This document discusses smart grids from a regulatory perspective in Colorado. It provides background on types of electric utilities in Colorado, trends in electric generation fuels from 1990-2008 showing increased natural gas and renewables. It defines smart grids as using bi-directional communication and control over the electric grid. The document outlines challenges for regulators around technology choices, standards, and ensuring benefits for both utilities and customers. It emphasizes the need for regulatory frameworks to promote innovation while managing risks and costs for ratepayers.

1. SMART GRID
A Regulatory Perspective
Matt Baker
Commissioner
Colorado Public Utilities Commission

2. Types of Colorado Electric Utilities
Colorado Energy Sales
by Type of Utility
Public
17%
Investor-Owned
55%
Cooperative
28%
2

3. Electric Generation Fuels in Colorado
1990-2008
Colorado Electric Generation
by Fuel Source 1990-2008
70,000
60,000
Renewable
50,000
Gigawatthours
NG
40,000
30,000 Hydro
20,000
Coal
10,000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
3

4. History of Colorado’s RPS
• Amendment 37 (2004)
– Voter initiated; 10% renewable energy by 2020;
separate solar requirement; net metering
• HB 1281 (2007)
– 20% renewables by 2020; 10% for municipal utilities
and cooperatives; solar requirement
• HB 1001 (2010)
– 30% by 2020; carve out for DG of 3% by 2020
(~650 MW PV)
4

5. Xcel Energy
• ~7000 MW peak load
• 2004-present
– 1,200 MW wind capacity
– 60 MW solar capacity
• By 2015
– Additional 750 MW wind capacity
– >250 MW new solar thermal
– >160 MW new photovoltaic
5

6. 6

7. PUC Smart Grid Activity

8. Smart Grid Defined
Source: Electric Power Research Institute. “The Green Grid: Energy Savings
and Carbon Emissions Reductions Enabled by a Smart Grid.” May 2008.

9. What is Smart Grid?
A Broad Definition:
 Overlay of Bi-Directional Communication and Control Mechanisms onto the
Electricity Grid
 Marriage of Electricity Grids with Information Technology
 Involves the entire electricity value chain:
 Generation
 Transmission
 Distribution
 Consumption
 Smart Grid is an enabler:
 Demand Response
 Efficiency
 Renewable Integration (central and distributed)
 Plug-in Hybrid Electric Vehicle (PHEV) Integration
 Consumer Choice

10. Smart Grid Enabled System
 Electricity providers will have greater access to
real-time information about the state of the
system from generation to consumption
 Electricity providers will have greatly increased
ability to control both supply and demand
 Consumers will have information about the cost
and environmental attributes of their electricity
and the ability to automate efficiency
Department of Energy, National Energy Technology Lab
http://www.netl.doe.gov/moderngrid/opportunity/vision_characteristics.html

11. 21st Century Electricity System
• Information rich
• Distributed design
and operation
• Clean tech priority
• Ubiquitous storage
• Automated
operations
• Highly
differentiated
energy services
Source: Steve Hauser, NREL

12. Transitional Challenges
 Complex array of potential technology choices.
 Smart Grid technology (equipment and software) will be a moving
target in the near term.
 Industry consolidation already occurring. Attrition likely as
dominant providers emerge.
 Interoperability standards are critical.
 Consumer education and adoption extremely important, very
uncertain.
 Regulatory landscape
 Balkanized regulations (Federal, State, local) will lead to
deployment and integration challenges.

13. The Built Environment
• How can smart grid lower costs?
• What revenue centers will it provide?
– HVAC
– Energy management
– Energy production
– PHEVs . . .
• How do codes and regulations enable progress?
– Implications to utility law?
• vertically integrated versus componentized approach?

14. Urban Context
• T&D efficiency gains
– i.e., distribution automation
• Building energy efficiency
• Microgrids
– small, integrated energy systems in which generation and load are co-
located
– can operate in parallel with the grid or intentionally islanded
• Energy Storage
– Utility scale or localized
• Renewables Integration
• Electric Vehicles
– Vehicle to Grid (V2G)
– Charging infrastructure
– Parking
Z. Ye, et al. Facility Microgrids, National Renewable Energy Laboratory
http://www.nrel.gov/docs/fy05osti/38019.pdf at 1.

15. Smart Grid: Regulatory Evolution
• Regulatory landscape must keep abreast of
innovation
– Should promote -- not stymie -- investment
• Investors
– Who has the expertise?
– Who takes the risk?
– Who owns smart grid infrastructure components?
• What codes, standards will apply?
• How to ensure cyber security?

16. Regulatory Incentives
• As with EE and DSM, utilities need incentives to
invest in technology that decreases sales
– Decoupling
– Dynamic rate structures
– But cost recovery for infrastructure investments
• Which investments require a CPCN?
• Which do not?
• Who pays?
– Minimize risk to ratepayers

17. Conclusions: Going Forward
• Smart grid offers promise and benefits
– But also some risks
• Do what makes economic sense now
– T&D upgrades are cost effective
• Come to us with pilots
• Allow third parties to work with business owners
and homeowners to achieve greatest gains

18. Questions?