January 2012 Capital Investment - National Grid

Exhibit ___ (EIOP-19)Page 95 of 684heavily dependent on the monitoring and performance data to be collected after theinitial installations of the different AGA technologies. Similar to the reference modeldescription, this ranking model will be a living application changing as new and/or betterinformation becomes available.Drivers:There are numerous drivers leading to an increasing focus on Advanced GridApplications:• Regulatory/government direction which can be very specific and targeted. Forexample, the American Recovery and Reinvestment Act 0f 2009 (ARRA) offeredgrants for Smart Grid research projects or pilots. There are generally targetedareas as well with items like incentives for developers of Photovoltaic Generationfacilities, expectation of increased application of Demand Side Managementand/or Demand Response programs, and incentives for use of new technologiessuch as Plug in Electric Vehicles.• The evolution of external standards promulgated by FERC, NERC, NPCC,NYISO, etc.• Efficiency, reliability, and an increasing availability of the advanced gridtechnologies themselves, especially communications systems. The cost benefitof increased use of technology in lieu of traditional T&D system expansion isexpected to become more favorable.• Greater understanding of the benefits that Advanced Grid Applications deliver toour customers over the current methods of service and system design.Ultimately, it will be the ability of Advanced Grid Applications to economicallysolve system problems and meet customer service expectations that willdetermine the pace of their adoption and whether or not the Company executesdeployment in volume.Customer Benefits:Increasing the use of AGA technologies on the T&D system is expected to deliversignificant benefits to customers, including:• Enable more sophisticated control systems• Improve Reliability and Operational efficiency• Release system capacity• Promote the connection of more renewable resources such as electric vehicles(EV) and distributed generationThese AGA technologies are expected to result in an improvement in service quality forcustomers. This item has no direct regulatory impact but the projected reliabilityimprovements will aid in meeting future service quality targets.IV-19 1996