Phase I Report:

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Phase I Report
:

Formation of Stakeholder
Process, Regional Plan
Integration and
Macroeconomic Analysis


DOE Award Project

DE
-
OE0000343


December
,

2011












EISPC NOT
E

TO REVIEWERS
:

The EISPC inserts found herein
include the entirety of EISPC
’s drafted and reviewed report.
T
he EISPC
inserts were placed

as separate paragraphs rather than integrated
as
individual phrases or sentences into the EIPC t
ext.
This
paragraph
-
insert method was used

for two reasons: (1) The tex
t, as shown, has
passed review within EISPC, and (2)
When
more
-
detailed integration
was

attempted, the editing became so messy that it was hard to read.
Since EISPC is most interested in Reviewe
rs
’ comments on content and
context, rather than “words”
,
the thought was that
roviding full
paragraphs should facilitate such feedback.
We recognize that

these

paragraph inserts

may result in
redundancy

between the EICP and
EISPC texts
.
EISPC
S
taff would be happy to work with EIPC to remove
such redundancy. Also,
i
f EIPC
and the SSC
agree

to the
additional
thoughts
conveyed
in the EISPC paragraphs, EISPC Staff would be
happy to work with EIPC to
“wordsmith” and smo
oth the text into one
cohesive

document.


Also, EISPC reminds Reviewers that the audience for this writing may
not be familiar with the workings of the Electricity industry. As such,
EISPC inserted a lot of background informational text to put this
report
to put it
into context for the
general
-
public reader.





Table of Contents

i

Table of Contents


Foreword

................................
................................
................................
................................
.........

iv

Executive Summary

................................
................................
................................
..........................

v

1.

Introdu
ction and Background

................................
................................
..........................

1

a)

Background

................................
................................
................................
.......................

3

i)

DOE Funding Opportunity Announcement


Overview and Purpose

..........................

3

ii)

Statement of Project Objectives


Phase I Deliverables

................................
...............

6

iii)

Scope of Work

................................
................................
................................
...............

6

iv)

Overview of Project Schedule

................................
................................
.......................

9

v)

Unique Study Characteristics

................................
................................
......................

10

2.

Study Results by Task

................................
................................
................................
.....

11

a)

Task 1


Stakeholder Steering Committee (SSC) Formation and Creation of Governance
Process

................................
................................
................................
...........................

11

i)

Assessment Phase (September 2009


February 2010)

................................
.............

11

ii)

Development of the Stakeholder Steering Committee (SSC) composition and role
(February 2010


August 2010)

................................
................................
..................

12

iii)

Development and Implementation of the SSC Selection Process (May 2010


July
2010)

................................
................................
................................
...........................

13

iv)

Development and adoption of the SSC Charter (February 2010


October 2010)

....

15


v) EISPC Tasks 1, 2 and 8

b)

Task 2


Integration of Regional Plans for the Year 2020

................................
..............

22

i)

The Roll
-
Up

................................
................................
................................
..................

23

ii)

Stakeholde
r Specified Infrastructure

................................
................................
..........

24

iii)

Transmission Limits to be used in Task 5 Work

................................
..........................

26


iv) EISPC Task 3

c)

Task 3


Production Cost Analysis of Regional Plans

................................
.....................

32

d)

Task 4


Selection of Macroeconomic Futures and Sensitivities

................................
...

32

i)

Futures Definitions

................................
................................
................................
......

32

ii)

Se
nsitivities

................................
................................
................................
.................

36

iii)

Data Inputs


Modeling Working Group Activities

................................
.....................

36

iv)

Transmission


The “Soft Constraint Methodology”

................................
..................

40


v) EISPC Task 6

e)

Task 5


Macroeconomic Modeling

................................
................................
...............

43

i)

MRN
-
NEEM Model Overview

................................
................................
.....................

43

ii)

Modeling Methodology

................................
................................
..............................

48

iii)

Modeling Results
................................
................................
................................
.........

51

iv)

Fu
ture by Future: Key Findings

................................
................................
..................

54

v)

High
-
Level Transmission Cost Estimates

................................
................................
.....

61

vi)

Additional Cost Estimates Requested by SSC

................................
.............................

63

f)

Task 6


Selection of Scenarios for Detailed Transmission Analysis

..............................

68


1. EISPC Task 7

3.

Description of
Three Scenarios for Study in Phase II

................................
.....................

75


Table of Contents

ii

a)

Scenario 1
-

Nationally Implemented Federal Carbon Constraint with Increased EE/DR
................................
................................
................................
................................
........

75

b)

Scenario 2
-

Regionally Implemented National RPS Scenario

................................
........

75

c)

Scenario 3
-

Business as Usual Scenario

................................
................................
.........

76

4.

Report Summary

5
.

Conclusions and Observations

................................
................................
.......................

77

a)

Technical Topics

................................
................................
................................
.............

89

b)

Pro
cess Topics

................................
................................
................................
................

89

c)

“Lessons Learned”

................................
................................
................................
..........

89

6
.

Appendices

................................
................................
................................
.....................

90

a)

Stakeholder Steer
ing Committee
and EISPC
Documents

................................
..............

90

b)

Report on Development of 2020 Model (Roll
-

Up Report)

................................
............

90

c)

Task 4

................................
................................
................................
..............................

90

d)

Task 5 Results

................................
................................
................................
.................

90

e)

Description of MRN/NEEM Modeling Tool

................................
................................
....

90

f)

Input Data

................................
................................
................................
.......................

90

g)

“Soft Constraint” Methodology

................................
................................
.....................

90

i)

Transfer Limit Hardening Methodology

................................
................................
.....

91

ii)

Ruthven/Hadley/Chattopadhyay Methodology


Building to a Target Capacity Facto
r
by Shadow Price

................................
................................
................................
..........

92

iii)

NGO Methodology


Building to a Target Flow Duration Threshold

.........................

94

iv)

Stakeholder Choices and Results

................................
................................
................

95

h)

High Level Transmission Cost Estimation Process

for Task 5

................................
.........

96

i)

Installed Capacity (GW) in 2030 for the EI by Capacity Type for each Future

...............

96



Figures


Figure 1: NEEM Regions and Transfer Limits

................................
................................
...............

27

Figure 2: Circular Flow of Goods and Services and Payment

................................
......................

44

Figure 3: NEEM Regions

................................
................................
................................
...............

46

Figure 4: Super Regions
................................
................................
................................
................

47



Tables


Table 1:

SSC Future Scenarios

................................
................................
................................
...

viii

Table 2:

Scenarios for Phase 2 Studies

................................
................................
........................

x

Table 3:

Installed 2030 EI Capacity (GW) by Capacity Type for Key Cases

...............................

52

Table 4:

2030 EI Generation as Percent

of EI Demand for Six Key Capacity Types, 2030 EI
Demand, and 2030 EI CO2 Emissions

................................
................................
.........

53

Table 5:

BAU: New Builds and Retirements by Capacity Type for the Eastern Interconnection


2015, 2020, and 2030 (GW)

................................
................................
.....................

55


Table of Contents

iii

Table 6:

High
-
Level Transmission Cost Estimates for each Future (Total EI)

...........................

63

Table 7:

Net Present Values for 2015
-
2030 (in $Billions)

................................
.........................

64

Table 8:

Results in $Bil
lions

................................
................................
................................
......

65





Foreword

iv

Foreword


As required by the Department of Energy Recovery and Reinvestment Act project, DE
-
FOA
-
00068, “Transmission Analysis and Planning”, this report describes the completion of Phase 1 of
Part A of the eastern interconnection portion of the project work scope.
The project began in
July 2010
and is intended to facilitate the President’s goals relating to clean electricity which
cannot be achieved without an adequate electricity delivery system.


The report was prepared by eight members of the Eastern Interconnection Planning
Collaborative (EIPC) who have contracted as Principal Investigators for this project. EIPC
comprises 26 of the major eastern utilities and was formed in early 2009.


This pro
ject has been carried out in close interaction with the Eastern Interconnection States
Planning Council (EISPC), partnered with the National Association of Regulated Utility
Commissions (NARUC) and the National Regulatory Research Institute (NRRI), who hav
e
contracted for Part B of the project work scope. EISPC comprises regulatory representatives
from the 39 states of the eastern interconnection with the District of Columbia and the City of
New Orleans.
While the detailed report on the EISPC work will be p
ublished as a separate
document,

this report includes results provided to EIPC as required for use in the Part A work
scope. The work has also benefited from close interaction with a Stakeholder Steering
Committee representing a wide range of interests.

In a parallel program, DOE is additionally
supporting independent but related work at selected National Laboratories. The EIPC is grateful
to DOE and to all the above participants for their contributions.


Phase 2 of this project is scheduled for completi
on by December 2012, following review of this
report and authorization by DOE to proceed.






Executive Summary

v

Executive Summary


The North American electrical power grid has evolved in five separate systems: the western,
Texas, eastern, Alaska,
and Quebec interconnections, which together serve more than 300
million people through 200,000 miles of high
-
voltage transmission lines. Of these
three,
the
eastern interconnection in the US covers the largest area, serves over 39 states with 70 % of th
e
US population, has the largest number of utility companies, and contains six of the eight North
American Electricity Reliability Corporation regions.


Growth in electricity use and the facilities needed to generate and transmit electricity to
consumers
represent continuing planning challenges for electricity companies, even with the
present economic slowdown and projections for expansion of energy efficiency and demand
side load management
.


Across the United States, states and planning regions are takin
g action
to ensure a reliable, cost
-
effective, and increasingly domestic energy supply to fuel the
country’s growth and chart a path toward energy independence. Pro
-
active, long
-
range
planning is an essential component of these efforts. This plan for a
n electric system that is
responsive to future needs must consider and integrate the legacy system with new technology
and advances while supporting the new market dynamics that include significant focus on
energy efficiency, demand response and Smart Grid

capabilities
.

In early 2009 a group of
Planning Authorities
1

in the east formed the Eastern Interconnection Planning Collaborative
(EIPC), with the goal of improving joint planning of interregional grid development. EIPC is the
first planning collaboration ever undertaken for the eastern interconnection, and member
ship
now totals 26 Planning Authorities.
Many advantages are anticipated from EIPC, including
support for the best interests of electricity consumers in the further expansion of reliable
electricity supply while addressing environmental goals.



DOE recognized the importance of inc
reased collaboration to meet
these

individual and
collective energy goals when it offered its Funding Opportunity Announcement (FOA) that led
to the creation of the Eastern Interconnection States Planning Council (EISPC
) and its
counterpart, the Eastern Interconnection Planning Collaborative (EIPC). The work envisioned
by the DOE would constitute the most ambitious examination to date of the electricity
generation and transmission “grid” facilities and potential across

the entire Eastern
Interconnection. Building power plants and transmission lines is expensive, time consuming
and has attendant impacts on America’s lands, air and water. A careful study of the facilities
that may be required to meet America’s future e
nergy needs, both efficiently and cost
-
effectively, is a worthy investment. To reflect the seriousness of this historic effort, this Study
employs state
-
of
-
the
-
art computer analyses to inform the decisions of policymakers, electricity
service providers a
nd others that bear an obligation to construct and maintain a robust power




1

Planning Authorities (aka Planning Coordinators) include RTOs, government power authorities and electric
utilities who have taken on th
e responsibility of coordinating, facilitating, integrating and evaluating transmission
facilities under the NERC Functional Model
.


Executive Summary

vi

system (i.e., “keeping the lights on 24/7”), deliver electricity at the lowest reasonable cost, and
comply with increasingly stringent environmental and other public policy goals.





Shortly after the formation of EIPC the members submitted a proposal for Part A of a
Department of Energy’s Recovery and Reinvestment Act project, FOA
-
00068, “Transmission
Analysis and Planning”, intended
to facilitate the

President’s goals relating
to clean electricity
which cannot be achieved without an adequate electricity delivery system. The FOA noted that
robust transmission and distribution networks are essential,
as a matter of national interest,

to
enable the development, integration, and delivery of new renewable and other low
-
carbon
resources, and the use of low
-
carbon electricity to displace petroleum
-
based fuels from the
transportation sector, and it was intended to support
development of gri
d capabilities in the
interconnection by preparing analyses of transmission requirements under a range of
alternative futures and develop interconnection
-
wide transmission expansion plans.



EIPC’s proposal for the eastern interconnection was accepted, as

were proposals by others for
the western and Texas interconnections, and a subgroup of nine EIPC members contracted to
perform the work. At the same time DOE accepted a proposal for Part B of the work from the
Eastern Interconnection States Planning Coun
cil (EISPC


EISPC is comprised of the 39 States in
the Eastern Electric Transmission Interconnection (Eastern Interconnection or EI)
2

plus the
District of Columbia and the City of New Orleans as well as the eight Midwestern and eastern
Canadian Prov
inces. EIPC consists of 26 Electric Transmission Planning Authorities in the
Eastern Interconnection as well as a broad consortium of interested Stakeholders coming
together as the Stakeholder Steering Committee (SSC), including EISPC. DOE’s interest,
en
couragement and funding provided an excellent opportunity for States, Planning Authorities
and Stakeholders to work together in studying potential public policy impacts on future costs
and the reliability of the energy grid under a number of hypothetical s
cenarios decades into the
future. These studies will provide a wealth of information for state, local, and federal
policymakers, utilities / load
-
serving entities, and a variety of other interested parties regarding
the provision of cost
-
effective and re
liable electric service throughout the Eastern
Interconnection in the years to come.


Please note that the information and studies discussed in this report are
intended to provide general information to policy
-
makers and
stakeholders but are not a
specific plan of action and are not intended to
be used in any State electric facility approval or siting processes. The
work of EISPC does not bind any State Regulator in any State proceeding

The Part A work scope comprises 12 tasks divided into two phases. In the first phase, an early
task was the formation of a Stakeholder Steering Committee (SSC) representing the states and a
balanced selection from industry and interested party sectors.

EI
SPC’s structure is built around




2

Please see Attachment D for a map showing the States in the Eastern Interconnection


Executive Summary

vii

collaboration and consensus
-
style decision making function.
3

The SSC structure also operates
by consensus.
4

After EISPC developed its structure, it moved into its first task, examining the
ten
-
year electric infrastructure

“Roll
-
up” plan prepared by EIPC. The “Roll
-
up” plan was a
stitching together of the various 10
-
year regional system and transmission plans


which would
be rolled up to provide the starting point for an interconnection
-
wide plan. Because EISPC (and
the
SSC) decided to use a twenty
-
year planning horizon (i.e., the year 2030) for its study, and
due to the differences in planning criteria across regions, it determined that adjustments to the
“Roll
-
up” plan were needed to more accurately reflect the electric

generation and transmission
infrastructure that is reasonably expected to be built within the planning horizon. The “Roll
-
up”
plan, along with these previously planned infrastructure adjustments, became known as the
“Baseline Infrastructure” and, as disc
ussed in greater detail below, was used as a basis for all of
the resource modeling conducted during Phase 1 of the project.



Another early task was the development by the Principal Investigators, for the first time, of a
combined grid model for
the interconnection based on a roll
-
up of the members’ expansion
plans for the year 2020. This model served as the basis for the EISPC and the Stakeholder
Steering Committee (SSC) for adaption as a
Stakeholder Specified (Baseline) Infrastructure
Model i
ncorporating an extended timeline to 2030 together with some revisions to future
generation and transmission assets. The SSI model then provided the basis for development of
eight future scenarios as shown in Table 1, each with nine sensitivities, for EIPC

to subject to
macroeconomic analyses.

After this first task was completed, EISPC

and the SSC
, along with EIPC, studied the background,
functions and structures of resource planning in order to have a solid knowledge base upon
which to start building a la
rge number of “Futures and Sensitivities” scenarios. This task began
with the question, “What major future policies could result in large impacts to the provision of
electric service?” EISPC and EIPC came up with a number of such policies, however, EIPC’
s
funding provided for a total of 8 major different public policy “Futures”. EISPC and EIPC
negotiated within each body and together, by consensus, decided to study the following
Futures:

1.

Business As Usual (BAU)


This Future continues today’s known and p
revailing polices
(the Future serves as a baseline for comparison to other Futures showing how their
focus would influence the BAU outcomes.)

2.

National Carbon Policy/National Implementation


This Future envisions a national
Carbon Emission Mitigation polic
y to be fulfilled by constructing no/low carbon

emitting energy generation facilities in the most productive generation resource areas




3

Although DOE’s FOA and EISPC’s stru
cture strongly encourages consensus and, in fact almost always reaches
consensus, EISPC also developed a “back up” voting structure that has operated effectively the few times it has
been used.

4

The SSC also developed a back
-
up voting structure when conse
nsus could not be reached.


Executive Summary

viii

and building transmission to connect those generation facilities to customers in the
Eastern Interconnection.

3.

National C
arbon Policy/Regional Implementation


This Future concentrates on fulfilling
a national Carbon Emission Mitigation Policy by constructing generation and
transmission within each region to serve the customers within that region.

4.

High Energy Efficiency/Dema
nd Response/Distributed Generation/Smart Grid


This
Future focuses on developing local programs to control load growth and mitigate the
need to construct large generation and transmission projects.

5.

National RPS/National Implementation


The Future assumes

the imposition of a 30%
Renewable Portfolio Standard which may be fulfilled by importing renewable energy
from the areas of the Eastern Interconnection with the highest renewable energy
resource potential.

6.

National RPS/Regional Implementation


This Futur
e assumes that local areas’ RPS
mandates are fulfilled by relying on renewable energy resource potential within each
region of the Eastern Interconnection.

7.

Nuclear Resurgence


This Future looks at favorably incenting the construction of
nuclear generation

over other generation technologies.

8.

National Carbon Policy/National Implementation with high Energy Efficiency/Demand
Response


This Future combines Future Nos. 2 and 4.



Future

Description

1
-

Business as Usual

Based on the Stakeholder Specified
Infrastructure model.

2
-

National Carbon Constraint
-

national

Cut carbon 42% in 2030, 80% in 2050 with
resources coming from best locations across
the eastern interconnection

3
-

National Carbon Constraint
-

regional

Cut carbon 42% in 2030, 80% in 2050 with
resources coming from best locations within
specified regions

4
-

Aggressive EE/DR/GD/Smartgrid

Based on original EIPC transfer limits

5
-

National Renewable Portfolio
Standard
-

nationally applied

30% national
RPS with renewables coming
from best locations across the eastern
interconnection

6
-

National Renewable Portfolio
Standard
-

regionally applied

30% national RPS with renewables coming
from best locations within specified regions

7
-

Nuclear Resurgence

Significant nuclear facilities developed in
Eastern Interconnection

8
-

Combined Federal Climate and
Energy Policy

Cut carbon 42% in 2030, 80% in 2050

Table
1
:
SSC Future Scenarios



Executive Summary

ix

In order to construct computer simulations for
each of these Futures, many assumptions and
data inputs were studied, debated

often vigorously , and agreed upon by EISPC and the SSC.
Once all of the assumptions and inputs were determined, EIPC provided EISPC and the SSC with
the opportunity (actually,

up to 72 opportunities) to change one input at a time to run a
“Sensitivity” which would show the implications of that changed input on the entirety of that
specific Future. For example, if a Future was modeled using a $4 natural gas price, a Sensitivi
ty
on that Future could be modeled changing just the natural gas price to a higher or lower cost to
see what impact it would have on the modeling results.


After EISPC and the SSC finished all of their Futures and Sensitivities selections in the spring of
2011, EIPC began the modeling process. As modeling results for each Future and each of the
sensitivities were completed and issued by Charles River Associates (CRA) and EIPC, throughout
the spring and summer, EISPC and the SSC reviewed and analyzed the r
esults. The modeling
provided an extraordinary amount of information. However, EISPC and the SSC concentrated
on the Futures and Sensitivities that would provide the most valuable insights to be used by
EIPC as the basis for three transmission build
-
ou
t “Scenarios.” These three transmission
planning analyses will constitute Phase 2 of this project.



Since transmission is the focus needed for Phase 2, EISPC and the SSC began analyzing how the
modeling results for each of the Futures and Sensitivities co
mpared and contrasted with each
other. They found that some of the modeling results could be grouped into similar sets of
results and that some results replicated others. This grouping (or clustering) analysis, for
example, showed that Futures 2, 5 and 8

would likely result in a large amount of transmission
being planned in Phase 2. A small amount of transmission would be built under Futures 1 and
4. Futures 3, 6 and 7 would result in a level of planned transmission somewhere in the middle
between the p
rior two groups. After much study and debate, analysis and debate, EISPC and
the SSC chose Future 8 to be used as a large transmission Scenario, Future 1 to be used as a
small transmission Scenario (and baseline) and Future 6 as a third transmission Scena
rio which
would result in planning a transmission build
-
out that was less than the first group and greater
than the second group.


A different selection of sensitivities was made for each of the futures. Sensitivities common to
several futures included high and low load growth, and changes in
nationa
l gas prices.



A proprietary Multi
-
Region National (MRN) economic model and the No
rth American Electricity
and Environment Model (NEEM) were used for the macroeconomic studies. In the NEEM model
the eastern interconnection is modeled as a simplified set of regions (bubbles) connected by a
simplified network of transmission (pipes). One
key assumption
5

of the NEEM model is that
transmission constraints between the bubbles are an input and the model normally locates
generation in the most cost effective location based on all inputs including those transmission




5

A second key assumption that will impact the Phase 2 work of the Planning Authorities is that, within the NEEM
“bubbles”, it is assumed that there are no transmission constraints. In Phase 2 any transmission constraints that
o
ccur within the bubbles will be identified and transmission may be needed to alleviate those constraints.


Executive Summary

x

constraints. In this study ef
fort, the “pipes” were allowed to expand for specific futures and
sensitivities to test whether cost
-
effective generation would be located differently if the
transmission system were expanded; these were known as “soft constraint” runs. For each of
these c
ases, the SSC reviewed the study results from the soft constraint runs and made a
decision as to how large the transmission pipes should be for subsequent analyses. If the
transmission pipes were larger than the original pipes the Planning Authorities work
ed together
to determine what type of added transmission would be needed to meet those pipe sizes and
developed a high level cost estimate for that added transmission. In addition to the
transmission, the NEEM model provided numerous outputs including gene
ration retirements
and additions by fuel type and region for review by the stakeholders.


In addition to the direct outputs from the NEEM model and the information provided by the
Planning Authorities on additional needed transmission, the SSC requested

additional cost
estimates that did not come directly out of the model. These included costs for significantly
increased energy efficiency, demand response and distributed generation and increased costs
for integrating significant amounts of variable gener
ation (mostly wind) into the electric grid
and were provided by
the

Modeling Working Group.


Using the results of the macroeconomic studies and additional information SSC/EISPC then
selected three scenarios as shown in Table 2 for EIPC to develop as
full interregional
transmission expansion models in the second phase of the work, following approval by DOE.
The second phase of the work is scheduled for completion and reporting by December 2012.


Scenario

Comments

Business as Usual

Based on Future 1

N
ationally Implemented Federal carbon
constraint

42% CO2 reduction by 2030 with flattened
price after that based on Future 8, 7% load
reduction due to modest increase in EE/DR

Regionally implemented national
Renewable Portfolio Standard

30% RPS based on F
uture 6

Table
2
:
Scenarios for Phase 2 Studies


This report describes the work performed in the first Phase of the Part A project by EIPC. While
some conclusions of the Part B work by EISPC are documented, in particular those on
which
subsequent work by EIPC depended, the detailed description of Part B work will be provided in
a separate report.


The results of the Part A Phase 1 work reported here are intended to provide information to
stakeholders, and particularly policy mak
ers, on the combinations of generation (including type
of resource and location) and high level transmission transfer increases needed between the
NEEM regions to support those generation resources. It will be apparent that any transmission
expansions indi
cated from the macroeconomic studies do not provide a transmission plan, and
the generic blocks and cost estimates do not represent likely project solutions. The choice of
transmission line types and voltages for expansion of the pipes is standardized and
does not

Executive Summary

xi

reflect regionally optimal choices. Costs of substations, transmission upgrades (especially of
lower voltage systems), financing, rights of way and routing, are details that are not included. In
Phase 2 of the work a more detailed transmission ana
lysis will be developed for the three
finalist scenarios, but even with the additional detail the results will be indicative only and not
representative of project solutions. Again many details such as transmission upgrades or
expansion below 230 kV will n
ot be considered. Additionally, although the results will be
consistent with NERC reliability criteria, the studies will not include requirements for full
compliance with NERC Standards. In all cases, any specific solutions will require study and
integrati
on in approved regional or interregional plans.

The identification of the three Scenarios completed the Phase 1 work. Looking back, EISPC,
EIPC and the SSC invested an extraordinary amount of time and effort and came up with
logically consistent and well
-
reasoned results for this first
-
ever exercise. Of course, whenever
anything is done for the first time, 20/20 hindsight reveals things that could have been adjusted
or changed. EISPC provides a list of such items in an effort to inform future work of thi
s type.
Moving forward into Phase 2, EISPC looks forward to continuing its collaboration with EIPC and
SSC in delving into the transmission study phase of this project. EISPC would also like to take
this opportunity to express its thanks to all of the EI
SPC members who served on EISPC
Committees, represented EISPC on the SSC and participated in EISPC and SSC Workgroups, as
well as SSC members and Stakeholders who assisted EISPC in its Phase 1 work. Among this
large group of people, there are a number of
non
-
EISPC members who have significantly
contributed to EISPC’s efforts and deserve individual recognition: Stan Hadley (Oak Ridge
National Laboratory), David Whiteley (EIPC), Catherine Morris, Caitlin Ellsworth and Margaret
Pinard (Keystone Center), Ralp
h Luciani (Charles Rivers and Assoc.), Roy Thilly (SSC Co
-
Chair),
David Meyer (DOE), Alicia Dalton
-
Tingler (NETL), J.T. Smith (MISO) and Tyler Ruthsven (National
Grid). Lastly, no such list is complete without thanking Lauren Azar who was instrumental in
EISPC’s creation and Phase 1 work before she left for DOE.



Following the completion of the first Phase of the project, it is possible to draw some initial
conclusions as follows:




This project represents a unique dialog with many different
stakeholder groups on
public policy and interconnection
-
wide transmission analyses to increase understanding
of alternative policy futures and the generation and transmission that might be needed
to support them. It does not require that one size fits all
, nor does it make any
conclusions regarding market driven versus vertically integrated utility models. It does
show how to accommodate differing stakeholder chosen policy futures. The experience
will help guide future and more focused efforts in addressin
g seams issues. EIPC will
continue to be a valuable contributor to both the utility and the regulatory functions in
their efforts to efficiently advance the electricity industry.


Executive Summary

xii



Although previous experience of the participants has been in more limited
int
erconnection planning exercises involving fewer participants, the Part A project work
involving a larger team over the full eastern interconnection is proceeding well.



The interaction between Part A and Part B participants also appears to be developing
ver
y well into a communication capability that will serve the nation well in the future.



We expect that the participants will use the experience for continuing and enhancing
future joint planning studies and that all of these efforts will help guide the US i
n
setting national goals for energy.







Introduction and Background

Page
1

1.

Introduction

and Background


The United States operates on electricity. Every day, we use electricity to carry on the business
of our careers and our lives. Not only do we use

electricity in nearly every facet of our lives,
what we use electricity for has fundamentally changed in just the past two decades. Twenty
years ago, devices like laptops, cell phones, electronic readers, flat
-
screen televisions were not
as prevalent or
as plentiful as today. Yes, these new technologies tend to be more energy
efficient than older technologies but this lower usage is more than offset by the sheer number
of today’s devices. When Americans hit the “on” button or flip the switch on these de
vices,
they expect the power to be there. And when it comes time to pay the power bill, Americans
need to have bills that are affordable, especially in today’s economic climate.

Historically, the grid evolved from small electric companies
-
each meeting their customers’
needs with their own resources. As the country became electrified and these individual
companies expanded, the system became an interconnected network.


Over time,
these
interconnections became so extensive that the electrical system for a large region of the U.S.
became referred to as the Eastern Interconnect, one of the three electrically distinct
interconnections in the lower continent. These transmission interco
nnections were primarily
built for reliability (i.e., to maintain electric service when a powerline was damaged by a storm,
etc.) rather than economics (whether electricity could be purchased at a lower price
elsewhere).


Until relatively recently, the con
cept of an integrated electric powerline “grid,”
with enormous potential for economic and reliability benefits, was far from a reality. The
historical focus by utilities on their own systems, rather than a broader regional perspective,
contributed to cycle
s in various places that were characterized as having either insufficient
generating capacity or excess capacity.


In both cases, the resulting resource mix was more
expensive for customers because power plants and powerlines weren’t planned, built, or
op
erated on a regional basis.


State commissions and utilities spent much of the mid 1970s
through the 1980s embroiled in contentious prudence hearings that still affect resource
decisions.


Some will recall that mergers between utilities, until very recentl
y, were justified by
the improved economics and reliability resulting from the merger of two generation and
transmission systems.


Many utilities joined centralized transmission operating systems and
markets offered by Regional Transmission Organizations o
r Independent System Operators to
better realize some of the intrinsic advantages of greater regional coordination in planning and
operations.

Regional, multi
-
regional, and Interconnection
-
wide studies and planning provide
the potential for improvements i
n reliability and significant economic benefits such as:





Optimizing the planning and construction of new or upgraded resources that improves
reliability, economic efficiency, and is consistent with changing federal and state polices
such as increasingly

stringent environmental rules.



Increased opportunities for states and federal agencies to work cooperatively on
planning, siting, and construction of new (or upgraded) infrastructure to better ensure
that necessary infrastructure is constructed in a timel
y manner.



Expanded opportunities to work with Planning Authorities and other stakeholders on
routine planning matters apart from contested proceedings.

If successful, this should

Introduction and Background

Page
2

expedite the planning, siting, construction, and cost recovery for new infra
structure.


All
of these benefits will reduce the risks and attendant rates paid by consumers.



A better understanding of both barriers and opportunities to encourage timely
construction of cost
-
effective resources.



A better mix of resources, greater state

and federal cooperation, involvement of PAs
and others, and overcoming barriers should reduce risk for entities that construct (or
upgrade) resources which should, in turn, translate into lower costs.



More effective utilization of demand response and ener
gy efficiency to reduce the need
for more capital intensive investments.



More effective integration of wind and other renewable resources.



Facilitate the deployment of more efficient transmission infrastructure such as Smart
Grid and advanced transmission
technologies.



Provide a foundation for increased electrification of the transportation industry


Throughout the Eastern Interconnection, entities listed on the NERC compliance registry as
Planning Coordinators

manage their individual local and regi
onal planning processes. The
foundation of these local and regional planning processes is built upon input and feedback
garnered from the stakeholders in their individual regions. The product of their effort generally
results in a regional expansion plan f
or each
Planning Coordinator

Area. These regional
expansion plans serve to provide insight on how the transmission system will evolve over a ten
year horizon. The Eastern Interconnection Planning Collaborative (EIPC) was initiated by a
coalition of regiona
l
Planning Coordinators

and represents a first
-
of
-
its
-
kind effort to involve
Planning Coordinators

in the Eastern Interconnection to model the impact of various policy
options determined to be of interest by state, provincial and federal policy makers and
other
stakeholders on the entire Eastern Interconnection. Their work will build upon, rather than
replace, the current local and regional transmission planning processes implemented by the
Planning Coordinators

and associated regional stakeholder groups wi
thin the entire Eastern
Interconnection.

Not only does the U.S. depend on reliable and affordable electricity, but during the past twenty
years or so, our Country has become cognizant of the environmental impacts of energy
production and the need to take
steps to mitigate certain impacts. This desire has lead to a
number of federal regulations on electricity generation emissions. States have also taken steps
to diversify their generation portfolio and lower the environmental impact of electricity
generat
ion by enacting State Renewable Energy Portfolio Standards or Goals (RPS). Currently,
over half of the States have such Standards or Goals. Although the details and criteria in each
State’s RPS programs may differ from programs in other States, all RPS p
rograms share the goal
of encouraging the development of electricity generation from renewable fuels.

As explained above, all of these additional and expanded uses and sources for electricity were
not envisioned when the existing transmission network (“grid”) was built in decades past. That
is not to say that the grid’s performance has not served all of t
hese expansions to electricity
service well. In fact, the grid has performed well (barring unforeseen and unavoidable natural
disasters, etc.) However, today’s electricity grid in the Eastern Interconnection as a whole is
generally being used at, or near
, full capacity. That means that the time is now to start thinking
about the size and type of grid that may be needed in the future, especially if new

Introduction and Background

Page
3

environmental laws, such as a national RPS or a national carbon
-
reduction law, are ever
enacted. It is
true that today’s economic climate may not be conducive to enacting such new
national electric policies. However, studying the potential impacts of various potential public
policies on electric generation and transmission infrastructures that might be im
pacted by such
future policies and actions is a prudent action to take at this time in order to be better informed
for future actions.


The EIPC received funding from the U.S. Department of Energy in 2010 to initiate a broad
-
based, transparent collaborative process to involve interested stakeholders in the development
of policy futures for transmission analysis. Although this analysis focu
ses on a timeline beyond
the ten
-
year horizon considered in existing regional planning processes
, the effort required to
perform this analysis is very much in line with the core function that EIPC had envisioned when
forming. This report serves to descr
ibe the work performed in the first phase of this analysis.


a)

Background


i)

DOE Funding Opportunity Announcement


Overview and Purpose

In June of 2009, the United States Department of Energy (DOE) issued a Funding Opportunity
Announcement (FOA)
,

DE
-
FOA000006
8
,

which

provided funding
6

to prepare analysis of
transmission requirements under a broad range of alternative futures.


The DOE
FOA covered
two specific topics.

Topic A was to fund Interconnection
-
l
evel
a
nalysis and
p
lanning work
while

Topic B was to fun
d
c
ooperation
a
mong States on
e
lectric
r
esource
p
lanning and
p
riorities.


The
DOE anticipated issuing three awards under each Topic corresponding to the three geographic
areas served by the three interconnections (Eastern, Western, and Texas).

In response
to DOE’s FOA, the 39 States in the Eastern Interconnection, along with the District
of Columbia and the City of New Orleans, came together to form the Eastern Interconnection
States Planning Council (EISPC). This was the first time that all of the Eastern

Interconnection
States had come together as a body to focus on pro
-
actively studying the future of its energy
grid. Because of the The Department of Energy (DOE) concurred with this study notion when it
issued its Funding Opportunity Announcement No. 000
00068 in 2009 (“the FOA”)
7
. DOE
envisioned a collaborative process among the States, the Electricity Planning Authorities (as
defined by the Federal Energy Regulatory Commission’s (FERC) Order No. 890) and interested
Stakeholder groups all with a diversi
ty of interests but the common goals of providing
Americans with reliable electricity at the most reasonable cost consistent with public policy
objectives. DOE structured its FOA as a two
-
sided structure in which the States in the Eastern
Interconnection
8

received funding to come together as a body to study interconnection
-
wide
resource and transmission needs under different theoretical future scenarios. The States’ work
would then flow into the other side of the FOA’s structure. This side would be compr
ised of
charging the Planning Authorities with two main tasks: (1) creating a structure by which




6

Funding
made available under the
American Recovery and Reinvestment Act of 2009 (ARRA

2009)
.

7

Please see Attachment A

8

Please see Attachment D


Introduction and Background

Page
4

Stakeholders could come together and, along with the States, create the aspects, inputs and
variables for a number of future scenariosand (2) conducting compu
ter modeling based on the
inputs from the States and Stakeholders.

In addition to this two
-
sided analysis structure, DOE’s FOA placed an additional charge on the
States. This charge was to conduct a number of studies and whitepapers on topics that would
inform the
analysis as well as future actions. The FOA suggested a number of topics but
mandated that only one topic be studied. The FOA mandated that the States conduct a study
that identifies potential clean energy
9

areas in each State in the Eastern I
nterconnection which
may be conducive to development by the States as Clean Energy Zones that could potentially
facilitate the development of clean energy infrastructure.

significant role that neighboring Canadian electric generation plays in electricity
service
provision in some northern States, the eight Canadian Provinces in the Eastern Interconnection
were also invited to join EISPC as ex officio members.

State Commissions, the District of Columbia, and New Orleans, while having differing statutory
a
uthorities, have a common requirement to ensure reliable and economic electric service for
their citizens. Consistent with this overarching statutory obligation, st
ates within the Eastern
Interconnection have worked col
laboratively to make this effort a su
ccess.


States, the District
of Columbia, and New Orleans, are all committed by statute to ensuring that cost
-
effective
transmission, generation, demand response, renewable energy, and energy storage are
planned and implemented in a timely manner.



Concu
rrently to EISPC’s creation, 26 of the Planning Authorities in the Eastern Interconnection
(serving over 95% of the customers’ needs in this area) came together to form the Eastern
Interconnection Planning Collaborative (EIPC). In compliance with their F
OA charges, the EIPC
created the Stakeholder Steering Committee (SSC), which groups all relevant Stakeholders into
eight Sectors with EISPC comprising one Sector. As agreed among DOE, EIPC and EISPC, EISPC
would hold ten of the 29 seats on the SSC. The o
ther Sectors would each hold three seats with
the exception of Canada which would hold one seat. The Stakeholders were grouped into the
following Sectors: End Users, Transmission Owners/Transmission Dependent Utilities,
Generators, Non
-
Governmental Organ
izations (i.e., Environmental Advocates), Other Suppliers,
Public Power, Canadian Generation and Transmission and EISPC.



In August of 2009, the
Planning Coordinators

in the Eastern Interconnection reached
agreement on the formation of the Easte
rn Interconnection Planning Collaborative (EIPC).

Under the collaborative, the NERC registered
Planning Coordinators

in the Eastern
Interconnection intended to “roll
-
up
,

analyze and, as needed, enhance
their respective
regional expansion plans
which were
developed under their FERC Order 890 approved regional
planning processes to form a model of the Eastern Interconnection.

This model would provide
a basis for interconnection
-
wide analysis that would feed information back into regional




9

Clean energy is defined generally as no
-
or
-
low carbon emitting electric generation. Examples would include
various renewable energy technologies, nuclear technologies and clean coal technologies with carbon capture and
storage. For more information plea
se see Attachment J.


Introduction and Background

Page
5

planning

processes and allow EIPC members to
coordinate

regional plans while also allowing
members to identify
potential
opportunities for transmission enhancements to increase the
ability to move power or reduce costs.

The core objectives served as the foundatio
n for a
proposal that EIPC submitted in August 2009 to perform the Topic A work under the DOE FOA.

All
26
EIPC members
10

support the work prescribed for Topic A
.

Eight

of the
26

members are
designated as Principal Investigators
11

who
bear

additional res
ponsibilities under the DOE FOA
with respect
to
project
execution,
management
,

and reporting.

PJM serves as the lead Principal
Investigator under the proposal.


The Topic A gran
t awarded to the EIPC became known as project DE
-
OE000043.
As part of its
proposal, EIPC had retained Whit
e
ley BPS Planning Ventures LLC to su
pport project
management
, The Keystone Center

(Keystone)

to support stakeholder process facilitation, and
Charles

River Associates (CRA) to support macroeconomic analysi
s and production cost studies.


Before this effort, the full complement of EI States have not had the opportunity to come
together face
-
to
-
face as a body and learn about each others’ views and challen
ges, nor have
the States had the need to come together to focus on the tasks set forth in the funding
agreement. This, in and of itself, has proven to be beneficial for all members to gain a greater
understanding of what States in other parts of the Easte
rn Interconnection are facing and to
gain a greater understanding of resource and transmission planning processes and methods.
The same may be said for the opportunity that the States have had to come together with the
Planning Authorities and Stakeholder
s to gain a greater understanding of their views and
challenges and, in turn, be able to impart the States views and challenges along with working
collaboratively on the Study tasks.

Once created, EISPC and the SSC each created their own internal
organizational structures, as
well as By
-
Laws governing meetings, communications, governance and collaborative decision
-
making processes.
12

Further information regarding EISPC’s organizational structure is provided
in the next Section of this report. More information on the SSC and its organizational structure
may be found in EIPC’s Phase I report. The report may be found at
www.eipconline.com

and is
included by reference throughout this report.

EISPC held its first meeting in mid 2008 to begin its organizational process and to put together
information to use in its response to DOE’s FOA. EISPC fil
ed its request for funding pursuant to
the FOA during the fall of 2008 and DOE awarded funding to EISPC later in the fall of 2008 and
the beginning of 2009. EIPC followed roughly the same timeline in submitting its funding




10

As of December 1, 2011, the EIPC Members include
Alcoa Power Generating
,
American Transmission Co.
,
Duke
Energy Carolinas
,
Electric Energy Inc.
, Entergy Services, E.ON,
Florida Power & Light
,
Georgia Transmission Corp
,
IESO,
Internat
ional Trans. Co.
, ISO New England,
JEA
,
MAPPCOR
,
Midwest ISO
, the Municipal Electric Authority of
Georgia (MEAG), NBS, New York ISO,
PJM

Interconnection,
PowerSouth

Energy Coop
,
Progress Energy Carolinas
,
Progress Energy Florida
, South

Carolina Elec. & Gas
,
Santee Cooper
, Southern Company,
Southwest Power Pool

and
Tennessee Valley

Authority.

11

Principal Investigators for the project include Entergy Services, ISO New England, MAPPCOR, Midwest ISO, New
York ISO, PJM Interconnection, Southern Company, and Tenn
essee Valley Authority.

12

Please see Attachment E for EISPC’s By
-
Laws.


Introduction and Background

Page
6

request and receiving its fundin
g award. After negotiating the terms of the two funding
agreements, along with separate but consistent Statements of Project Objectives (SOPO) and
Project Management Plans (PMP), among DOE, EIPC and EISPC, EISPC and EIPC each began to
perform their own ta
sks in 2009. Each of the SOPOs lists a number of tasks (with sub
-
tasks)
that must be fulfilled to comply with the terms of the funding agreement. Each of the PMPs
provides guidance on how and when the tasks are expected to be performed and lists a number

of milestones and deliverables. EISPC’s SOPO and PMP are included in this report at
Attachments B and C respectively. EIPC’s SOPO and PMP are addressed in their report
.

This historic opportunity afforded by the Department of Energy’s Funding Opportuni
ty has
enabled state governments, utilities, and a diverse group of interested parties in the Eastern
Interco
nnection to engage in a state
-
of
-
the
-
art effort to shape the resource future of the
Eastern Interconnection.

All of the participants in this first

of its kind endeavor recognize that
the Nation’s economic strength is integrally tied to the electric power industry and all share the
aspiration of providing reliable electric power at the lowest delivered cost consistent with
public policy objectives.




ii)

Statement of Project Objectives


Phase I

Deliverables

for EIPC and for EISPC


The EIPC
and EISPC
proposal
s
each
incorporated
Statement
O
f Project Objectives (SOPO) as
required under the terms of the DOE FOA
.
Each

SOPO

was originally submitted as part of the
proposal in August 2009 and
was
then revised during contract negotiations with the DOE in
February 2010
. T
he revised version
of the
two
SOPO
s

are

included
in the Appendix to this
Report
.



The EIPC proposal inco
rporated a Statement
of

Project Objectives (SOPO) as required under the
terms of the DOE FOA
.


T
wo

objectives

were

stated in the SOPO
:



1.

E
stablish processes for aggregating the modeling and regional transmission expansion
plans of the entire Eastern Inte
rconnection and to perform interregional analyses to
identify potential conflicts and opportunities between regions.

This interconnection
-
wide analysis was to serve as a reference case for modeling various alternative grid
expansions based on the scena
rio
s developed by stakeholders.


2.

P
erform

scenario analysis as guided by broad

stakeholder input and
the
consensus
recommendations of a stakeholder committee formed under the proposal.

The analysis
would serve to aid federal, state and provincial regulators

a
s well as
other policy makers
and stakeholders in assessing interregional options and policy decisions.


iii)

S
cope

of

Work



Introduction and Background

Page
7

The scope of work proposed

by the EIPC
in the SOPO was
divided

into 13
tasks with two
phases.

Phase I

included the following tasks:




Task 1


Initiate Project

o

EIPC to meet with Topic B Awardee (EISPC) to discuss interaction between entities
and to gather feedback on Stakeholder Steering Committee (SSC) structure.

o

EIPC directed t
he Keystone Center to facilitate the formation of the S
SC a
nd any
necessary subgroups.



Task 2


Integrate Regional Plans

o

EIPC to generate Roll
-
up Model using regional plans for year 2020.

o

EIPC to perform inter
-
regional analysis on Roll
-
up Model.

o

EIPC to indentify conflicts between plans and/or opportunities for re
gional plan
improvement.



Task 3


Production Cost Analysis of Regional Plans

o

EIPC directed
CRA to perform production cost analysis on Roll
-
up Model
.



Task 4


Macroeconomic Futures Definition

o

SSC to reach consensus on eight
F
utures (each
F
uture having up to nine
S
ensitivities
totaling 80 cases).



Task 5


Macroeconomic Analysis

o

CRA to perform macroeconomic analysis and report on each
F
uture and
S
ensitivity.

o

EIPC to produce high level transmission cost estimates for each of the
eight

F
utures
scenarios.



Task 6
a


Expansion Scenario Concurrence

o

EIPC to assist SSC in selecting three scenarios from the Task 5 work as options for
the transmission expansion, analysis, and costing work in
Phase II

of the project.



Task 6b


Interim Report

o

EIPC to prod
uce interim project report on
Phase I

activities.


Phase II

of the project proposed
developing

and analyzing transmission expansion options for
the three scenarios selected by the SSC in Task 6a at the end of
Phase I
.

For each of the three
scenarios
selected, the work in this phase proposed the following tasks:




Task 7


Interregional Transmission Options

Development

o

EIPC to modify powerflow
models

built in Task 2 to create interregional
transmission expansion models for each scenario
13
.



Task 8


Reliability Review

o

EIPC to perform reliability analysis consistent with NERC reliability criteria on each
scenario.





13

This activity is i
ntended to provide high
-
level interconnection
-
wide expansion analysis and not substitute for
regional planning processes or state, local or provincial siting
processes
. The models

will not identify specific
routing, siting, environmental
,

or other related issues associated with any potential enhancements to the grid
coming out of this task.


Introduction and Background

Page
8



Task 9


Production Cost Analysis of Interregional Expansion Options

o

CRA to perform economic analysis using production cost modeling for ea
ch
scenario.



Task 10


Generation and Transmission Cost Estimates

o

EIPC to perform high level cost estimates for transmission expansion options for
each scenario.

o

Costs associated with resource additions and retirements will be developed by CRA
for each sce
nario.



Task 11


Review of Results

o

EIPC to produce a draft report on the
Phase II

effort.

o

EIPC to present the results of the analysis, respond to questions, and solicit input
from stakeholders.

o

SSC to provide consensus
-
based comments on the draft report.



Task 12


Phase II

Report

o

EIPC, with CRA providing technical support, to review the input received from the
SSC and address it in the final report.


There have been two core changes to the SOPO initiated by the SSC and supported by DOE.
The first change
was on in Task 2 regarding the development and use of the Roll
-
up Model.
Following study of the detailed aspects of the various regional plans that EIPC utilized for the
Roll
-
up Model development, the SSC requested that EIPC revise the Roll
-
up Model to co
nstruct
a Baseline Infrastructure Model. Through a formal process initially led by EISPC, the SSC agreed
to a revised set of transmission and generation assets that would serve as t
he basis for
a
revised Roll
-
up Model for 2020. This new Baseline Infrastr
ucture Model replaced the Roll
-
up
Model and served as the starting point for all of the remaining DOE project work.


The second change to the SOPO related to the production costing work that was planned under
Task 3 in Phase I of the project. Under the or
iginal EIPC proposal, a production cost analysis
was to be performed on the integrated regional plans that served to create the 2020 Roll
-
up

Model. With the
replacement of the Roll
-
up Model by a stakeholder derived Baseline
Infrastructure Model as the sta
rting point for further analysis, and with the decision to consider
a 20 to 25 year time horizon rather than the 10 year horizon assumed in the integrated regional
plans used to derive the Roll
-
up Model, the SSC agreed that this work was no longer providin
g
value to the project. At the request of EIPC, the DOE, in May 201
1,
cancelled Task 3 of the
SOPO.


EISPC’s SOPO provides a Scope of Work divided into five main task subjects:



Identify potential Energy Resource areas or zones in the Eastern Interconnecti
on of
particular interest for low
-
or no
-
carbon electricity generation development.



Conduct studies or whitepapers on the integration of variable renewable technologies,
the availability of baseload renewable and other low
-
carbon resources and other topics
to enable state participation in regional and interconnection
-
wide analyses.



Develop inputs to populate the EIPC analyses.


Introduction and Background

Page
9



From their unique positions, the EISPC member should “provide insight into the
economic and environmental implications of the alterna
tive electricity supply futures
and their associated transmission requirements developed…” by EIPC’s process.



Demonstrate a process for reaching consensus decisions, etc.

To fulfill the five bulleted tasks in the scope of work, eight tasks (with sub
-
tasks
) were
developed to ensure that EISPC’s objectives and requirements were fulfilled. EISPC’s main tasks
are:

1.

Establish the EISPC structure and organization and manage the project
.

2.

Expand the Council members’ knowledge base regarding resource and
transmission
planning in order to facilitate consensus decisions on inputs to the EIPC process via
the Stakeholder Steering Committee (SSC).

3.

Assemble data for EISPC’s analysis of EIPC’s “Roll
-
up” energy infrastructure
integration case and reach consensus o
n feedback and inputs into the infrastructure
that should be used as the baseline for the future scenarios
.

4.

Conduct studies to facilitate further refinement of the modeling inputs and future
scenarios as well as to inform other processes. EISPC must cond
uct a study to
identify potential low
-
or
-
no carbon energy resource areas for potential development
into energy zones. EISPC will also conduct other studies

5.

Preparation of whitepapers on topics pertinent to this project as well as to inform
other processes
.

6.

Reach consensus on EISPC’s positions on the future scenarios on which
macroeconomic analysis would be conducted by EIPC.

7.

Reach consensus on EISPC’s positions on the transmission build
-
out scenarios to be
conducted by EIPC.

8.

Participate in EIPC and SSC act
ivities.



E
ISPC Tasks will be discussed after each of their counterpart EIPC Tasks with the exception of
EISPC Tasks 4 and 5. These Tasks are EISPC
-
only Tasks. As such, they are outside of the scope
of this
EIPC Phase 1 report. EISPC will report
separ
ately
on Tasks 4 and 5 at the
conclusion

of
those Tasks.


iv)

O
verview of Project Schedule


T
he DOE FOA

specified that

the project work was to be completed by June 30, 2013.


The
restructured EIPC proposal that was submitted in February 2010 called for
Phase

I

work to be
complete by June of 2011 and for
Phase II

work to be complete by June of 2012, well ahead of
the June 2013 deadline.

A revised schedule was issued
in mid
-
2011 that moved completion of
Phase I

of the project to December 2011 and completion of
Phase II

to December 2012, still
well ahead of the original June 2013 deadline set in the DOE FOA.

The
extension to
the original
schedule was the result of EIPC support of SSC effort
s to

create
the

Baseli
ne Infrastructure
Model, extensive stakeholder education regarding the operation
of
and input assumptions
needed for the macroeconomic models
,

an
d by the additional time necessary for

the SSC to
reach agreement on the futures and associated sensitivities f
or the Task 5 work.

The

modifications to the schedule were supported by
the
DOE

and by the SSC as they

served to

Introduction and Background

Page
10

allow the
EISPC and
SSC to make decisions essential for supporting the stakeholder process.

EIPC
anticipat
es no

any further delays in the pro
ject schedule
,

at this point
. Even in the event
of modest schedule changes during the remaining work, EIPC is
confident that the original June
2013 deadline spelled out in the
DOE FOA

can be met
.



v)

Unique Study Characteristics


[TO BE DEVELOPED]



First of
its kind effort for the EI



Complexity and differences among the regions should be accommodated



Consider Phase I in context of overall Project


to develop transmission alternatives



Phase I was not an end unto itself



SSC modification of roll
-
up caveats



SSC
negotiated input assumptions need to be placed into context



Macroeconomic models are used for many broad ranging studies

were propsed to
assist stakeholders to determine the final three Scenarios

NOT as an end unto
themselves



Because of the complexity of f
actors involved in this type of study, there was never any
intent to “optimize” or “co optimize” every possible assumption



Stakeholder consensus process was somewhat unwieldy but generally worked pretty
well in that needed decisions were eventually made



Pr
ocess has led to a better understanding of regional similarities and differences and to
the degree of complexity involved in an analysis of such a broad and diverse region



Process has provided all participants with a great deal of information that should b
e
useful if similar studies are to be done in the future




Study Results By Task

Page
11

2.

Study

Results by Task


a)

EIPC
Task 1


Stakeholder Steering Committee (
SSC
)

Formation and Creation of
Governance Process


As the
Topic B awardee
, EISPC representation in the SSC was predetermined by DOE contract to
constitute one
-
third of the total SSC membership, with the significant role of coordinating the
input of 39 states, the District of Columbia, and the City of New Orlea
ns and working
collaboratively with other SSC segments to be formulated to provide a coherent stakeholder
voice to support the research, modeling, and deliberations of the EIPC project. The EISPC also
accepted a number of research tasks in its contractual

relationship with DOE. In parallel with
the development of the Stakeholder Steering Committee (SSC), the EISPC has established its
own governance structure and decision
-
making processes. Therefore the EIPC, its
subcontractors, and the EISPC have collabo
ratively coordinated meeting schedules, work
products, and decision
-
making.


The SSC was formed in a four step process: 1) assessment 2) development of the SSC
composition and role, 3) development and implementation of the SSC selection process, and 4)
d
evelopment and adoption of the SSC Charter. The formation of the SSC was a significant
milestone as the first time that stakeholders from all major interest groups across the Eastern
Interconnection came together to discuss long
-
term resource options and
related infrastructure
needs in the 39
-
state region, the District of Columbia, the City of New Orleans, and the Eastern
Canadian provinces.


i)

Assessment
Phase (
September 2009


February 2010)


EPIC determined

that an assessment be conducted to fully develop the SSC make
-
up and its
process for engaging a wide range of stakeholders.
Acting for EIPC, the
Keystone
Center
(Keystone)
conducted an initial round of interviews with known stakeholders active in the
ene
rgy and transmission fields. These interviews produced both information for understanding
stakeholders’ interests as well as additional names of people who were knowledgeable and had
a stake in the development of the transmission system in the Eastern Int
erconnection. A second
round of interviews was supplemented by EIPC
Planning Coordinators
’ lists of stakeholders
currently

participating in each of their FERC Order 890 transmission planning processes.


As part of the assessment phase,
EIPC

planned and hos
ted two webinars to inform interested
parties about
its

evolving work plan and the ove
rall objectives of the project.

EIPC
reviewed the

plan of work
set forth in the bid documents
during the October
2009
webinar and answered a
number of questions. Each we
binar was attended by over 200 participants


EIPC

created
a
website
at this early stage to provide stakeholders with easy access to webinar
materials, EIPC materials submitted to DOE, and general information about the project.

Study Results By Task

Page
12

Listservs were established f
or all
registered
stakeholders to receive notification of project
events and postings.


ii)

Development of the Stakeholder Steering Committee (
SSC
) composition and role
(February
2010


August 2010)


Based on

the results of stakeholder interviews

and analysis

of
the FERC

Order
89
0 stakeholder
committee process, i
n coordination with EIPC,
Keystone

drafted a straw proposal for
composition of the SSC
. Keystone also designed
a
proposed
process for fairly and transparently
selecting

individuals to serve on
the
Committee
.

Guiding principles for the stakeholder process
and the SSC included the following:




The stakeholder process should be inclusive
so

the interests of all relevant stakeholders
should be represented within
each

sector.



The process should build
upon the existing stakeholder FERC

Order 890
-
approved
processes.



The
SSC
should
be a manageable size and allow decisions to be made through
consensus
.



There should be balanced representation among the sectors



State representatives
should

have at least one
-
third of the total SSC seats.



There
should

be
ongoing communication
s among
SSC members and their interest group
sectors.


This proposal for composition of the SSC and its voting process was reviewed by DOE, EIPC and
sector representatives at various
time
s

during this period. The proposal was presented for
comment during two webinars in March 2010. Finally, the proposal was discussed at length
during the April 2010 Stakeholder meeting, and finalized through a series of open conference
calls.


The SSC
structure was approved in April 2010

as follows
:





Transmission Owners and Developers:
3 members.

See eligibility criteria
on page 2
at
http://eipconline.com/uploads/EIPC
-
SSC_Des
cription_FINAL.pdf




Generation Owners and Developers:
3 members; minimum 1 renewable and 1 non
-
renewable



Other Suppliers

(
e.g.,

power marketers, energy storage, distributed generation): 3
members; minimum 1 demand
-
side resources representative



Transmission
-
Dependent Utilities, Public Power and Co
-
ops

(
e.g.,

municipal utilities,
rural co
-
ops, power authorities): 3 members; minimum 1 public power or cooperative
transmission
-
dependent utility (TDU)



Non
-
Governmental Organizations

(NGOs): 3 members



End Users

(
e.
g.,

small consumer advocates, large consumers): 3 members; minimum 1
state consumer advocate agency


Study Results By Task

Page
13



State Representatives

appointed by the EISPC: 10 members



Canadian Provincial Representatives

appointed by Canadian Provinces: 1 member


iii)

Development and
I
mpl
ementation of the SSC
S
election
P
rocess

(
May 2010


July 2010)


A key principle for selecting SSC members was
for

the process

to

include all interested
stakeholders. To ensure this,
EIPC directed
Keystone

to

undert
ade

a number of activities to
communicate with the stakeholder community. Listservs were created for all
registered

stakeholders
,

and a website was created as a repository for all relevant documents.
EIPC

instituted a monthly newsletter summarizing decisions

and posting upcoming events for
distribution to the listserv

and

create
d

an on
-
line process for selection of Sector Caucus and SSC
members and hosted a webinar to explain the selection process.


The SSC selection process was designed in two phases. First, each region of the East
ern
Interconnect (see Text box)

selected three representatives from each of four sectors
(Transmission Owners and Develop
ers, Generation Owners and Developers; Other Suppliers;
and TDU, Public Power and

Co
-
ops
)
.

The End User and NGO sectors selected their
representatives from across the EI.

These individuals were the designated Sector Caucus
members.

The EISPC

developed t
heir own selection
process to appoint the state SSC members.


To begin
the Sector Caucus selection process,
EIPC

asked
that S
ector
C
oordinators
be appointed from
each region
and sector (7 regions and 8 sectors or 56 coordinators,
with some being responsibl
e for more than 1 sector and/
or region).

Th
eir

contact information was posted
on the
web site
to allow the broad
er

stakeholder community to
learn about and participate in the process via e
-
mail and/or
direct communication with
the sector/region coordinat
or.


In addition to contact information, each region
al

and
sector
representatives posted

their process

for selecting
representatives
, the SSC candidates,

dates and times for

voting/ decisional meetings, and
voting and consensus
rules and procedures
.

Con
cerns and
objections to the
process were
required to be
resolved b
efore voting could
take place.


Region
al
/ sector

representative
s were
encouraged to
host
preparatory
for
ums for

candidates to