Utility Issues and the Site Selection Process Webinar

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Utility Issues and the SiteUtility Issues and the Site
Selection ProcessSelection Process
Basic Training for our Economic Development AlliesBasic Training for our Economic Development Allies

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Utilities – A Brief HistoryUtilities – A Brief History
The Early DaysThe Early Days
Independent Generators and DistributorsIndependent Generators and Distributors
Competition for customersCompetition for customers
A tangled web of power linesA tangled web of power lines
Read a detailed history at theRead a detailed history at the Edison Electric Institute web siteEdison Electric Institute web site
http://www.eei.org/industry_issues/industry_overview_and_statistics/history/index.htmhttp://www.eei.org/industry_issues/industry_overview_and_statistics/history/index.htm

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Consolidation came in the 1920sConsolidation came in the 1920s
• Large electric power holding companies were formedLarge electric power holding companies were formed
• By 1932, eight holding companies controlled 73% of U.S.By 1932, eight holding companies controlled 73% of U.S.
investor-owned electric businessinvestor-owned electric business
There was:There was:
• little effective state regulationlittle effective state regulation
• no federal regulationno federal regulation
• holding companies overcharging subsidiariesholding companies overcharging subsidiaries
• expenses being passed on to customersexpenses being passed on to customers
What followed is known as “The Regulatory Compact”What followed is known as “The Regulatory Compact”
• Abuses were corrected with the passage of the 1935 FederalAbuses were corrected with the passage of the 1935 Federal
Power Act and the Public Utility Holding Company ActPower Act and the Public Utility Holding Company Act
(PUHCA).(PUHCA).

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The Regulatory CompactThe Regulatory Compact
 Is a covenant or contract between the authority of stateIs a covenant or contract between the authority of state
governments, represented by public utility commissions (i.e. NYSgovernments, represented by public utility commissions (i.e. NYS
Public Service Commission), the Federal Energy RegulatoryPublic Service Commission), the Federal Energy Regulatory
Commission (FERC) and in some cases local governments andCommission (FERC) and in some cases local governments and
investor owned utility companiesinvestor owned utility companies
 In exchange for the obligation to provide service to all customers inIn exchange for the obligation to provide service to all customers in
a particular “territory”, investor owned electric utilities are given aa particular “territory”, investor owned electric utilities are given a
territorial monopoly on service and allowed to earn a limited profit.territorial monopoly on service and allowed to earn a limited profit.
State regulators have historically set prices at rates that reflect theState regulators have historically set prices at rates that reflect the
cost of building power plants and putting up transmission andcost of building power plants and putting up transmission and
distribution systems (the wires). Profits have reflected the cost ofdistribution systems (the wires). Profits have reflected the cost of
capital.capital.
 This established the current structure of the industry. In addition toThis established the current structure of the industry. In addition to
investor-owned utilities, public utilities and co-ops operate in thisinvestor-owned utilities, public utilities and co-ops operate in this
system.system.

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Utility RegulationUtility Regulation
The FERCThe FERC
 The Federal Energy Regulatory CommissionThe Federal Energy Regulatory Commission
regulates and oversees energy industries in theregulates and oversees energy industries in the
economic, environmental, and safety interests of theeconomic, environmental, and safety interests of the
American public. FERC is the federal agency thatAmerican public. FERC is the federal agency that
regulates electricity transmission and wholesaleregulates electricity transmission and wholesale
electricity sales in interstate commerce. FERCelectricity sales in interstate commerce. FERC
implements the laws of Congress through orders andimplements the laws of Congress through orders and
rulemakings on electricity policy. For detailedrulemakings on electricity policy. For detailed
information use this linkinformation use this link http://www.ferc.gov/about/about.asphttp://www.ferc.gov/about/about.asp

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State RegulatorsState Regulators
 Under State law, Public Service (or Utility)Under State law, Public Service (or Utility)
Commission members have the obligation to ensureCommission members have the obligation to ensure
the establishment and maintenance of utility servicesthe establishment and maintenance of utility services
as may be required by the public convenience andas may be required by the public convenience and
necessity, and to ensure that such services arenecessity, and to ensure that such services are
provided at rates and conditions that are just,provided at rates and conditions that are just,
reasonable and nondiscriminatory for all consumersreasonable and nondiscriminatory for all consumers
 In New York State the regulator is the New York StateIn New York State the regulator is the New York State
Public Service CommissionPublic Service Commission http://www.dps.state.ny.us/http://www.dps.state.ny.us/

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DeregulationDeregulation
 Is the elimination of some or all regulations from a previouslyIs the elimination of some or all regulations from a previously
regulated industry or sector of an industry.regulated industry or sector of an industry.
 In the 1990s the New York State Public Service CommissionIn the 1990s the New York State Public Service Commission
(PSC) opened the State's electric industry to competition.(PSC) opened the State's electric industry to competition.
 Utilities divested their generation assets and a spot market forUtilities divested their generation assets and a spot market for
electricity was established.electricity was established.
 Changes in the electric market allow customers to choose theirChanges in the electric market allow customers to choose their
supplier of electricitysupplier of electricity.. Utilities deliver power to customers, underUtilities deliver power to customers, under
regulation by the NYS-PSCregulation by the NYS-PSC

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Not all states have implemented deregulationNot all states have implemented deregulation

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Prior to deregulation the Utility operated as aPrior to deregulation the Utility operated as a
vertically integrated, regulated monopoly that:vertically integrated, regulated monopoly that:
 Built and operated power plantsBuilt and operated power plants
(hydro-electric, nuclear, gas combined cycle, coal-fired)(hydro-electric, nuclear, gas combined cycle, coal-fired)
 Transmitted energy over long distancesTransmitted energy over long distances
(transmission towers and wires)(transmission towers and wires)
 Distributed energy to homes and businessesDistributed energy to homes and businesses
(electric poles and wires)(electric poles and wires)
 Provided ancillary servicesProvided ancillary services
(balancing of generation supply, managing the grid)(balancing of generation supply, managing the grid)
 Provided metering, billing and customer servicesProvided metering, billing and customer services

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After RestructuringAfter Restructuring
UnregulatedUnregulated RegulatedRegulated
Independent Power ProducersIndependent Power Producers Energy Delivery CompaniesEnergy Delivery Companies

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Electric Delivery SystemElectric Delivery System

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Overhead Electric Distribution SystemOverhead Electric Distribution System
Overhead
Transformer
Primary
Distribution
Feeders
Secondary
Distribution
Lines
Telephone
CATV

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Basic Power TermsBasic Power Terms
 Amp = the number of electrons movingAmp = the number of electrons moving
along a conductor path (flow)along a conductor path (flow)
 Voltage = the ‘force’ at which energy flowsVoltage = the ‘force’ at which energy flows
(pressure)(pressure)
 Watt = one AMP at a pressure of one VOLTWatt = one AMP at a pressure of one VOLT
(Watts = Volts x Amps)(Watts = Volts x Amps)
 Kilowatt (kW) = 1,000 WattsKilowatt (kW) = 1,000 Watts
 Megawatt (mW) = 1,000,000 Watts =1,000 kWMegawatt (mW) = 1,000,000 Watts =1,000 kW

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Basic Power TermsBasic Power Terms
 Demand = rate of energy consumption (kW)Demand = rate of energy consumption (kW)
 Kilowatt Hour = quantity of energy (kWh)Kilowatt Hour = quantity of energy (kWh)
 Load Factor = the ratio of average load to peak load in aLoad Factor = the ratio of average load to peak load in a
periodperiod
 Power Factor = ratio of ‘true power’ to ‘total powerPower Factor = ratio of ‘true power’ to ‘total power
PF =PF = kWkW
kVakVa

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Information Needed for a Capacity Assessment andInformation Needed for a Capacity Assessment and
Rate Quote/Bill EstimateRate Quote/Bill Estimate
Basic Information NeededBasic Information Needed
 Site Location (address, intersection or map)Site Location (address, intersection or map)
 Peak Demand in Kilowatts (kW)Peak Demand in Kilowatts (kW)
 Energy Consumption in Kilowatt Hours (kWh)Energy Consumption in Kilowatt Hours (kWh)
 Hours of Operation/Days per WeekHours of Operation/Days per Week
 Delivery Voltage at Site(s)Delivery Voltage at Site(s)
Distribution -Distribution - Secondary @ 2.2 kV or Primary @ 13.2 kVSecondary @ 2.2 kV or Primary @ 13.2 kV
Transmission -Transmission - Sub-transmission @ 34.5 kV or TransmissionSub-transmission @ 34.5 kV or Transmission
@ 69 kV, 115 kV@ 69 kV, 115 kV

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Information Needed for Energy Intensive OperationsInformation Needed for Energy Intensive Operations
MORE DETAILED INFORMATIONMORE DETAILED INFORMATION
Load CharacteristicsLoad Characteristics (type of operation)(type of operation)
Type of Equipment to be UsedType of Equipment to be Used (motor sizes)(motor sizes)
Power Quality NeedsPower Quality Needs (is a dual feed required?)(is a dual feed required?)
Connected LoadConnected Load (kilovolt amperes - kVa)(kilovolt amperes - kVa)
Power FactorPower Factor (PF = kW x kVa)(PF = kW x kVa)

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Why does the Utility need this information?Why does the Utility need this information?
To Determine the Cost to ServeTo Determine the Cost to Serve
Short TermShort Term
 Determine Available CapacityDetermine Available Capacity
and In-Service Dateand In-Service Date
 Measure Impact on SystemMeasure Impact on System
 Snapshot of DemandSnapshot of Demand
on Systemon System
 Plan for GrowthPlan for Growth
Long TermLong Term
 Determine Upstream ImpactDetermine Upstream Impact
 Determine Downstream’ ImpactDetermine Downstream’ Impact
 Anticipate System DemandsAnticipate System Demands
 Make the best use of timeMake the best use of time

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Why Bring Utility in onWhy Bring Utility in on
Retention/Expansion Opportunities?Retention/Expansion Opportunities?
Determine if impending change will effect serviceDetermine if impending change will effect service
Manage Customer and Community ExpectationsManage Customer and Community Expectations
Review by engineers and plannersReview by engineers and planners
Determine best way to serveDetermine best way to serve
Determine potential customer chargesDetermine potential customer charges
Manage Expectations and Address with ProgramsManage Expectations and Address with Programs

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What is an “Electric-Ready Site”?What is an “Electric-Ready Site”?
 It matches electric facilities to the proposed useIt matches electric facilities to the proposed use
 Heavy Industrial/High Tech - Sub-transmission or transmission on-site orHeavy Industrial/High Tech - Sub-transmission or transmission on-site or
nearby, dual feed capability, high reliabilitynearby, dual feed capability, high reliability
 Data Centers - Sub-transmission or transmission on-site or nearby,Data Centers - Sub-transmission or transmission on-site or nearby,
redundant service capabilities, high reliabilityredundant service capabilities, high reliability
 Light Industrial/ Distribution – Primary or secondaryLight Industrial/ Distribution – Primary or secondary
 Office - Primary or secondary, underground preferredOffice - Primary or secondary, underground preferred
 Proximity to Electric Facilities - The Closer the BetterProximity to Electric Facilities - The Closer the Better
 Low or no Customer Charges for Line Extension CostsLow or no Customer Charges for Line Extension Costs
 Time Requirements for System Upgrades/ Line ExtensionsTime Requirements for System Upgrades/ Line Extensions

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Who’s Responsible for What?Who’s Responsible for What?
Overhead Distribution Electric Extension (Rule 15)
 NG will install, at its cost, up to 300 feet for a three-
phase extension and 500 feet for a single-phase
extension
 Customer pays NG costs for footage in excess of
300/500 feet (costs per foot)
 Customer provides right-of-way (ROW) or agrees to
pay NG for ROW acquisition

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Service Laterals - Below 15,000 Volts (Rule 21)
For overhead service laterals from overhead distribution, NG will
install service laterals up to 100 feet
 Customer pays for the portion of service lateral in excess of
100 feet that requires intermediate support
For underground service laterals from overhead distribution lines
 Customer installs, owns and maintains at their expense the
entire service connection (riser pole may or may not be
chargeable)

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 For underground service laterals from
underground distribution lines or network areas
(2400 to 15,000 Volts)
 NG will install, own, and maintain, at its expense, the
conduit from distribution system to just inside the
curb; to the end of the service lateral.
 Customer is responsible for all conduit on it’s
premises, from their distribution facilities.

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 Service Laterals above 15,000 volts
 Customer is responsible for all work and costs to install, operate
and maintain the lateral
 Special Services Performed By NG for a Customer
 Customer shall reimburse NG for all costs incurred for requested
relocations of NG equipment or facilities to suit the convenience
of the customer
 Customer requested additions to NG equipment or facilities beyond
those necessary or normally used to serve customer
 Customer pays NG for all costs for the work. Payment can be
made by upfront payment or via a monthly surcharge of 1.5% on
electric bill for 10 years

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 Underground Distribution Extensions for Non-
Residential Developments
 Customer makes advance payment contribution to
NG for the amount of the company’s estimated
underground extension costs (maximum payment will be
the delta of underground estimates to overhead extension
estimates)
 If overhead extension cost estimates exceed
underground estimates, applicant will pay
underground costs.

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 Rule 4.2 – Expansions
 If a customer requests added or enlarged
electric facilities to accommodate load
increase of 150 kW or greater, for their sole
use, NG may require the customer to make a
reasonable contribution to the cost of adding
or enlarging facility (CIAC – Contribution In
Aid to Construction)

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The Natural Gas SystemThe Natural Gas System
Production Interstate Pipeline Distribution

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Natural Gas Delivery SystemNatural Gas Delivery System

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Gas Utilities Prior to DeregulationGas Utilities Prior to Deregulation
A single, vertically integrated utility company that:A single, vertically integrated utility company that:
 Produces natural gasProduces natural gas
(owns and operates production)(owns and operates production)
 Transmits natural gasTransmits natural gas
(owns and operates large transmission pipelines)(owns and operates large transmission pipelines)
 Distributes natural gasDistributes natural gas
(owns and operates local distribution pipeline system)(owns and operates local distribution pipeline system)
 Provides ancillary servicesProvides ancillary services
(scheduling and balancing of gas supply)(scheduling and balancing of gas supply)
 Provides metering & billing servicesProvides metering & billing services

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Deregulated Natural Gas UtilitiesDeregulated Natural Gas Utilities
Production Interstate Pipeline Distribution
UNREGULATED REGULATED

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Natural Gas TermsNatural Gas Terms
 Gas Load:Gas Load: rate of gas consumption, usually measured in cubic feet orrate of gas consumption, usually measured in cubic feet or
therms (National Grid bills customers in therms consumed)therms (National Grid bills customers in therms consumed)
 Pressure:Pressure: expressed in PSI – pounds per square inch or PSIG - poundsexpressed in PSI – pounds per square inch or PSIG - pounds
per square inch gaugeper square inch gauge
 Volume:Volume: expressed in cubic feetexpressed in cubic feet
 Flow:Flow: expressed in cubic feet per hourexpressed in cubic feet per hour
 British Thermal Unit (Btu):British Thermal Unit (Btu): The quantity of heat required to raise theThe quantity of heat required to raise the
temperature of 1 pound of liquid water by 1 degree Fahrenheit at thetemperature of 1 pound of liquid water by 1 degree Fahrenheit at the
temperature at which water has its greatest density (approximately 39temperature at which water has its greatest density (approximately 39
degrees Fahrenheit).degrees Fahrenheit).

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Equivalent ValuesEquivalent Values
1 cf = 1,000 Btu = .01 Therm1 cf = 1,000 Btu = .01 Therm
1 cf = 0.02832 cubic meters1 cf = 0.02832 cubic meters
1Ccf = 100 cf = 100,000 Btu = 1 Therm1Ccf = 100 cf = 100,000 Btu = 1 Therm
1Mcf = 1,000 cf = 1,000,000 Btu = 10 Therms1Mcf = 1,000 cf = 1,000,000 Btu = 10 Therms
1Mcf =10 Therms = 1 decatherm (dt) = MMBtu = 1.054615 gigajoules (GJ)1Mcf =10 Therms = 1 decatherm (dt) = MMBtu = 1.054615 gigajoules (GJ)
1Mcf = 1,000 cf = 1,000,000 Mcf1Mcf = 1,000 cf = 1,000,000 Mcf
1Bcf = 1,000,000 Mcf1Bcf = 1,000,000 Mcf
This table assumes that one cubic foot of gas contains 1,000 Btu. If one cubic foot of gas has a different BtuThis table assumes that one cubic foot of gas contains 1,000 Btu. If one cubic foot of gas has a different Btu
content, the above table would require a correction factorcontent, the above table would require a correction factor

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Information Needed for a Capacity Assessment andInformation Needed for a Capacity Assessment and
Bill EstimateBill Estimate
MinimumMinimum
 Site(s) Location (address, intersection or map)Site(s) Location (address, intersection or map)
 Connected Load (Mcf/hr)Connected Load (Mcf/hr)
 Maximum Hourly Load (Mcf/hr)Maximum Hourly Load (Mcf/hr)
 Delivery Pressure RequiredDelivery Pressure Required
 Annual Load (Mcf or therms per year)Annual Load (Mcf or therms per year)
 Time Frame for ResponseTime Frame for Response

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Information Needed for Energy IntensiveInformation Needed for Energy Intensive
Operations (i.e. glass manufacturing)Operations (i.e. glass manufacturing)
More DetailedMore Detailed
 Type of BusinessType of Business
 Type of EquipmentType of Equipment
 Equipment Use (hours of operation)Equipment Use (hours of operation)
 Site PlansSite Plans
 Actual Site LocationActual Site Location
 Service Required DateService Required Date

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Short TermShort Term
 Determine Available CapacityDetermine Available Capacity
 Determine Flow DateDetermine Flow Date
 Measure Impact on SystemMeasure Impact on System
 Snapshot of Demand on SystemSnapshot of Demand on System
 Plan for GrowthPlan for Growth

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Long TermLong Term
 Determine Upstream ImpactDetermine Upstream Impact
 Determine Downstream’ ImpactDetermine Downstream’ Impact
 Anticipate System DemandsAnticipate System Demands
 Make the best use of timeMake the best use of time

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Why Bring Utility in onWhy Bring Utility in on
Retention/Expansion Opportunities?Retention/Expansion Opportunities?
Determine if impending change will effect serviceDetermine if impending change will effect service
Review by gas engineeringReview by gas engineering
Determine how best to serveDetermine how best to serve
Determine potential customer chargesDetermine potential customer charges
Manage Expectations and Address with ProgramsManage Expectations and Address with Programs

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 Extension of Gas Mains (Rule 10)
 For non-residential customers, NG provides:
 Material and installation costs related to 100 feet of main
and appurtenant facilities
 Service line, service connections and appurtenant
facilities located in the public right-of way
 Amounts legally imposed for working permits and
repairing or replacing disturbed pavement

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Applicant is responsible for:
 Costs associated with extending gas main beyond
100 feet; and,
 A surcharge which would include return,
depreciation, taxes and maintenance of 20% per
year of the actual reasonable costs; or
See next two slides for revenue justification optionsSee next two slides for revenue justification options

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 A surcharge which shall be paid ratably from time of receiving gas
service for ten years
 Surcharge will be reduced annually as a credit based on 50% of
adjusted gas revenues
 Surcharge will be adjusted if more customers are added to the
extension, based on allowed footages per customer
 Surcharges will cease if Adjusted Gas Revenue (AGR) from all
customers on extension equal 40% of main costs for two
consecutive years
 No surcharge if estimated AGR equals 40% of actual reasonable
cost of extension

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 Customer may elect contribution in lieu of surcharge, which is
extension cost in excess of allowance, less estimated two year AGR
 When more than one customer is initially connected to an extension,
the contribution will be reasonably allocated to all customers
 If customers are added within five years of an extension, a pro-rata
refund will be made for that portion of main extension
 If AGR from all customers served by main extension exceed
carrying costs of entire extension, any surcharges or contributions
paid by such customers during preceding five years will be refunded

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ResourcesResources
 Glossary of Utility TermsGlossary of Utility Terms
http://www.utilityeda.com/utility_term_glossary.asphttp://www.utilityeda.com/utility_term_glossary.asp
 Utility Usage WorksheetUtility Usage Worksheet
http://www.utilityeda.com/UEDA_EnergyWorksheet.pdfhttp://www.utilityeda.com/UEDA_EnergyWorksheet.pdf
 Electric and Gas IndustryElectric and Gas Industry
Federal Energy Regulatory CommissionFederal Energy Regulatory Commission http://www.ferc.gov/http://www.ferc.gov/
Electric Power Research InstituteElectric Power Research Institute http://my.epri.com/http://my.epri.com/
Edison Electric Institute (EEI)Edison Electric Institute (EEI) http://www.eei.org/http://www.eei.org/
American Gas AssociationAmerican Gas Association http://www.aga.org/http://www.aga.org/
Energy Information AdministrationEnergy Information Administration http://www.eia.doe.gov/http://www.eia.doe.gov/
Natural Gas Supply Association http://www.ngsa.org/Natural Gas Supply Association http://www.ngsa.org/
Public Utilities ReportsPublic Utilities Reports http://www.pur.com/http://www.pur.com/

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Contact National Grid’s Economic Development DepartmentContact National Grid’s Economic Development Department
Art HamlinArt Hamlin
Director, EconomicDirector, Economic
DevelopmentDevelopment
(315) 428 6543(315) 428 6543
Linda HillLinda Hill
(518) 433 3691(518) 433 3691
Brian AndersonBrian Anderson
(315) 428 5140(315) 428 5140
Joe RussoJoe Russo
(315) 428 6798(315) 428 6798
MaryGrace WelchMaryGrace Welch
(716) 831 7752(716) 831 7752
300 Erie Boulevard West300 Erie Boulevard West
Syracuse, NY 13202Syracuse, NY 13202
www.ShovelReady.comwww.ShovelReady.com

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