About 75 energy experts met today (Dec. 11) at the Energy Roadmap Workshop on Energy Infrastructure to offer their advice about enhancements to the electricity and natural gas delivery systems in West Virginia. The event was the last in a series of energy workshops sponsored by the West Virginia Development Office, and the National Research Center for Coal and Energy and the College of Business and Economics at West Virginia University.
George Blankenship, a senior consultant with Allegheny Power, highlighted the national move toward regional transmission organizations (RTOs) as one of the best ways to enhance the reliable delivery of electricity to customers. An RTO controls and operates the transmission system on behalf of its members. Regulations administered by the Federal Energy Regulatory Commission (FERC) call for utilities to join RTOs. Consistent with that federal requirement, Allegheny Power joined PJM Interconnection about 18 months ago.
“The RTO is an independent third party that allows all power producers to compete on a level playing field in the delivery of their product,”explained Blankenship.”Instead of having to negotiate deals with multiple transmission systems, buyers and sellers at the wholesale level need only deal with one transmission service provider. This allows buyers to get the best deal on power. The savings can be passed along to the retail customer.”
West Virginia’s other major electricity provider, AEP , currently is caught in the debate over joining a regional transmission organization, said Richard Verret, AEP senior vice president of electric transmission. AEP plans to join PJM .
“PJM has a long history of providing transmission service and has an excellent track record managing transmission assets owned by others,”said Verret.”Also PJM is in the center of the West to East flow of transactions through our transmission system, so from both a business and an engineering perspective, PJM seems to be the logical choice for us.”
A move to join PJM would be good for West Virginia, he added, since PJM already serves as Allegheny Power’s RTO . Verret called on West Virginia’s leaders to support AEP ’s bid to join PJM and to encourage their colleagues at the state and federal level in neighboring states to also support that bid.
“AEP has a robust transmission system, with the largest investment in power lines of anyone in the country,”Verret said.
AEP’s transmission assets absorbed the power fluctuations and stopped the massive Northeast blackout that occurred last August from spreading any farther.
“West Virginia is central to our transmission system. Roughly 18 to 20 percent of our assets are in West Virginia, and we’re preparing to make further investments,”Verret said.
AEP spent $39 million on transmission line construction in 2003 to serve customers of its Appalachian and Wheeling power companies. This is in addition to its plans to invest nearly $300 million in southern West Virginia for a new transmission line scheduled for construction next year.
Workshop participants then turned their attention to natural gas infrastructure.
Jim Crews of Columbia Gas Transmission, a NiSource company, and Dan Kortum of Dominion Transmission said additional gas transmission capacity is needed in West Virginia. Crews noted that financing for major gas transmission pipelines is changing. Historically, local gas distribution companies, the part of the industry that delivers gas to consumers, entered into contracts of 10 to 15 years that included fees that made building transmission lines financially feasible. That paradigm is being challenged by regulatory and market risks. Producers who need the lines to deliver their gas have not typically participated in this financing, but may need to now.
“We can and are producing more natural gas in West Virginia. In fact our natural gas production is increasing faster than our ability to get it to the market using the existing infrastructure,”said Crews.
But it takes time, two to three years, just to build new capacity, added Kortum. A new financing model is needed, said the two. Building transmission requires hundreds of millions of dollars. But because of deregulation and natural gas price volatility, end users are shying away from such commitments.
It may be time for producers to help support the infrastructure, they suggested. But producers do not operate under such long-term business models since their wells often deplete long before a 10 year contract would expire.”And once again, price volatility is an issue. A producer cannot predict prices over the long term,”said Kortum.
Neither expert has seen a business model yet that overcomes these obstacles.
The presentations by the gas and electricity industry experts underscored Dave Ellis’major point that,”West Virginia energy infrastructure considerations do not stop at the state line.”Ellis is director of the utilities division of the West Virginia Public Service Commission. Because of the regional nature of energy infrastructure projects, the state must be vigilant about being aware of, and involved in, regional infrastructure issues, he said.
Several factors need to be monitored, he said. Among them is the FERC ’s efforts to open energy markets to competition. Another is federal legislation that may remove siting authority from an individual state in favor of federal forums or a multi state regional forum for such decisions.
“All entities with an interest in energy infrastructure issues need to be aware of and participate in the new regulatory proposals as their interests require,”added Earl Melton, director of the PSC ’s engineering division. The informational sessions closed with a panel presentation on infrastructure security and reliability.
Joe Paladino of the Department of Energy’s National Energy Technology Laboratory described efforts under way in Morgantown to establish the Energy Infrastructure Training and Analysis Center (EITAC).”This federal facility intends to provide training and analytical support to federal agencies, state and local governments, and the private sector to address improving the reliability and security of the energy infrastructure,”said Paladino.
He said that the laboratory is seeking advice from the business sector, as well as state and local government, as to how to best meet their current and expected needs and welcomed comments from participants.
Staff Sgts. Tim Young and Greg Carden of the West Virginia National Guard presented information about the West Virginia Joint Intelligence Fusion Center. The center is a cooperative effort between the National Guard, West Virginia State Police and Anti terrorism Advisory Council in both the northern and southern district of West Virginia. The center’s goal is to provide community leaders with a method of assessing threats to the community and identifying and prioritizing the critical facilities, critical infrastructure and events within the community.
They described the Homeland Security Comprehensive Assessment Model, a process to help communities identify critical infrastructures, apply known threats, develop priority assessment plans and conduct onsite vulnerability assessments. The Guard offers two to three day courses for community leaders. More information is available by contacting Capt. Randall Isom at 304-727 5068.
Using the information from the briefings, participants divided into small work groups to offer their insights to the West Virginia Development Office. Organizers expect to release preliminary findings as early as mid January. Reports will be available online atwww.WVEnergyRoadmapWorkshops.org.