsworth and  his  colleague  Mark  LeBel                                                               
recently  gave  talks  at the  Virtual  Alaska  Electric  Vehicle                                                               
Workshop  co-hosted   by  ACEP  and  the   U.S.  Arctic  Research                                                               
Commission, a workshop that is available on the ACEP website.                                                                   
9:15:24 AM                                                                                                                    
CHAIR  HOPKINS  recalled  Dr.  Colt's  statement  regarding  load                                                               
management  and the  importance  that  it includes  informational                                                               
provisions to different  utilities and the public.   He requested                                                               
Dr. Colt  elaborate on how that  works with IRP and  what type of                                                               
information should be provided from this planning.                                                                              
DR. COLT  replied that there are  two levels at which  this could                                                               
occur.   First, to have  good integrated resource  planning there                                                               
must  be  common  and  widely  available  information  about  the                                                               
system, how  it works, and what  the possibilities are.   The big                                                               
power markets in the Lower  48 have beautiful data platforms that                                                               
make it  transparent to everybody  what's going on in  the system                                                               
and  what the  opportunities are  for  joining the  system.   But                                                               
Alaska  doesn't have  well-developed wholesale  markets like  the                                                               
Lower 48,  so Alaska must  put that transparency and  openness to                                                               
collaboration into  its planning process.   Second, it's possible                                                               
to  manage the  loads  in Alaska  without  necessarily having  to                                                               
control them  with an  iron fist.   It's  possible to  get people                                                               
into  the process  just  by sharing  information  with them  real                                                               
time, such as  providing messaging about when a big  peak load is                                                               
coming, or  when the grid might  be having a problem,  or when it                                                               
is  particularly  good to  charge  an  electric vehicle  (EV)  in                                                               
combination with an incentive to  make it worth people's while to                                                               
pay attention and follow the information.                                                                                       
9:18:06 AM                                                                                                                    
CHAIR HOPKINS surmised that the  [Dominion Energy] South Carolina                                                               
process is a living document that the company is updating.                                                                      
DR.  COLT clarified  that the  South Carolina  example is  just a                                                               
run-of-the-mill/business-as-usual  tariff  filing as  opposed  to                                                               
being part  of an  IRP.   The IRP,  he said,  needs to  line out,                                                               
articulate, and put in place  the openness and the willingness of                                                               
the ongoing ratemaking and regulation  process to be receptive to                                                               
proposals  like this.   It's  unknown what  the technologies  are                                                               
going to  be in 10 or  20 years, so what  the IRP can do  is make                                                               
sure that  the doors  are open  for proposals  like this  one and                                                               
that they won't be precluded by  some kind of exclusive plan that                                                               
isn't going to be open to new proposals like this.                                                                              
9:19:53 AM                                                                                                                    
SENATOR  GIESSEL  commented  that  Dr.  Colt  made  an  important                                                               
statement when he referred to a  plan being a good doorstop.  She                                                               
remarked that  this calls to mind  General Eisenhower's statement                                                               
that  plans  are worthless,  but  planning  is everything.    She                                                               
stated  her   appreciation  for   Dr.  Colt's  emphasis   on  the                                                               
importance of  a dynamic  process of  planning and  remarked that                                                               
energy   innovations  are   happening  so   rapidly  and   beyond                                                               
expectations  that  [Alaska]  cannot  get  married  to  a  static                                                               
written-in-cement plan.                                                                                                         
CHAIR  HOPKINS agreed  it  is  critical for  Alaska  to have  the                                                               
flexibility to  allow for the ever-changing  world and technology                                                               
that is yet unknown.                                                                                                            
9:21:22 AM                                                                                                                    
CHAIR  HOPKINS introduced  the next  presenter, Michael  Hogan of                                                               
the Regulatory Assistance  Project (RAP).  He  explained that RAP                                                               
is  an  independent,  nonpartisan,  nongovernmental  organization                                                               
composed of  former utility and regulators,  industry executives,                                                               
system operators,  and other officials with  extensive experience                                                               
in the  power sector.  The  RAP team focuses on  the world's four                                                               
largest power  markets responsible for  half of the  global power                                                               
generation - China, Europe, India, and the U.S.                                                                                 
CHAIR  HOPKINS related  that  since  2010 Mr.  Hogan  has been  a                                                               
senior advisor to RAP on  the power industry's decarbonization in                                                               
the  areas  of  wholesale  market design,  demand  response,  and                                                               
system integration of intermittent  supply.  Mr. Hogan previously                                                               
directed the European Climate  Foundation's landmark roadmap 2050                                                               
decarbonization  study.   During 18  years in  the private  power                                                               
industry Mr.  Hogan was  responsible for  development, financing,                                                               
acquisition, and  operations for  tens of thousands  of megawatts                                                               
of generation  from independent  powerplants on  four continents.                                                               
Mr.  Hogan  began his  career  in  power systems  marketing  with                                                               
General  Electric and  earned degrees  in business,  engineering,                                                               
and   management  from   Harvard,   Massachusetts  Institute   of                                                               
Technology, and University of Notre Dame.                                                                                       
CHAIR HOPKINS  stated Mr. Hogan  would provide a  presentation on                                                               
wholesale power system reliability,  metrics that are appropriate                                                               
for  assessing  system  readiness, and  mechanisms  for  ensuring                                                               
delivery  at lowest  reasonable cost.   He  said Mr.  Hogan would                                                               
also provide a brief description of  best practices in the use of                                                               
integrated  resource  planning  (IRP)  to  assist  in  delivering                                                               
reliability with integration of variable renewables.                                                                            
9:23:07 AM                                                                                                                    
MICHAEL  HOGAN,  Senior  Advisor, Regulatory  Assistance  Project                                                               
(RAP),  provided a  PowerPoint presentation,  titled "Reliability                                                               
in Wholesale Power Systems," dated  8/7/20.  He displayed slide 2                                                               
and   addressed   current   best  practice   and   power   system                                                               
reliability.  He  said reliability is the idea that  the value of                                                               
continuous  good  supply  of   electricity  to  various  consumer                                                               
segments  can  be quantified,  and  that  the  loss of  value  or                                                               
societal welfare through involuntary  interruption of that supply                                                               
can  likewise be  quantified, and  the design,  construction, and                                                               
operation  of modern  power  systems should  be  calibrated to  a                                                               
standard that is consistent with that value.                                                                                    
MR. HOGAN  stated that different  metrics have been  developed to                                                               
assess the  reliability of  different parts of  the system.   For                                                               
the  generation  sector  there  are  determinant  target  reserve                                                               
margins and probabilistic loss of  (indisc.) energy metrics.  For                                                               
delivered  reliability (indisc.)  or system  average interruption                                                               
duration index  and system  average interruption  frequency index                                                               
to the duration and frequency  of customer service interruptions.                                                               
Less common but increasingly important  are attempts to recap the                                                               
metrics  for different  layers of  the power  system in  a common                                                               
context  so that  the  tidal  wave of  new  investment needed  to                                                               
transport an energy  system can be properly  prioritized based on                                                               
value  to consumers.    Underlying  every recognized  reliability                                                               
metric  is  that  while reliability  is  a  paramount  objective,                                                               
consumers  are  best  served  by balancing  measures  to  add  an                                                               
increment for reliability  against the cost of  those measures to                                                               
consumers.   It is  inescapably true, and  always has  been, that                                                               
there is some  level of expected deliberate  load curtailment due                                                               
to the feature of a  reliable prudently managed power system, not                                                               
a failure.   The details matter, he continued.   One should never                                                               
(indisc.)  short-lived,   controlled  power   interruptions  that                                                               
result  from  a rare  shortfall  in  generating capacity  or  the                                                               
uncontrolled but localized interruption  that is typically caused                                                               
by  distribution  system  problems,  such  as  a  squirrel  in  a                                                               
transformer,  with  cascading  system  collapse  and  system-wide                                                               
blackouts that  are almost exclusively  the result  of transition                                                               
system failures.                                                                                                                
MR. HOGAN pointed  out that electric system  planning today faces                                                               
a  lot  of  uncertainty  from rapidly  evolving  technology  like                                                               
transportation and heating  that hasn't been seen  since the days                                                               
when Edison and Westinghouse were  fighting it out over AC versus                                                               
DC transmission.   The good news is that  investment cycles today                                                               
are  far shorter  than  they  were 30  years  ago.   The  leading                                                               
generation  of  technology  has  become  more  modular  and  most                                                               
leading  technologies  can  be   added  quickly  and  in  smaller                                                               
increments to meet need.  He  stated that never in his career has                                                               
it been less  clear what technology options will  be available in                                                               
10  years from  now or  what demand  for energy  services due  to                                                               
technology options will need to be met.   But much can be done to                                                               
ensure there are ways to adapt  to put the interests of consumers                                                               
first.   It's never been  more important  to balance the  need to                                                               
ensure  readiness  against the  need  to  protect consumers  from                                                               
being  saddled with  decades of  paying for  wasted or  imprudent                                                               
investments.   In  this new  reality, best  practice is  to shift                                                               
focus from  "how much"  to a focus  on "how  flexible" (indisc.).                                                               
The  capacity  of the  system  still  matters, but  the  system's                                                               
capabilities matter  more.  The more  operationally adaptable the                                                               
resource portfolio the less capacity will be required.                                                                          
9:28:20 AM                                                                                                                    
MR.  HOGAN  stressed the  importance  that  "reliability need  no                                                               
longer be a one-way  street, nor can we afford for  it to be so."                                                               
He  said a  significant share  of electricity  demand has  always                                                               
been controllable to  some extent even if  there was historically                                                               
little value  in exercising  that controllability.   But,  as the                                                               
resource  portfolio shifts  and as  uses like  transportation and                                                               
heating proceed  to be electrified, exploiting  the potential and                                                               
controllable  demand  will  become  a  critical  success  factor.                                                               
Planning,  regulatory  processes,  and market  arrangements  will                                                               
need  to  embrace  this  potential  in ways  that  few  have  yet                                                               
contemplated,  right down  to the  question of  integrated retail                                                               
rate designs.                                                                                                                   
MR.  HOGAN  moved to  slide  3  depicting  a graph  dealing  with                                                               
standards for  resource adequacy.   He  explained it's  a classic                                                               
graph  of the  relationship between  a common  reliability metric                                                               
used  to  determine  the quantity  of  investment  in  generating                                                               
capacity.  The X-axis is the  loss of load expectation or loss of                                                               
load hours,  and the Y-axis  is what the chosen  standard implies                                                               
about the value to consumers of avoiding service interruptions.                                                                 
MR. HOGAN  said the  graph offers  two key  insights.   First, as                                                               
more generating capacity is added,  lowering the expected average                                                               
number of hours  during which the amount  of available generating                                                               
capacity is  expected to fall  short of demand, beyond  a certain                                                               
point  the  implied  value  of  adding  that  extra  megawatt  of                                                               
generation begins  to rise  exponentially.   In other  words, the                                                               
value of  adding a megawatt  of generation  to go from  two hours                                                               
per year to one hour per year  needs to be much, much higher than                                                               
it would need to  be to go from six hours per  year to five hours                                                               
per  year in  order  to justify  adding  that megawatt  capacity.                                                               
Second, the graph  illustrates the chasm that  exists between the                                                               
standard [green line] reflecting  what dozens of economic studies                                                               
over the years have  found to be the upper end  of the value that                                                               
residential and  small commercial  customers place on  avoiding a                                                               
service interruption,  which is about $25,000  per megawatt hour.                                                               
The  value  implied  by the  conventional  standard  employed  by                                                               
operators  like the  Southwest Power  Pool  have one  day in  ten                                                               
years [gold  line], which equates  to about $50,000  per megawatt                                                               
hour.   The value assumed  by the standard employed  by operators                                                               
like the  PJM system  operator has  one event  in ten  years [red                                                               
line], which can  amount to $250,000 per megawatt  or more, which                                                               
is 25,000  cents a kilowatt  hour.  He said  he will leave  it to                                                               
legislative members  to think  about what  they might  happily do                                                               
for a  tiny fraction of 25,000  cents per kilowatt hour  in order                                                               
to help  keep their and  everyone else's  lights on for  the next                                                               
couple of hours.                                                                                                                
9:31:38 AM                                                                                                                    
MR. HOGAN turned  to slide 4 and said  the disconnect illustrated                                                               
in slide  3 comes into  sharper relief when these  commonly cited                                                               
generation resource  adequacy standards are  presented alongside,                                                               
and  on the  same terms,  as the  delivered standard  performance                                                               
consumers have  come to expect.   He  explained the left  side of                                                               
the graph presents  the statistics [for Western  Europe] for what                                                               
is heard about  how much service disruption  the average consumer                                                               
experiences  from all  causes    the system  average interruption                                                               
duration  index (SAIDI).   The  numbers  for the  U.S. are  about                                                               
twice as high  - the average U.S. customer  experiences about two                                                               
hours  per year  cumulative  service  interruptions from  various                                                               
causes.   He said  the right  side of the  graph is  the resource                                                               
adequacy standard  typically adopted in Western  Europe, which is                                                               
less than (indisc.) system operators    3 hours per year compared                                                               
to 2.4 hours or less per year.   He stated that the two standards                                                               
of  performance  reflect  wildly different  conceptions  of  what                                                               
reliability is worth to consumers.                                                                                              
MR. HOGAN specified  slide 5 is another way of  looking at it but                                                               
using U.S.  data.  He  said interruptions  due to a  shortfall in                                                               
available generating  capacity overall  represent less  that .009                                                               
percent of  the service interruption hours  consumers experience.                                                               
Even after excluding unusual [weather]  events, 99.773 percent of                                                               
customer   service  interruption   hours   are   the  result   of                                                               
transmission  and distribution  problems.   The  bottom line,  he                                                               
advised, is that  nearly everywhere in the  developed world today                                                               
investment  in  generating  capacity is  vastly  overvalued,  and                                                               
investment  in  transmission,   distribution,  and  non-(indisc.)                                                               
alternatives, such  as demand response  and energy  efficiency as                                                               
options  for   meeting  consumers  demand  for   reliability,  is                                                               
undervalued.   This  tendency is  especially strong  in (indisc.)                                                               
planning  processes and  some  extra caution  is  warranted.   He                                                               
qualified that  he isn't an expert  on Alaska or the  Railbelt in                                                               
particular but said  that a quick look at  the characteristics of                                                               
the Railbelt system suggests to him  that if the question is what                                                               
the highest priority should be  for improving system reliability,                                                               
then adding  large central station generating  capacity that must                                                               
be   connected  to   distant  load   centers   by  high   voltage                                                               
transmission  lines strung  across a  challenging landscape  in a                                                               
harsh  environment  may   not  be  the  first   choice.    Higher                                                               
priorities  might   include  achieving  a   coordinated  economic                                                               
dispatch with  system balancing resources, improving  the ability                                                               
to  move power  around the  system from  the existing  generation                                                               
portfolio, incentivizing  the participation of  large, controlled                                                               
loads  in  line  with  the  value  of  doing  so,  and  otherwise                                                               
improving  the  ability  of  the various  load  centers  to  ride                                                               
through reliability events occurring elsewhere in the system.                                                                   
9:34:50 AM                                                                                                                    
MR. HOGAN explained  slide 6 is a  conceptual representation that                                                               
the Irish system operator EirGrid  uses to portray the challenges                                                               
facing the  system planners in a  run up to 2050,  in an islanded                                                               
system with  a peak  load of  about 12.5  gigawatts and  with the                                                               
share of energy  coming from wind production reaching  as high as                                                               
65 percent  of energy into the  system in some hours.   While the                                                               
system is  expected to become increasingly  capital intensive, as                                                               
seen  by  the  bar  graph  on the  left,  the  righthand  columns                                                               
indicate  that the  reliability challenge  going forward  will be                                                               
far less  a question  of how  much generated  capacity is  on the                                                               
system and  far more  a question  of the range  and scope  of the                                                               
operational  capabilities of  the system's  resources to  provide                                                               
system services both on the supply side and on the demand side.                                                                 
MR. HOGAN  stated that slide 7  presents a similar trend  that is                                                               
emerging in the Ercot system  in Texas, which is another islanded                                                               
system with  very high penetration  from (indisc.)  resources and                                                               
at the  highest load growth  of any region in  the U.S.   He said                                                               
Ercot  has  consistently  met  an  extremely  stringent  resource                                                               
adequacy standard while maintaining a  reserve margin of about 11                                                               
percent, which is less than one-third  as large as the 35 percent                                                               
reserve margin on the much  larger and much better interconnected                                                               
PJM  system, and  PJM claims  to observe  the identical  resource                                                               
adequacy standard that Ercot asserts.   Ercot's focus has shifted                                                               
strongly to   1) increasing  the amount and range  of flexibility                                                               
services  available to  system operators  as  illustrated in  the                                                               
slide;  2)  strengthening  the   transition  network  making  the                                                               
changing resource portfolio  to their major load  centers; and 3)                                                               
developing new ways to tap  into the inherent flexibility of many                                                               
of their customers largest electricity loads.                                                                                   
9:37:03 AM                                                                                                                    
MR. HOGAN displayed slide 8 and  said that the value of equitably                                                               
incentivizing and  enabling the inherent controllability  of many                                                               
electricity  loads, especially  new  ones  like electric  vehicle                                                               
charging,   is  one   that  is   still   poorly  understood   and                                                               
[under]appreciated  by  too  many energy  regulators  and  policy                                                               
makers.    He noted  the  graphic  is  from  one of  the  leading                                                               
decarbonization studies and depicts the  typical summer week in a                                                               
future system with about 35  percent of annual energy coming from                                                               
intermittent  resources.   The  dotted black  line  on the  graph                                                               
shows the historical  load profile in the system  over the course                                                               
of a  week in the  summer, while the  solid black line  shows the                                                               
load profile after  shifting only 10 percent of  the daily energy                                                               
consumption within the day from when  the supply is tight to when                                                               
it  is plentiful.   The  difference in  investment and  operating                                                               
costs  between the  two scenarios  is dramatic.   As  much as  40                                                               
percent  less  investment  is required  for  the  scenario  where                                                               
policy and market design enable  the deployment of a modest share                                                               
of  the  inherent  flexibility  in electrical  demand.    In  the                                                               
interest   of  meeting   consumers'  demand   for  cost-effective                                                               
reliability, policy, and  regulation, including the all-important                                                               
issue of  retail tariff  design, "they  must adapt  themselves to                                                               
move  from  a  world  where  we  forecasted  load  and  scheduled                                                               
generation, to  one where increasingly  we are going  to forecast                                                               
generation and  schedule load."   An  essential enabler  for this                                                               
will  be the  ability  of third-party  aggregators  to enter  the                                                               
market  with innovative  new  products and  services  for a  wide                                                               
range of consumers.                                                                                                             
MR. HOGAN moved  to slide 9 and advised  that traditional avenues                                                               
for   the   participation   of  load   and   maintaining   system                                                               
reliability,  to  the  extent  that  they  existed  at  all,  are                                                               
woefully inadequate to meet this  challenge.  He said the graphic                                                               
is  from  a massive  study  of  the  range  of low  cost,  easily                                                               
deployed options  for electricity demands in  California to adapt                                                               
and to respond  to para-market conditions.  The  red boxes depict                                                               
the   scope  of   this  potential,   traditionally  captured   by                                                               
traditional  (indisc.) demand  response, scheduled  peak shedding                                                               
and under-frequency load  shedding programs.  Both  were based on                                                               
inconveniencing  the relevant  consumers and,  as a  result, were                                                               
tightly limited in how and how  often they could be used.  Demand                                                               
flexibility that  meets the  needs of the  previous slide  can no                                                               
longer be about paying a  few consumers to be inconvenienced once                                                               
in a blue moon.  It  will be about delivering the reliable energy                                                               
services  consumers want  day to  day in  ways that  are easy  to                                                               
understand, convenient, and beneficial to  the family budget.  In                                                               
conclusion,  he  stated  that automation  and  ready  access  for                                                               
third-party service providers will  certainly be two, among many,                                                               
critical success factors in achieving this.                                                                                     
9:41:00 AM                                                                                                                    
CHAIR HOPKINS  returned attention  to slide  6 and  requested the                                                               
definitions  of  capacity,   ramping,  stability,  reactive,  and                                                               
MR.  HOGAN  advised  that   utility  service  terminology  varies                                                               
significantly from  one system to  another.  He  defined capacity                                                               
as the instantaneous capability of  a resource to feed power into                                                               
the system  if required.   He  specified that  ramping is  an old                                                               
concept  that  has  acquired  new  importance  with  the  growing                                                               
penetration  of intermittent  resources.   Ramping refers  to the                                                               
ability of  a resource to  change its output over  different time                                                               
scales  in order  to  follow  changes in  demand  on the  system.                                                               
Typically,  ramping refers  to  longer time  scales  of, say,  30                                                               
minutes  to several  hours as  opposed to  the much  shorter time                                                               
scale of changing  the output that is required to  do things like                                                               
manage  frequency (indisc.)  system.   Ramping will  be acquiring                                                               
more and more importance as  more and more intermittent resources                                                               
come on to the system.                                                                                                          
MR. HOGAN  pointed out that  stability tends  to refer to  a more                                                               
arcane  service  but  one  that  is  going  to  become  extremely                                                               
important.  On a system that relies  on a lot of very large, very                                                               
heavy  spinning machineries,  he explained,  an upset  such as  a                                                               
transmission line going off or  a powerplant tripping offline can                                                               
cause  instantaneous disturbance  in  system frequency.   If  the                                                               
system has a  lot of inertia it tends to  resist for some period,                                                               
for seconds or even approximately  a minute, changes in frequency                                                               
until  other resources  can be  brought  into play  to bring  the                                                               
frequency back  to 60 hertz, or  in the case of  Europe 50 hertz.                                                               
As  these  large  heavy  spinning   machines  are  replaced  with                                                               
asynchronous connective  resources like wind power,  the level of                                                               
inertia  and  the  system's inherent  resistance  to  changes  in                                                               
frequency tends  to decline.   So, there  is going to  be growing                                                               
demand for  a way  to replace  the role  that big  heavy spinning                                                               
pieces of  machinery used to  play in  the system, and  there are                                                               
several options  for doing that.   The Irish system  operator has                                                               
been on the forefront of trying  to develop those because with 65                                                               
percent  or more  of energy  coming from  asynchronous resources,                                                               
they have  begun to confront the  question of how to  continue to                                                               
operate  the  system  in  a   stable  fashion  from  a  frequency                                                               
perspective.  The Ercot system  in Texas is approaching a similar                                                               
MR. HOGAN defined  reactive power on the system as  the amount of                                                               
the total  alternating current electricity  that is  available to                                                               
do work on  the system.  If the three  phases of built-in current                                                               
get out  of sync with  each other  for various reasons,  then the                                                               
effectiveness  of some  of the  power  that is  generated at  the                                                               
powerplant is  lost before it  gets to  end users.   So, reactive                                                               
power  services are  different ways  that the  system compensates                                                               
for problems,  reductions, in reactive  power.  On a  system with                                                               
more and  more asynchronous resources  connected there  is likely                                                               
to be a greater demand for reactive power services.                                                                             
MR. HOGAN specified that conventional  reserves are reserves that                                                               
the system operator maintains to  provide frequency regulation as                                                               
quickly as  possible if there is  an upset in the  system.  Given                                                               
the  amount of  inertia  of the  system, one  wants  to bring  in                                                               
reserves standing by that can  respond in milliseconds to seconds                                                               
to a  few minutes  to bring  the frequency  back up  to 50  or 60                                                               
hertz.  Secondary,  or operating, reserves are  reserves that can                                                               
be available to  respond very quickly to boost  frequency but can                                                               
only  operate for  a  few  minutes.   Therefore,  other kinds  of                                                               
reserves are needed  that can be brought in to  replace those and                                                               
can operate longer - some can  operate for as long 15-30 minutes.                                                               
Then,  those must  be replaced  by tertiary  reserves, which  are                                                               
reserves that can be brought in  and operate on a steady state to                                                               
bring the  system back into stable  operation.  All of  these are                                                               
different  kinds of  services.   As  more  and more  intermittent                                                               
resources  become part  of  the  system, it  is  going to  become                                                               
increasingly important that the  resources that are available can                                                               
provide some or all these  services regardless of the capacity of                                                               
resources.  The  more capacity that lacks  these capabilities the                                                               
more  expensive  it's  going  to become  to  operate  the  system                                                               
9:48:49 AM                                                                                                                    
CHAIR HOPKINS introduced the next  presenter, David Farnsworth of                                                               
the  Regulatory  Assistance  Project.   He  said  Mr.  Farnsworth                                                               
advises   regulators   and   advocates  on   clean   energy   and                                                               
environmental policy and regulation.   Prior to working with RAP,                                                               
Mr. Farnsworth served  as hearing officer and  staff attorney for                                                               
the Vermont  Public Service  Board from 1995-2008.   He  has also                                                               
worked  internationally  as  a  regulatory  consultant  providing                                                               
training on  legal and policy  issues to relevant  ministries and                                                               
regulatory   commissions   in  Slovakia,   Romania,   Mozambique,                                                               
Swaziland,  and Tanzania.   Mr.  Farnsworth  earned degrees  from                                                               
Colby College and the Vermont Law School.                                                                                       
9:49:37 AM                                                                                                                    
DAVID  FARNSWORTH,   Principal,  Regulatory   Assistance  Project                                                               
(RAP),  provided a  PowerPoint  presentation, titled  "Integrated                                                               
Resource Planning:  An Introduction,"  dated 8/14/20.   He turned                                                               
to slide 1 and said his  goal for this presentation is to provide                                                               
committee  members   with  enough  understanding   of  integrated                                                               
resource  planning  (IRP)  so  members know  where  they  are  in                                                               
subsequent  IRP discussions  and  so members  can  ask where  the                                                               
discussion  is going  and have  a  sense of  where that  is.   He                                                               
displayed slide  2 and noted that  IRP is very complex.   He then                                                               
showed  slide  3  and  said  his goal  isn't  that  members  will                                                               
understand everything there  is to know about this  topic, but to                                                               
provide a general outline and sense of the big picture.                                                                         
MR. FARNSWORTH moved to slide 4  and explained the origin of IRP.                                                               
He said  several states  started IRP  processes and  adopted laws                                                               
requiring  this because  they were  experiencing backlashes  from                                                               
large utility  projects that for various  reasons weren't working                                                               
out as  had been planned.   Most important, states  realized they                                                               
didn't  have the  information,  and the  public  didn't have  the                                                               
information,  to  make  decisions  when  expectations  about  the                                                               
future  and how  things were  supposed to  happen weren't  really                                                               
paying off.   A plan helps in understanding where  things are and                                                               
what needs to be done.                                                                                                          
MR. FARNSWORTH  showed slide 5  and related that about  30 states                                                               
have some form  of regular integrated planning on the  books.  He                                                               
said  it's  important to  notice  that  integrated planning  also                                                               
happens in other contexts and can provide similar benefits.                                                                     
MR. FARNSWORTH  turned to  slide 6 and  pointed out  that utility                                                               
regulators have a very complex  job.  Historically, he explained,                                                               
traditional regulatory goals  meant ensuring safety, reliability,                                                               
and  rates that  were  just,  reasonable, and  nondiscriminatory.                                                               
But today  their workload and  the things  they need to  know and                                                               
stay  on  top  of  have  increased  significantly,  such  as  new                                                               
technologies  with different  capabilities.    Resources are  not                                                               
just a  supply of  energy from  a powerplant.   Resources  can be                                                               
many things:   the ability to interconnect  one's micro-grid; the                                                               
accessibility of good, easy charging;  the ability to ensure that                                                               
the  quality of  the power  on a  system is  what is  needed; the                                                               
creation  of   new  technologies;  different   capabilities;  and                                                               
building  and transportation  electrification that  involves both                                                               
thermal and electric storage.   Renewable energy is becoming less                                                               
expensive  and   competitive  in   many  ways   with  traditional                                                               
resources.   Their capabilities are  slightly different,  but the                                                               
pricing is going  to result in them putting a  lot of pressure on                                                               
traditional resources.   There  are more  efficient technologies.                                                               
For  example, natural  gas plants  are way  more efficient  today                                                               
than they  were in, say,  1990.  There  is the ability  to manage                                                               
load  as  a result  due  to  the  flexibility  of some  of  these                                                               
resources, the  digital capabilities  to manage power  grids, and                                                               
the ability to coordinate supply  and consumer demand for that on                                                               
these grids.  Add in  environmental compliance costs:  Will there                                                               
be climate  change legislation  at some  point that  will require                                                               
fossil  fuel-fired electricity  to pay  more to  account for  the                                                               
effects it's having  on the environment?   Air quality compliance                                                               
costs as well?   Mr. Farnsworth advised that  when the complexity                                                               
and  inter-relatedness of  all  these factors  are  added up,  it                                                               
makes  comprehensive  planning  for utility  regulators  quite  a                                                               
challenge.  That's partially why  integrated resource planning is                                                               
being talked about today.                                                                                                       
9:55:22 AM                                                                                                                    
MR. FARNSWORTH drew  attention to slide 7 and  specified that IRP                                                               
is a  plan to  meet the  public's need for  energy services.   It                                                               
looks  at supply-side  and demand-side  resources, he  explained,                                                               
and  it  does  not  arbitrarily  favor one  over  the  other  but                                                               
considers the capabilities of each.   It considers various likely                                                               
futures  for  meeting  the  public's  need for  energy.    If  an                                                               
integrated  resource plan  were a  set of  headlights, then  they                                                               
would shine 20  years down the road  - it looks at  the very long                                                               
MR. FARNSWORTH  displayed slide  8 and  reiterated that  his goal                                                               
for committee members  is to understand the  structure so members                                                               
know where they are and where they are going.                                                                                   
MR. FARNSWORTH said he put together  the graphic on slide 9 using                                                               
information from  Portland General  Electric.  He  explained that                                                               
reading from left to right and  looking at the green arrows gives                                                               
a  sense of  the  steps  in the  IRP  process:   identify  needs,                                                               
develop   portfolios,  [optimize   and   evaluate  options,   and                                                               
preferred portfolio].   He further explained  that the rectangles                                                               
above and below  generally suggest some of the  major topics that                                                               
feed into this  process.  As indicated by the  red circle, an IRP                                                               
puts together  and analyzes  a portfolio of  resources.   He said                                                               
the company, the regulator, and the  public look at this and ask,                                                               
"What are we going to need in  the way of resources over the next                                                               
20 years?"  What needs to  be considered includes the load - what                                                               
the utility  will have  to provide -  what resources  are already                                                               
available on  both the supply and  demand side, and what  will be                                                               
the future resource options.                                                                                                    
MR.  FARNSWORTH addressed  slide 10  [mistakenly numbered  as 9].                                                               
He explained that each option  - whether it is energy efficiency,                                                               
demand  response, renewable  energy, a  powerplant upgrade,  or a                                                               
brand  new  powerplant    is  analyzed  with respect  to  meeting                                                               
reliability needs over the horizon of  the plan and doing that in                                                               
a least-cost manner.                                                                                                            
9:57:52 AM                                                                                                                    
MR.  FARNSWORTH moved  to slide  11 and  specified that  some new                                                               
technologies will  work like  load in that  they will  be drawing                                                               
energy off  the system.   Some new  technologies will be  able to                                                               
work like  supply.  For  example, electric vehicles  are electric                                                               
storage or  batteries on wheels,  and electric water  heaters are                                                               
thermal energy stored in batteries, so  to speak.  An IRP inquiry                                                               
asks questions  like, "Will electrification double  utility sales                                                               
by 2050?"  He  urged members to look at the  paper written by The                                                               
Brattle Group.                                                                                                                  
MR. FARNSWORTH brought  attention to the graphic on  slide 12 and                                                               
stated that  as things move  along beyond  developing portfolios,                                                               
the  process comes  to optimization,  the comparing  of different                                                               
collections of  resources and  their suitability  under different                                                               
future scenarios.  He said this  isn't a matter of simply looking                                                               
at one or more crystal balls  but an effort to tease out probable                                                               
futures.   All sorts of  obvious questions  get asked as  well as                                                               
other questions that may not be  so obvious.  Will there continue                                                               
to be wars in the Mideast  that affect world energy prices?  Will                                                               
there be more than one war?   Will world natural gas prices go up                                                               
or will they  go down?  What effects will  that have on liquefied                                                               
natural gas  (LNG) export  and import?   Will  battery technology                                                               
costs  continue  to  drop, making  electric  vehicles  and  other                                                               
resources more  possible?  Will  renewable energy  costs continue                                                               
to drop?   Questions  like these  get asked  and answered  as the                                                               
process  tries to  optimize and  evaluate options.   The  process                                                               
tries  to winnow  out  scenarios  that are  determined  to be  "a                                                               
little bit far out" and  focus on more plausible future scenarios                                                               
and to  determine what  sort of resource  choices should  be made                                                               
given those future scenarios.                                                                                                   
10:00:30 AM                                                                                                                   
MR. FARNSWORTH  turned to  slide 13  and specified  that modeling                                                               
helps  this work  by  creating a  sense of  possible  ways for  a                                                               
utility to respond to these possible futures.                                                                                   
MR. FARNSWORTH showed slide 14  and discussed the important topic                                                               
of risk.  Risk can mean  many things, he noted, such as financial                                                               
risk, regulatory risk, risks  associated with construction costs,                                                               
and risks associated with weather.   As an IRP looks at potential                                                               
futures, it helps  to understand the strengths  and weaknesses of                                                               
various approaches  and responses  to different futures,  and one                                                               
thing it does  is to help sort out risk.   It gathers information                                                               
about risk  and characterizes it in  as useful a way  as possible                                                               
to inform decision-making.                                                                                                      
MR. FARNSWORTH moved  to slide 15 and pointed  out the importance                                                               
of the public being  part of the effort at each  step of the way.                                                               
He said  this goes  to the  question that was  asked of  Dr. Colt                                                               
about  access  to information.    He  advised that  incorporating                                                               
stakeholder point  of view means  that the state's  energy future                                                               
is  considered through  the eyes  of citizens,  through industry,                                                               
and  through  local  and  tribal government,  as  well  as  other                                                               
members  of society.    Practices may  vary as  to  how much  the                                                               
public  participates or  at what  point the  public participates,                                                               
but IRP is generally understood as  a public process that goes to                                                               
informing the  public's need for  energy services.   In Colorado,                                                               
for instance, there  is a great deal of  public participation and                                                               
engagement in the first two or  three of the arrows [shown on the                                                               
graphic]  and less  public  engagement later.    He continued  to                                                               
slide 16  and pointed out  that regardless of whether  the public                                                               
is meeting  in a large  group or virtually,  public participation                                                               
is important  to educate people  and to build  constituencies and                                                               
support for a cohesive vision of the state's energy future.                                                                     
MR. FARNSWORTH brought  attention to the graphic on  slide 17 and                                                               
explained  that due  to  space constraints,  the  action plan  is                                                               
shown in the blue box rather than  in a green arrow.  He moved to                                                               
slide 18 and said he is  emphasizing this because the bulk of the                                                               
work that is  done on an IRP is looking  at 20-plus year horizons                                                               
for planning, but still every good  IRP has a vision for the next                                                               
two  to five  years and  that  is called  the action  plan.   The                                                               
action plan  answers the question  of what things need  to happen                                                               
as soon as  leaving the starting gate.  Every  IRP, despite being                                                               
a long-term effort, has a short-term action plan appended to it.                                                                
10:04:10 AM                                                                                                                   
MR. FARNSWORTH  addressed slides 19-21 to  summarize.  Addressing                                                               
slide 19, he said an IRP is good  for creating a vision.  It's an                                                               
illustration of a state's future  energy needs and its resources.                                                               
The bulk  of the  work is  based on  long-term horizon  but still                                                               
there must be a short-term vision  with an action plan at the end                                                               
of it.   Integrated resource  plans are relevant for  big systems                                                               
as seen  in the Lower 48,  but also perfectly suited  to Alaska's                                                               
circumstances  where  there  needs   to  be  coordination  across                                                               
multiple  systems.   Addressing  slide 20,  he  advised that  IRP                                                               
helps  in  understanding where  large  investment  might work  or                                                               
where  numerous   small-scale  investments  might   work  better.                                                               
Addressing  slide 21,  he  said that  engaging  in this  planning                                                               
effectively  requires:    that the  regulator  be  enabled,  that                                                               
there's   very   clear   institutional  process,   that   there's                                                               
recognition of  all the  public policy  goals that  are relevant,                                                               
that the  data is  accessible and  timely, and  that stakeholders                                                               
engage so  there is  support for  the effort.   It's  a technical                                                               
undertaking as well  as a political undertaking, as  anybody at a                                                               
utility  commission knows.   Utility  commissions are  created by                                                               
legislatures.    They  are  quasi-judicial   as  well  as  quasi-                                                               
legislative, so  it is  very important to  include the  public in                                                               
this effort.   Displaying  slide 22 he  concluded by  saying that                                                               
plans  are what  they are,  but  it's the  undertaking, it's  the                                                               
planning that is everything.                                                                                                    
10:06:32 AM                                                                                                                   
CHAIR  HOPKINS   recalled  that   at  last  week's   hearing  the                                                               
Regulatory  Commission  of  Alaska  (RCA)  described  the  cross-                                                               
utility  integration of  this  IRP as  being  somewhat unique  or                                                               
rare.  He requested Mr. Farnsworth  or Mr. Hogan to describe what                                                               
that cross-utility integration could look  like in Alaska and why                                                               
it's rare in other parts of the U.S.                                                                                            
MR. FARNSWORTH  replied that "typically  we often  find ourselves                                                               
in silos and  IRP is no different."  He  said integrated resource                                                               
planning statutes  were passed and  the requirements  were placed                                                               
on  utility  companies.    When  a  state  has  multiple  utility                                                               
companies  it often  ends  up  being the  case  that  an IRP  for                                                               
 Company  A  occurs  and  an  IRP for   Company  B   occurs.   In                                                               
practice over the  last few years folks have  found that somewhat                                                               
limiting because,  after all,  a resource  can be  that utility's                                                               
powerplant or  it can  be a  contract that   Utility A   got from                                                               
 Utility B   and those  resources are  available, not  to mention                                                               
any other  resource that can  be gotten  across a system.   These                                                               
systems  are interconnected  and highly  flexible.   So, when  it                                                               
comes to  planning, ideally what one  would do is have  a utility                                                               
plan for  the resources  available or  have a  state and  all its                                                               
utilities plan for  those resources that are  available, and make                                                               
sure that  everything is put on  the table so there  can truly be                                                               
an integrated look at the resources out there.                                                                                  
10:08:47 AM                                                                                                                   
MR  HOGAN elaborated  about cross-utility  planning.   He related                                                               
that  in Europe  where he  does a  little more  than half  of his                                                               
work,  and which  is a  place  that would  be more  in love  with                                                               
central planning  than most parts of  the U.S., the hot  topic of                                                               
the last  few years is  what is  referred to as  sector coupling.                                                               
Sector coupling  may be another  way of  describing cross-utility                                                               
planning  and it  may be  a  bit more  comprehensive than  cross-                                                               
utility planning.   It refers to the  power sector transformation                                                               
that's  taking place  and the  role  of decarbonized  electricity                                                               
that is going  to play in reducing greenhouse  gas emissions from                                                               
the transportation and heating sectors  and the effects that both                                                               
of those things have on the  shape and size of demand for natural                                                               
gas and  the ways  that natural gas  is going to  be used  in the                                                               
system.  It is  frankly crazy, he said, "to have a  plan to do an                                                               
electricity sector  that is in  any way independent of  your plan                                                               
for the transportation sector and  is in any way independent from                                                               
your  plan  for oil  imports  and  exports  that  is in  any  way                                                               
independent of  your plan  for building  technologies that  is in                                                               
any way independent of your  plan for your gas transportation and                                                               
distribution  system."   He  said these  are  all now  intimately                                                               
linked in  terms of  what's going  to drive  cost-effective, low-                                                               
cost,  affordable,  reliable  delivery   of  energy  services  to                                                               
customers  because,   in  the  end,  customers   don't  buy  gas,                                                               
electricity, or  oil - they  buy services.   What is going  to be                                                               
seen  is a  level  of interdependent  linkage  among the  various                                                               
formerly  independent prior  energy sources  that has  never been                                                               
seen before.                                                                                                                    
10:11:39 AM                                                                                                                   
CHAIR HOPKINS  noted that in  the past an outside  contractor did                                                               
the large "doorstop" plan that  was referenced earlier.  He asked                                                               
who,  in  Mr.  Farnsworth's  experience,  usually  does  the  IRP                                                               
MR FARNSWORTH responded that the  first steps associated with IRP                                                               
are convening  all the appropriate  stakeholders and  making sure                                                               
that the information that's being  brought forward is as complete                                                               
as  possible.   It's engineering  information and  all the  other                                                               
information that can inform the  process, as stated by Mr. Hogan.                                                               
It's important to  get information about buildings  if it's known                                                               
that buildings  are poorly insulated  and so more fossil  fuel or                                                               
wood  will be  burned, or  more electricity  used, to  keep those                                                               
buildings  warm.   It's important  to get  information about  the                                                               
transportation system.   It's  important to get  a sense  of what                                                               
the Railbelt  communities are  thinking as  well as  more distant                                                               
communities, as  everybody has different needs  and perspectives.                                                               
It  is  a  bit  overwhelming when  thinking  about  that  initial                                                               
inquiry and  the need  to include public  input into  the effort,                                                               
but all this goes to emphasize  the point that to the degree that                                                               
that information is  included and a contractor is  helping to put                                                               
this together, it  really doesn't matter where  the contractor is                                                               
if the contractor  is enabling the basic  tenets of participation                                                               
and  access  to  all  information.    If  all  those  things  are                                                               
observed,  he   continued,  it  doesn't  really   matter  whether                                                               
[Alaska] has a  contractor.  Some fairly  involved modeling often                                                               
goes  on,  and  that  expertise  may  be  found  at  the  utility                                                               
commission,  but oftentimes  many of  these specialties  are not,                                                               
and the most cost-effective thing to  do is to engage somebody to                                                               
provide those  resources.   If the commission  were to  oversee a                                                               
process that is  as inclusive and open to as  much information as                                                               
possible,  then the  commission can  proceed perfectly  well with                                                               
outside help.                                                                                                                   
10:15:21 AM                                                                                                                   
CHAIR HOPKINS  noted that Alaska  is something of an  island that                                                               
is without power  system and transmission line  connection to the                                                               
outside world.  For example, he  said, Fairbanks is at the end of                                                               
a large  transmission line.   He asked  about the ways  that IRPs                                                               
could address end-of-line reliability  and flexibility that might                                                               
lend some  light to directions  that should  be looked at  for an                                                               
IRP in Alaska.                                                                                                                  
MR.  FARNSWORTH   referenced  Ercot  in  Texas   and  Ireland  as                                                               
mentioned  by Mr.  Hogan.   He said  a comprehensive  approach is                                                               
going to recognize  everybody on the system.   What's interesting                                                               
to  see is  how thorough  the process  is at  evaluating ways  to                                                               
address the folks  who are at the end  of the line.  It  may be a                                                               
good  solution to  build a  big new  transmission line,  big pipe                                                               
right down  to the end  of the line.   It  may be that  there are                                                               
lots of smaller solutions that are  useful at the end of the line                                                               
that reduce demand,  that maybe provide for  micro-grids that can                                                               
provide  some of  the supply  that would  have been  sent a  long                                                               
distance  down the  system  to the  end of  the  line that  could                                                               
produce those  things more  effectively and at  lower cost.   For                                                               
example, Bar  Harbor, Maine, adjacent  to Arcadia  National Park,                                                               
is exploring these  things because Bar Harbor is  in exactly that                                                               
situation.  Bar  Harbor is looking at alternatives to  a big wire                                                               
going  out  to the  community  and  looking  at things  that  the                                                               
community  can  do  to  provide  more  supply  for  itself,  more                                                               
flexible supply for  itself, more flexibility in the  way it uses                                                               
energy, and more efficient ways to  get what it needs to get done                                                               
at lower cost.                                                                                                                  
10:18:23 AM                                                                                                                   
CHAIR  HOPKINS related  that one  of the  big energy  projects in                                                               
Alaska that's  been going on  for 50-60 years is  the large-scale                                                               
Susitna-Watana Hydroelectric  Project that  is currently  off the                                                               
shelf;  however, no  work is  being done  to that  study.   It is                                                               
planned to  provide up to 600  megawatts of power in  its current                                                               
iteration,  he explained,  which would  provide one-half  to two-                                                               
thirds of  the generation  on the  Railbelt.   It seems  to match                                                               
well the goals  of the capital expenditure  (capex) and operating                                                               
expenditure  (opex)   in  2050  as   seen  in  slide  6   of  Mr.                                                               
Farnsworth's presentation.   He inquired as to  how a large-scale                                                               
project  like this  would fit  into an  integrated resource  plan                                                               
that would look towards more flexibility in its sources.                                                                        
10:19:31 AM                                                                                                                   
MR. HOGAN qualified that he  probably knows less about Alaska and                                                               
the  Railbelt  situation than  does  Mr.  Farnsworth, who  likely                                                               
would suggest  he's not an  expert on  it either.   Therefore, he                                                               
prefaced,  he would  need to  know  a lot  more to  give a  truly                                                               
robust answer  to the question.   He said the question  ties back                                                               
to the  other question just asked  and to Dr. Colt's  point about                                                               
resilience versus reliability for people  at the end of the line.                                                               
He  recalled the  point he  made  earlier about  the tendency  to                                                               
overvalue the  contribution of investment in  generating capacity                                                               
to  reliability versus  the value  of investment  in transmission                                                               
distribution and (indisc.) alternatives  like demand response and                                                               
energy efficiency.   In a system the size of  the Railbelt today,                                                               
600  megawatts come  awfully close  to being  able to  supply the                                                               
entire  system,  which  may  sound  like a  good  thing,  but  in                                                               
traditional utility planning it is  always wise to be leery about                                                               
a system  that is too overly  reliant on any one  failure, called                                                               
the M-minus-one test.                                                                                                           
MR.  HOGAN stated  he doesn't  know anything  about the  Susitna-                                                               
Watana  project.   However, he  said, assuming  it's a  reservoir                                                               
hydroelectric project and it has  adequate storage, the good news                                                               
is that hydro can  be quite a flexible resource, and  it can be a                                                               
great complement  to intermittent resources like  wind and solar.                                                               
Assuming that  the reserve margin  of an installed  generation on                                                               
the  Railbelt  is  adequate to  comfortably  adequate,  which  in                                                               
preparing for  this presentation  he concluded  that it  is, it's                                                               
not  clear to  him what  reliability purpose  that project  would                                                               
serve.   It  may be  an excellent  choice over  time for  meeting                                                               
expected  load  growth  from  new  industry  and  growth  in  the                                                               
Railbelt region,  but from a  reliability perspective he  said he                                                               
questions  the  wisdom  of  adding  a  very  large,  single-point                                                               
resource that  is by and large  going to be connected  to distant                                                               
load centers  by high voltage  transmission across  a challenging                                                               
landscape in a harsh environment,  as opposed to focusing more on                                                               
resiliency as Dr.  Colt referenced.  Resiliency,  Mr. Hogan said,                                                               
is  about  how quickly  and  to  what  extent  a given  level  of                                                               
essential  services can  be maintained  in  the event  of a  very                                                               
significant  reliability event  on the  system.   It's not  about                                                               
building a duplicate  system so that nobody  notices that there's                                                               
been  a   reliability  event,  he  specified,   it's  more  about                                                               
maintaining as  much of  the central  services as  possible until                                                               
the  system can  be  restored to  something  resembling a  stable                                                               
10:25:40 AM                                                                                                                   
MR. HOGAN  advised that an  issue that would be  quite widespread                                                               
is how many people  are not "at the end of the  line" in a system                                                               
like the  Railbelt.   Planning is  going to be  a way  forward as                                                               
opposed  to  some  combination  of planning  and  market.    When                                                               
assessing these different things  and their impact on reliability                                                               
and their impact on the cost  of reliability, they must be put in                                                               
some sort  of a common  context in order  to weigh the  "bang for                                                               
the   buck"  of   investment  in   different   measures  on   the                                                               
contribution  they  make  to  the  delivery  of  reliable  energy                                                               
services to  end use  customers across the  system.   The mistake                                                               
that  is  so often  made  in  these  prophesies  is to  focus  on                                                               
resource adequacy to  the exclusion of a focus  on the customers'                                                               
lived experience of reliability, and  what the causes and sources                                                               
of (indisc.)  effects on those  lumped experiences are,  and what                                                               
the nature  of the solutions are.   There was a  time when they'd                                                               
take   the   (indisc.)   generation  adequacy   separately   from                                                               
distribution issues  because generation had  to be added  in such                                                               
large increments  that would occur  in 5 to 10  to 15 years.   It                                                               
was more challenging  to get into trouble  on generation adequacy                                                               
than it might  have been to get into trouble  on reinforcing part                                                               
of a local  distribution system that tended to fail  from time to                                                               
time - but that is increasingly no longer the case.                                                                             
MR.  HOGAN further  pointed  out that  investment  cycles on  the                                                               
generation side for  many of the leading resources  are now quite                                                               
short, and those  resources, those technologies, can  be added in                                                               
a very modular  fashion, which is not what is  being talked about                                                               
with  the  Susitna-Watana  Hydroelectric  Project.   It's  a  big                                                               
project and  it's a huge  percentage of  the total demand  on the                                                               
system.   That's not to  say it's not a  good idea, but  he would                                                               
suggest thinking  of it  differently from  the measures  that are                                                               
wanted  to improve  reliability,  maybe more  something to  think                                                               
about as a long-term way of  addressing load growth to the extent                                                               
there is confidence that load growth is going to be seen.                                                                       
10:28:55 AM                                                                                                                   
MR.  FARNSWORTH  provided  an  example from  IRP  that  would  be                                                               
informative here, although it's about  an existing plant, not the                                                               
idea of building a new one.   He related that Southern California                                                               
Edison  in  1999  owned  a plant  called  the  Mojave  Generating                                                               
Station that  was about  1600 megawatts.   It had  two coal-fired                                                               
resources  in  it,  built  between  1967 and  1971.    The  owner                                                               
executed  an  agreement  with  California  officials  to  install                                                               
sulfur dioxide controls  or to close the plant by  2005.  In 2003                                                               
the owners approached the  California Public Utilities Commission                                                               
(CPUC)  with a  preliminary engineering  study for  the retrofit.                                                               
After hearings, the  CPUC said it wanted  a comprehensive review,                                                               
an integrated resource plan, to be  done for this unit.  In 2005,                                                               
they produced  the Mojave Alternatives and  Complements Study and                                                               
it examined alternatives to that  retrofit.  In other words, pull                                                               
the 1600-megawatt  plant out of  the picture and fill  that 1600-                                                               
megawatt  hole.   In looking  at alternatives  they found  a wide                                                               
variety of  alternatives that were  far more  cost-effective, and                                                               
the  study recommended  closure.    They closed  the  plant as  a                                                               
result of that study.  He said  Mr. Hogan alluded to that when he                                                               
suggested that  Alaska doesn't have  to build or acquire  all 600                                                               
megawatts at once,  it could be approached in  a modular fashion.                                                               
This   sort  of   observation  underlies   Mr.  Hogan's   earlier                                                               
observation  about   financing  periods  being   shorter  because                                                               
projects can  be smaller.  He  asked the committee to  imagine an                                                               
all resources  request for proposals  (RFP) for 600  megawatts or                                                               
whatever amount  that Alaska thinks  suitable to fill  that need.                                                               
What people  submit as bids, and  what is found to  be reasonable                                                               
proposals, might put the resource  that is being thought about in                                                               
the  chair's question  in  an entirely  different  light, and  it                                                               
might  help  inform [Alaska's]  decision  about  how suitable  it                                                               
would be to go with that one resource or these alternatives.                                                                    
10:31:58 AM                                                                                                                   
MR.  HOGAN added  that  in  a system  the  size  of the  Railbelt                                                               
system,  adding  600  megawatts  or even  300  megawatts  from  a                                                               
single-point  production facility  would have  significant ripple                                                               
effects on  how the  overall system  is operated,  the economics,                                                               
and  operational characteristics  of the  other resources  on the                                                               
system.   Especially in  that situation, he  advised, it  will be                                                               
absolutely critical  to assess the  economics of such  a decision                                                               
on a  systemwide basis  dynamically based on  how it  affects the                                                               
overall system  operation.  Not on  a busbar-to-busbar comparison                                                               
between  adding  a 300-  or  600-megawatt  hydro plant  (indisc.)                                                               
basis versus,  say, what a combination  of a wind farm  and a 100                                                               
megawatt highspeed  diesel operating  on natural gas  or hydrogen                                                               
and what  the busbar production  cost for that  would be.   It is                                                               
absolutely  critical  to  look  at the  economics  of  those  two                                                               
decisions based on  how the overall system would  function if one                                                               
or the  other were  done.  He  added that that  gets back  to the                                                               
question  of  achieving  some  sort  of  a  coordinated  economic                                                               
dispatch balancing resources.                                                                                                   
10:34:17 AM                                                                                                                   
CHAIR HOPKINS thanked the presenters and concluded the meeting.                                                                 
10:36:01 AM                                                                                                                   
There being no further business before the committee, the House                                                                 
Special Committee on Energy meeting was adjourned at 10:36 a.m.                                                                 

Document Name Date/Time Subjects
2020-08-14 - David Farnsworth Presentation.pdf HENE 8/14/2020 9:00:00 AM
SB 123
SB 123 Implementation
2020-08-14 - Michael Hogan Presentation.pdf HENE 8/14/2020 9:00:00 AM
SB 123
SB 123 Implementation
2020-08-14 - Steve Colt Presentation to Energy Committee.pdf HENE 8/14/2020 9:00:00 AM
SB 123
SB 123 Implementation