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42January/February 201416Features1030Departments10 Utilities Headed for a Cliff?Utility business strategies are threatened like never before.Sales are off, capital spending remains high and newtechnologies threaten. Power and natural gas industryleaders examine what is at stake – and what may be next.11 Threats to the Monopoly ModelJim Rogers, former head of Duke Energy, speaks about themany challenges confronting America’s utilities.13 Keep DiggingDavid Crane, the head of NRG Energy, writes that the shalegas flood will help spur major changes in our energy sector.16 Gas Competes with PowerGas utility CEOs in their annual Leadership Roundtable withEnergyBiz discuss how their industry is taking off, and newbusiness opportunities abound.24 Path to SecurityNew information technology will play a key role in securing thepower grid. Two nationally recognized CIO leaders explain how.The topic will also be explored at the EnergyBiz Securing PowerForum in Washington March 3-4 – www.energybizforum.com.24 Keeping the Enemy at Bay26 Learning through CollaborationOur Tak e4 Business Threats and CyberattacksBusiness Edge6 Cleantech Cluster8 Powering a New FrontierTechnology Frontier30 Apps and Social Media // EnergyBizCIO Leadership Roundtable33 New Direct CurrentTransmission Capabilities34 Frontier of Energy Storage35 The Future of BiogasIntroducing38 Addressing CybersecurityLegal Arena40 State Energy Innovators42 Building Merchant Transmission44 Getting Clean Energy Policy Right46 Priorities after FERC OvertureVol. 11, No. 1. Copyright 2014 by Energy Central. All rights reserved. Permission to reprint or quote excerpts granted by written request only.EnergyBiz (ISSN 1554-0073 ) is published bimonthly by Energy Central, 2821 S. Parker Road, Suite 1105, Aurora, CO 80014. Periodicalpostage paid at Aurora, Colo., and additional mailing offices. Subscriptions are available by request. POSTMASTER: Send address changesto EnergyBiz, 2821 S. Parker Road, Suite 1105, Aurora, CO 80014. Customer service: (303) 782-5510. For change of address include old addressas well as new address with both ZIP codes. Allow four to six weeks for change of address to become effective. Please include current mailing labelwhen writing about your subscription.Final Take47 Back to School //John Rowe’s New Focus2 EnergyBiz January/February 2014

» Our Take www.energybizmag.comBusiness Threatsand CyberattacksTwo transcendent issues. They are huge — and will soonswamp all other considerations in the electric power business.The century-old regulated monopoly business model is threatened likenever before.Terrorists and criminals threaten to attack the power grid in cyberspacewhile increasingly frequent and violent bad weather threatenspower reliability.Both challenges — and how they are dealt with — will be transformational.Some of the power industry’s most respected leaders are saying thatthe old regulated monopoly approach is toast.David Crane, the visionary head of NRG Energy, believes that regulatedutilities are about to get slammed by new business realities.Gas utility chief executive officers, recently meeting with EnergyBiz,laid out their vision of how they will use the shale gas revolution to goafter power companies as they quickly exploit new opportunities. “Thisis a fairly new reality for us,” said Terry McCallister, WGL Holdings andWashington Gas chairman and chief executive. “We are looking for opportunitiesto help customers find ways of being more grid independent.”Power generation in America will increasingly be disbursed and distributed.Rooftop solar panels will proliferate. Battery storage and fuel cellswill come on rapidly.There is one way in which the business model transformation can bevery timely — and meaningful.Governors and policymakers, particularly those servingstates that lived through Hurricane Sandy last year, areexperimenting with microgrids and distributed energytechnologies that will help keep the power on when badweather levels power lines.A much more intelligent grid knitting together a vastnetwork of rooftop solar panels, microgrids, fuel cells andbatteries will be a hardened grid.New strategies to make the power grid moreresilient will be front and center at theEnergyBiz Securing Power Forum March 3-4in Washington [www.energybizforum.com].Please join us for what promises to be apathbreaking discussion.Editor-In-Chief Martin Rosenbergmrosenberg@energycentral.com 303.228.4725COPY EDITORs Don Bishop,Martha Collins, Meaghan ShawFeature Writers Thomas F. Armistead, Steve Barlas,Gargi Chakrabarty, Russ Choma, Lisa Cohn,Pamela Coyle, Darrell Delamaide, Richard Korman,Paul Korzeniowski, Salvatore Salamone, Gary Sampson,Al Senia, Richard Schlesinger, Gary SternAccount ExecutivesTodd Hagen, Ken Maness, Eric Swansonsales@energycentral.com 800.459.2233Advertising CoordinatorKendra Branch-Brett 303.228.4748Circulation Customer ServiceCindy Witwer 303.228.4740ENERGY CENTRALwww.energycentral.comPresident/CEO Steve DrazgaVice President, EnergyBiz,Intelligent Utility Mark JohnsonVice President, Market Practices Mike SmithDirector of Sales, EmploymentServices Kyle Schnurbusch2821 South Parker Road, Suite 1105Aurora, CO 80014Phone 303.782.5510, Fax 303.782.5331ADVERTISING AND REPRINT REQUESTS Please call800.459.2233 or email sales@energycentral.comEnergyBiz is available free to a limited numberof qualified subscribers. Basic subscription ratesare $99 per year US and $129 outside the US.Single copies are $10 plus S/H. Subscribe onlineat www.EnergyBiz.com/REGISTER.Martin Rosenberg, Editor-in-Chiefeditor@energybiz.com2012 Eddie Gold Best magazine energy/utilities/engineering2012 Eddie Silver Best Online Blog by B-to-B publication2012 ASBPE Silver National Medal for Editorial Excellence4 EnergyBiz January/February 2014

Top UtilityWeb SitesWisconsin PublicService, PPL ElectricUtilities, Duke Energyand Pacific Gas andElectric are among agroup of utilities with thetop websites, accordingto a study by E Source.The Missouri River mainstem reservoirs areanticipated to be around 75 percent of averagestorage capacity this year. At Glen Canyon Dam,the Bureau of Reclamation plans to reduce releasesby 750,000 acre-feet for the coming year, a historiclow. The iconic Hoover Dam is experiencing a14-year drought, the worst in the last 100 years.Finally, California’s Central Valley Project receivedonly 17 percent of normal snowpack.For Western, insufficient water results innot having sufficient hydropower to meetour contractual obligations. Under manyof our contracts, we must purchase moreexpensive power on the market to meet ourobligations. In other contracts, such as theCentral Valley Project and Boulder CanyonProject, we market the hydropower that isavailable, and it is our customers’ responsibilityto obtain the remainder of what theyneed. In both cases, the increased costsare eventually reflected in consumer power bills.Utilities around the country pride themselves on reliability.We provide power when and where Americansneed it, and if that power is disrupted, we embarkon herculean efforts to bring customers back onlinein record time. However, maintaining our reliability isbecoming more challenging because of new energysources, ever-increasing compliance standards, unprecedentedsevere storms and higher expectations.There is no one reliability solution, nor are thereeasy adaptations we can make to incorporate our newenergy frontier. As utilities, we must look individuallyat our organizations and collectively at our industryand determine what needs to be done to continue toprovide reliable power.To that end, Western is collaborating with customers,stakeholders, the Department of Energy andemployees to develop a strategic roadmap that willserve as the agency’s directional guide through 2024.This roadmap will encapsulate our anticipation of whatwill occur in the future in order to tie together ourstrategy, capital budgets, asset management programand human capital needs and ensure that we continueto successfully execute our core mission and providethe best value to meet our customers’ needs.Mark A. Gabriel is administrator of the Western AreaPower Administration.Gatherings//Business EdgeFeb. 27March 3-4Energy MarketingConferenceEnergyBiz SecuringPower ForumFor more information about these and other events, please visitwww.energycentral.com/events.New YorkWashingtonenergybiz.com EnergyBiz 9

Main HeadlineUtilitiesHeadedfor a Cliff?10 EnergyBiz January/February 2014

Utilities Headed for a cliff?And that is why solar disrupts everything in a way thatwind power never could, because solar will be producedeverywhere that people live and consume electricity. Thereare 50 million buildings in America that are suitable forrooftop solar installation and virtually all of those buildingshave either parking lots or driveways that could be coveredwith a solar installation.Because of the ever-increasing number of those who participatein self-generation, Americans will self-generate thegreat majority of the electrons they consume at their homesand offices, principally through distributed solar arrays overtheir roofs, driveways and parking lots, or in adjacent fields.To the extent they are a little bit short of meeting demand,they may use the batteries in their electric cars, they may callupon energy-converting appliances in their basements, orthey might even call upon their neighbors to send over someelectricity through a local wire. What they probably won’tdo is draw on the grid as we know it today, that monolithic,command-and-control visual blight on our landscape fromthe 1930s, for anything other than deep backup.In the absence of asset growth, the only breadcrumb leftfor utilities is to use the current system as the backup for thedistributed energy future, much like other eroded monopolies(e.g., the Post Office and the old AT&T fixed-linelong-distance telephone system) serve in other areas of oureconomy. The problem with that future is that it is highlyunpalatable to a group of companies that have been “thestraw that stirs the drink” in the electricity business since theglory days of Sam Insull.There will be an impulse — ill-conceived and ultimatelydoomed to failure — in the utility industry to try to winpolitically (if you can’t win in the marketplace, try your handin the lobbies of the statehouse). Their political strategy willbe to start by fighting the distributed energy future throughnet metering constraints and absurd interconnection chargesand then attempt to co-opt it for the economic benefit ofthe utilities themselves through fixed charges for backupservices. Both strategies rely on exploiting what utilities perceiveas the Achilles’ heel of distributed power — the fundamentaland undeniable intermittency of renewables.The problem for utilities is that although they have theonly cost-effective solution today to that intermittency (thegrid), tomorrow is not today. The grid is ripe for the pluckingby disruptive innovation. There are batteries and otherenergy storage solutions, but our view is that the grid, asan electricity distribution system, is about to be disruptedby — of all things — the unheralded natural gas distributionsystem connected with a home appliance that willconvert natural gas into electricity in your home. There are34 million American homes served by both the electricityand natural gas distribution systems, and it makes no sensefor the American homeowner to pay for two expensive energydelivery systems into their homes if onewould do. And if they are going to pickone, are they likely to pick the one thatis reliably below ground or the one thatis mostly above ground?See Superstorm Sandy for thecorrect answer.Twenty years ago, who wouldhave thought American homeownerssomeday would be calling their localphone companies in droves to disconnecttheir home phone lines? Butthat is what has happened. The cellphone has won. The same future isright around the corner for the electricdistribution companies. Distributedgeneration will win because, in thevery near term, it will perform the central function of ourindustry — the delivery of safe, affordable, reliable and sustainableenergy — better than the grid operated by regulatedutilities. Furthermore, distributed generation offers customersindividual empowerment and the opportunity to controltheir energy destinies in a way that the present system cannoteven contemplate. And that is of pivotal importance to theAmerican consumer in the 21st century.In this context, I find the prevailing strategic consensusof American electric utilities — B2R (back to regulated)— amusingly ill-advised. In the new technology-driven,sustainability-focused energy industry of the 21st century,you can run from competition and free market capitalism,but you can’t hide. I guess, when it comes to utility strategy,what we are seeing is just a twist on the old adage: When youare in a hole, keep digging!David Crane is chief executive officer of NRG Energy.Americans willself-generatethe greatmajority of theelectrons theyconsume attheir homesand offices.14 EnergyBiz January/February 2014

Work Flow ManagementLeveraging Data for SolutionsThis article is based on an October 2013webcast sponsored by Elster Solutions thatincluded panelists Marc Gerken, Presidentand CEO of American Municipal Power,Andrew Duhon, Customer and SupportServices Manager of Lafayette UtilitiesSystem, and Michael Johnson, TechnicalMarketing Manager, Software andApplications, Elster Solutions.Utilities across the country areinvesting massive amounts of moneyin taking infrastructures largely builtafter World War II and upgradingthem to inject intelligence throughouttheir operations. This introducesmany associated difficulties. First, thefinancial investments required toupgrade infrastructures will placestressors on utility businesses fromboth an operations technology and aninformation technology standpoint.Second, Smart Grid initiatives areproducing a resultant tidal wave ofinformation that utilities are justbeginning to take advantage of. Third,the combination of an aging workforceand new technology will necessitate agreat deal of training.These changes will inevitably demandthe alteration of utilities’ businessprocesses in the upcoming years andcause significant disruption, but theywill also create new opportunities. Theability to analyze information as wellas manage change with increasingsophistication and oversight is crucialto utilities’ ability to be successful andprovide dependable service to the public.When we look at business and ITtrends, Smart Grid is the driver. Itsinitiatives are grid optimization andmodernization to improve reliability,resilience and recoverability, and toaddress the need to involve consumerparticipation in the provision of energy,such as on-premise generation andconsumer energy efficiency initiatives.In an endeavor to realize theseimprovements, Smart Grid will generatedata in excess of what utilities areaccustomed to dealing with by severalorders of magnitude.The integration of operations andinformation technologies driven bySmart Grid data will demand actionorientedskill sets and strong leadership.A highly skilled and well-compensatedworkforce will be paramount inaddressing current trends. Thetechnologies required to respond tothese trends are capital intense, withvery high operational costs. Most publicpower and municipal electric systemswill struggle to adapt and/or adopt.Reliability is fundamental to utilitycompanies. Customers’ perceptions ofreliability are changing, and failures inutility reliability receive more publicitythan in the past due to social mediaand digitally connected customers.Utilizing Smart Grids, social mediaand operations data allows a utilityto employ predictive analytics, suchas forecasting of commercial andresidential loads based on weathervariations, estimation of equipmentfailures based on condition observations,and prediction of changes in customersegments and energy usage based ondemographics and behavioral statistics.Predictions can be made with regardto grid instability based on analysis orfailure measurement data. The abilityto utilize data from a Smart Gridperspective will afford utility companiesopportunities to become public powerleaders in the areas of power supply andproject generation, financial stability,energy efficiency, technology servicesand safety.Leveraging data for solutions empowersusers to solve problems that are beingaddressed by utilities today usingworkflow-driven applications. Thereare many things that need to beaddressed as we go down this road.Aging infrastructures and returns oninvestment must be considered whilelooking at the communities that theutilities are serving. Renewable energymust be supported. The industry mustbe able to improve operations whilereducing costs. And there must be areturn on the considerable investmentrequired to bring utilities’ infrastructureinto the future.From an investment standpoint, weexpect to receive the best return onour investment. The data we amasswill enable us to make decisions ongeneration, building infrastructure,getting into the transmission areaand managing load. It will allow us tocombine operations, making utilitymembers more competitive. Smallercompanies are still very manual oriented,and we may be able to take over someof their services through automationfor cost-effectiveness. We see ourinvestments paying big dividends.WeBcast • SPONSORED BY ElsterThis Thought Leadership commentary is based on a recent webcast. Listen in at: www.energybiz.com/workflowmanagement.energybiz.com EnergyBiz 15

Utilities Headed for a cliff?Gas Competes with PowerA New Foundation Fuel, New Business ChannelsBy Martin RosenbergThe shale gas revolution has gas utilities envisioningnew business avenues. They believe they are uniquelypositioned to help energy users secure their power suppliesin the event of major disruptions. EnergyBiz recentlydiscussed these game-changing developmentswith a panel of gas utility chief executive officersfrom around the country. Their editedcomments follow.EnergyBiz Gas-fueled generation ofpower is growing fast. Does that raiseany concerns?Kantor We continue to worry about theability of the pipeline system in our region tobe able to handle the kinds of loads – not justfrom electricity, but also from industrial facilities.We’ve got companies converting to naturalgas. Over the last two years we’ve hookedup 36 new large commercial and industrialcustomers. Prior to that, the typical numberof new large industrial customers was aboutfive a year. It is recognition of the economicincentive that natural gas at these prices providesto a very broad range of industries.EnergyBiz You lack adequate pipelineinfrastructure?Kantor We’ve got a pipeline problem.We’ve got to figure out as a region how toinvest in new pipeline capacity. You don’tbuild reserves into your pipeline. We needthe region to agree that another pipeline isnecessary. It’s a big issue.PARTICIPANTSGordon GilletteTampa Electric& Peoples GasPresidentTampa, Fla.Ronald JibsonQuestarChairman, Presidentand CEOSalt Lake CityGregg KantorNW NaturalPresident and CEOPortland, Ore.Terry McCallisterWGL Holdings andWashington GasChairman and CEOWashington, D.C.Dave McCurdyAmerican GasAssociationPresident and CEOWashington, D.C.Anne Shen SmithSouthern California GasChairman and CEOLos AngelesEnergyBiz Is there an opportunity for the gas industryto redefine itself given the rising concern about electricpower reliability and the decentralization of electricpower production? Is there a new business modelfor gas utilities?Gillette Yes, I think there are potential opportunities. Wedo think about distributed generation, bothon the electric and gas side. Florida is about60 percent natural gas-fired for power generation.The distributed generation debateon the electric side really hasn’t completelycome to Florida.EnergyBiz If a hurricane barrels throughknocking power lines down, isn’t abusiness better off if it has gas linesconnected to a generator or fuel cell atits facility?Gillette There is no doubt that weatherevents tend to affect the electric utilities withall the overhead lines more significantly thangas utilities.EnergyBiz Do you see a change in howpeople are getting their businesses poweredbecause of that?Gillette Not yet. There are some supermarketsin Florida that have put backupgeneration on-site for their stores. But interms of widespread distributed generation,we haven’t seen that. There are someregulatory issues and some safety issues towork through. Does a microgrid become amini-utility? If so, what are the regulatory implications ofthat? For gas distribution utilities, there is probably a lotof opportunity. Will those opportunities come from generatorsthat sit at electric substations? Or will the genera-16 EnergyBiz January/February 2014

Photos by Michel BerdaGilletteJibsontors sit on the customers’ premises? There will probably beboth going forward.McCallister In our territory there are a lot of governmententities. There’s a whole lot of interest in grid reliabilityand backup reliability. The other big concern inWashington today is cyberterrorism. There is growing fearthat cyberterrorists will take down the grid. Military bases,the Departments of Defense and Homeland Security andthe FBI want to know that they can operate after somethinghas taken the grid down. The federalagencies want to know that at a timeThere is acontinuing pushby customersto become lessdependent onthe grid.when it’s absolutely critical for themto operate, they can. At our ownoperation center opened last year wehave natural gas fuel cells. We canprovide our own power to that. Weare providing those kinds of servicesto businesses. We are providing commercialsolar to many entities aroundthe country. We are providing alternativeenergies in the non-utility sideof our business. If a customer wants a combined heat andpower plant, we can support it.Anne Shen SmithJibson Like all businesses right now, we are looking atthe opportunities that have been expanded in our industryas a result of the abundance of natural gas. It’s been a totalparadigm shift. The shale energy revolution has openedup the door for all of our businesses to look at newopportunities. We certainly have been involved withnatural gas vehicles for a long time. We’ve expandedthat role substantially in partnerships with the state ofUtah. We are building out more refueling facilities andproviding more natural gas for transportation. We’vealso now formed a non-regulated company to buildoutside of Utah.Smith We’ve been serving central power plants for a longtime. We find ourselves more and more in the business ofensuring electric reliability than ever before. The interdependencyissue is something that the regulators are addressing,looking at natural gas as well as electric reliability. There is aneed to make sure the natural gas infrastructure is adequate.In addition to central generation, for many years we’ve hada pretty aggressive program to look at distributed generation.There is a continuing push by customers to become lessdependent on the grid.EnergyBiz Do you see an opportunity to go to an electricpower customer and say, “We will give you electricity.Here’s the equipment. We’ll give you the gas.”Gillette A big part of our business at Peoples Gas inFlorida has been selling gas to the power generators. Floridahas an electric peak of about 45,000 megawatts. Behindour city gate at Peoples, we’ve got about 4,500 megawattsof electric load. It’s currently mostly municipal powerutilities and large-scale independent power plants. Thequestion is to what extent there will be smaller and moredistributed generation, either run by utilities or by customers.How are we going to supply them? There is potentialfor us to sell a lot of gas. We can work with customersas they set up some of these distributed sites aroundthe state.EnergyBiz What is the potential for your companies tohelp develop microgrids?McCallister We have what can be called microgrids inabout 29 states. We just installed one in Hawaii. We are notconstrained by having an electric utility.energybiz.com EnergyBiz 17

McCurdySmithwinning technology. Set the goal and allow us to compete.We are confident that when that happens, natural gas will bevery competitive.EnergyBiz Is there enough gas infrastructure to allowfor a continued expansion of natural gas use?Gillette There is a need for new infrastructure. We aregoing to see a lot of changes, both on interstate pipelines andlocal gas distribution utilities going forward. In Florida, we areessentially an electrical and gas island. We have a lot of generationon the state, but we importAllow the marketto work andyou motivateeveryone to findbetter ways todo things.Ronald Jibsonmost, if not all, of our fuel toFlorida, including natural gas. Wesee opportunities to bring in newsupplies of natural gas. Until now onthe East Coast, gas has flowed westto east and south to the north. Wemay begin to see flows of gas fromthe Marcellus shale in Pennsylvaniahead into the Southeast, maybe allthe way to Florida.Jibson Six years ago we had a lot of production in theRockies and not enough takeaway capacity. What’s happenedsince then is that major pipelines have been built, eastto west. We have more pipeline capacity than we have productiontoday.McCallister Right up the road are the largest natural gasreserves in the country, if not the world. There is not anywherenear enough pipeline to take away capacity on thelong-haul pipelines today. Pipeline companies are reversingflow on some pipelines. There are a lot of pipelines on thedrawing board. The whole trading dynamics in the UnitedStates are shifting.EnergyBiz Some say that natural gas is a bridge fuelbecause while burning gas emits half the CO 2 of coal, itputs out more than wind, solar or energy efficiency. Howdo you answer that?McCurdy Ten years ago it might have been a bridgefuel because there was uncertainty about supply. Todaywe live in an age of abundance. If it’s a bridge, it’s a longbridge. We are talking about nearly a century bridge.To me that’s a foundation. In order to have a nationalenergy policy that includes renewables and energyefficiency, you need natural gas because renewablesare intermittent.Jibson You are always going to need your foundationfuel. Now that doesn’t mean that we shouldn’t developother forms of energy such as renewable energy. We should.Allow the market to work and you motivate everyone to findbetter ways to do things. We’ve done that in the naturalgas industry.EnergyBiz Will use of gas-powered vehicles grow in theyears to come?Kantor I think they will eclipse EVs. The science aroundbatteries is stalled out. It’s going to happen quicker thanpeople think.McCurdy There is a lot of room for growth for both EVsand natural gas.EnergyBiz Where is the shale gas revolution headed?Kantor This is not a static revolution. This is like computers.Today the shale gas revolution is where computerswere in the late 1980s. This is evolving very rapidly. You can’tthrow a dart at it and say, “That’s where we are and that’swhere we are going to be.”energybiz.com EnergyBiz 19

By merging them into one system, utilities can betterByidentifymergingthe locationthem intoandonescopesystem,of autilitiesfault, increasecan bettertheidentifyeffectivenessthe locationof automation,and scopeandofrealizea fault,increasedincrease thereliabilitydue to fastereffectiveness of automation,responseandandrealizerestorationincreasedtimes.reliabilitydue to faster response and restoration times.• Increased Expenses. Multiple data sources create• IncreasedduplicationExpenses.of IT costsMultipleto support,data sourcesmaintain,createandupgradeduplicationsystemsofduringIT coststheirto support,lifecycle.maintain,Also, operationsandupgradeoften havesystemsto manuallyduringsynchronizetheir lifecycle.andAlso,resolveoperationsconflictsoftenamonghavedisparateto manuallynetworksynchronizemodels.and resolve conflictsamong disparate network models.The best option is to deploy new, more modern tools thatthatTheincreasebest optionemployeeis to deployproductivitynew,andmoreimprovemoderncustomertools thatthatsatisfactionincreasewithoutemployeeraisingproductivityexpenses.andConvergenceimprove customerto ansatisfactionintegrated Advancedwithout raisingDistributionexpenses.ManagementConvergenceSystemto anintegrated(ADMS) improvesAdvancednetworkDistributionefficiency,ManagementstrengthensSystemreliability,and lowers(ADMS) improvescostsnetworkagainstefficiency,the challengingstrengthensbackdropreliability,oftoday’sand lowersdynamiccostsgrid.against the challenging backdrop oftoday’s dynamic grid.WHAT IS NEEDED IN ADVANCED DISTRIBU-WHAT TION MANAGEMENT IS NEEDED IN SYSTEMS?ADVANCED DISTRIBU-TION A Centralized MANAGEMENT View of Company SYSTEMS? Performance. DataAcanCentralizedno longer beViewhousedof Companyin individualPerformance.silos. UtilitiesDataneedcanto consolidateno longer beinformationhoused insoindividualall workerssilos.haveUtilitiesa clearneedtopictureconsolidateof any andinformationall interconnectedso all workersparts.have a clearpicture of any and all interconnected parts.Real Time Diagnostics. Performance information isRealneededTimeASAP.Diagnostics.If a problemPerformancearises, utilitiesinformationmust moveisneededon it quickly.ASAP. If a problem arises, utilities must moveon it quickly.Automation. With more elements generating moreAutomation.alerts, workersWithdo notmorewantelementsto sloggeneratingthrough amorevariety ofalerts,systemsworkersto figuredooutnotwhatwantistohappening.slog throughTheira varietyADMSofsystemssolution mustto figurebe smartout whatenoughis happening.to sort theTheirdataADMSandsolutionthen providemustthebecausesmart enoughas well astoasortpossiblethe datafixandto operatorsthen provideand fieldthecrew.cause as well as a possible fix to operatorsand field crew.WHAT CAN NEXT GENERATION SYSTEMSWHAT DELIVER? CAN NEXT GENERATION SYSTEMSDELIVER?Less Downtime. With more information available to moreLessemployees,Downtime.utilitiesWitharemoreable toinformationoperate inavailablea proactiveto moreemployees,manner. Theyutilitiesreplacearedevices;able to operatesay a transformer,in a proactiveas itmanner.comes closerThey replaceto the enddevices;of its lifesayrathera transformer,than waitasuntilitcomesthe systemclosermalfunctions.to the end ofTheitsADMSlife rathersystemthaniswaitsmarter:untilitthe system malfunctions. The ADMS system is smarter: itFAST FACTFAST FACTCompanies realize an average 33%Companies reduction in realize SAIDI. an The average reduction 33%means reduction improved in SAIDI. network The reduction availability,more means uptime improved for customers, network availability, and moremore uptime revenue for customers, for the utility. and morerevenue for the utility.is programmed to perform root cause analysis and identifyis programmedthe major elementto performcausingrootthecauseproblemanalysisratherandthanidentifygetboggedthe majordownelementon minorcausingoffshoots.the problemEmployeesratherarethanpassedgetboggedthoroughdownand relevanton minorperformanceoffshoots. Employeesinformation,aresopassedthethoroughtime neededandtorelevantidentifyperformanceand repair itemsinformation,is reduced.so thetime needed to identify and repair items is reduced.Improved Productivity. When appropriate, automatedImprovedproceduresProductivity.fix networkWhenproblems.appropriate,As a result,automatedemployeesspend lessprocedures fix networktime onproblems.routine tasksAsanda result,moreemployeestimeon ensuringspend lessthattimetheondistributionroutine tasksnetworkandoperatesmore timeatonpeakensuringefficiency.that the distribution network operates atpeak efficiency.Fewer Chances for Operator Error. The next generationFewerof DMS/OMSChancessystemsfor Operatoris intelligentError.andTheautomatesnext generationroutineof DMS/OMSfunctions. Becausesystems istheintelligentsystem doesand automatesmore, employeeroutineerrorfunctions.occurs lessBecauseand thethesystemsystembecomesdoes more,moreemployeeefficient.error occurs less and the system becomes more efficient.Improved Customer Service. Since employees haveImprovedaccess to up-to-dateCustomerinformation,Service. Sincetheyemployeesare able tohaveprovidecustomersaccess to up-to-datewith moreinformation,accuratetheypicturesare ableaboutto providewhatconcernscustomersthem:withtheirmoreenergy.accurateCustomerpicturesserviceaboutrepresentativeswhatconcerns them:are abletheirtoenergy.see throughCustomerthe network,service representativesidentifyany problems,are ableand provideto see throughmore accuratethe network,estimatesidentifytoanywhenproblems,power willandbeproviderestored.more accurate estimates towhen power will be restored.Consistent Data. In most cases, information has beenConsistentscattered in departmentalData. In mostdatacases,repositories,informationsohasit hasbeenbeenscattereddifficult toindeliverdepartmentala central,datacohesiverepositories,picturesoof whatit haseventsbeendifficultare takingto deliverplace. Now,a central,datacohesiveis centrallypicturecollected,of whatsoeventseveryoneare takinghas a consistentplace. Now,viewdataofiswhatcentrallyis takingcollected,place.so everyonehas a consistent view of what is taking place.Less Waste. Technicians examine the needs of all of theLesselementsWaste.in aTechnicianssystem as aexaminewhole ratherthe needsthan theof allindividualof theelementscomponents.in aConsequently,system as a wholetheyratherhave athanbettertheunderstandingof whatindividualcomponents. Consequently,work needstheyto behavedonea betterfrom aunderstandingresponseand maintenanceof what workperspective.needs to be done from a responseand maintenance perspective.22 EnergyBiz January/February 2014THOUGHT LEADERSHIP • SPONSORED BY GENERAL ELECTRICTHOUGHT LEADERSHIP • SPONSORED BY GENERAL ELECTRIC

Better Communications. ADMS systems streamlineinformationCONCLUSION: THE TIME IS RIGHT TO INVESTBetter Communications.flow. EmployeesADMSaresystemsable tostreamlineaccess CONCLUSION: IN A NEW ADMS THE SYSTEM TIME IS RIGHT TO INVESTneededinformationitems moreflow.quickly.EmployeesLessareduplicationable to accessmeans IN Utilities A NEW now ADMS have to SYSTEM balance often conflicting businessneededless confusion.items moreWhenquickly.work crewsLess duplicationarrive, theymeansdo not drivers:Utilitiesthenowneedhaveto deliverto balancemoreoftenservicesconflictingbut thebusinessdesire tolesshaveconfusion.to spend timeWhensiftingworkthroughcrews arrive,data totheydeterminedo not drivers:keep expensesthe needintocheck.deliverADMSmoresystemsservicesofferbut thethesedesirebusinessestohavewhattoitemsspendhavetimebeensiftingcompletedthroughanddatawhichto determineones arekeep expensesa way toinmeetcheck.thoseADMSgoals.systemsSinceofferthey representthese businessesthewhatoutstanding.items haveThatbeeninformationcompletedis availableand whichat theonesstartareof foundationa wayfortothemeetnextthosewavegoals.in energySincedelivery,they representinterest intheoutstanding.the shift, so theyThatareinformationup and runningis availablefaster,atresultingthe startinof foundationthese systemsfor theis rising.next wave in energy delivery, interest intheimprovedshift, soefficiency.they are up and running faster, resulting in theseOncesystemsan energyis rising.company decides that it needs such aimproved efficiency.system,Oncethean energyquestioncompanybecomes:decidesFromthatwhomit needsdo theysuchbuyait?Improved Network Efficiency. 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Theentries.processAn ADMSrevolvesConsumerand services(Commercial,from theIndustrialPower Plantand Residential).to the End PowerWhensystemaroundstreamlinestime-consumingdata entry, somanualemployeesentries.areAnmoreADMS Consumerevaluating an(Commercial,ADMS system,IndustrialDigitalandEnergyResidential).is a goodWhenplacesystemproductivestreamlinesin the controldata entry,room andso employeesout in the field.are more evaluatingfor utilitiesanto startADMSthesystem,process.Digital Energy is a good placeproductive in the control room and out in the field. for utilities to start the process.THOUGHT LEADERSHIP • SPONSORED BY GENERAL ELECTRICTHOUGHT LEADERSHIP • SPONSORED BY GENERAL ELECTRICenergybiz.com EnergyBiz 23

Path to SecurityKeeping the Enemy at BayChampioning FlexibilityBy Gary HayesBefore leading their forces into battle, generalsmake sure they have a solid, comprehensive plan.They also know, however, that the enemy is doing the same.Once the battle is joined, commanders on both sides mustbe prepared to adjust their tactics inresponse to battlefield conditionsand events.The army that is prepared forcombat, but lacks flexibility for thedynamics of the engagement, is ata severe disadvantage. The samecan be said for companies that failto anticipate and respond to theincreasing risks their informationand operational technology networks face every day.In a very real sense, the energy industry must consideritself in a warlike status. As technology systems become moreintegral to companywide operations, the potential impactof threats — whether from major weather events or fromcyberattacks — carries increasingly serious consequences.Since I joined CenterPoint Energy in 2010, the company’sIT network has taken on a growing role in the developmentof analytics and situational awareness solutions in areas suchas revenue forecasting and protection, grid and outage management,telecommunications and customer service. I’mproud of the teams that haveworked to achieve these advancesand help position our companyas an industry leader in a futureThe EnergyBiz SecuringPower Forum will exploreshaped by intelligent energy.in depth many of the issuesBut with these advances comeraised in this article. Learnvulnerabilities. As recently as fivemore about the March 3-4Washington event atyears ago, if our IT data centerwww.energybizforum.com.had become incapacitated forsome reason, our employees would experience little changeto their work in delivering electricity to more than 2 millionhomes and businesses in our 5,000-square-mile service territoryaround Houston. Today, technology is a core elementin their work and the systems they support. IT is not justan information system now; it’s an operational technology24 EnergyBiz January/February 2014

Path to securityGary Hayes, chiefinformation officerof CenterPointEnergy, [right] wasnamed the KITECIO of the Year,large utility, at therecent Knowledge2013 Summit,conducted byEnergy Central.BenjaminBeberness, chiefinformation officerof SnohomishPublic UtilityDistrict, washonored asCIO of the Year,small utility.Learning through CollaborationCIOs’ Expanding RoleBy Benjamin BebernessIn today’s utility, chief information officers are requiredto do more than keep the IT lights on. Most utilityCIOs today have some role in supporting operational technologysuch as emergency management systems and supervisorycontrol and data acquisition systems – EMS/SCADA.They face an increase in the volume and sophistication ofcyberattacks in addition to making sure all the new endpointsbeing introduced by smart grid are secure. On top of all ofthat, utilities have had to respond to some of the worst naturaldisaster events in decades, such as Superstorm Sandy.So with all of this change, what are we doing at SnohomishCounty PUD? First and foremost, I work hand-in-handwith Chris Heimgartner, our chief operationsofficer and assistant general manager.We have worked together to makesure that Snohomish’s IT and operationsteams work together and alwaysput safety first, followed by what’s bestfor our customers. Whenever we have astorm, IT is working with operations tillthe end. The same is true if we are undera cyberattack.Today’s cybersecurity events are getting more and morelike natural disasters, so much so that the Department of26 EnergyBiz January/February 2014

Homeland Security is staging its fourth cybersecurity event:Cyber Storm IV. Utilities across the Northwest are participatingby testing their cybersecurity programs, with particularemphasis on their cyberincident response plan.Utilities have had to take cybersecurity more seriously aspart of NERC CIP. This means that utilities have cybersecurityprograms that typically cover four key areas: protect/prevent, monitor/detect, respond, and recovery. Protect/preventand monitor/detect are synonymous with the defensein-depthcybersecurity strategy we have talked about foryears. This approach is still critical to utility cybersecurityprograms, but it is not enough. We have learned in recentyears that we can continue to build bigger and thicker cybersecuritywalls, and this helps make utilities more secureand may deter some hackers, but it will not prevent utilitiesfrom being penetrated. A comprehensive cybersecurityprogram is critical.Much like storm response, utilities need to make surethey’re ready to respond to and recover from cyberevents.That’s where the Cyber Incident Response Plan comes in.Snohomish’s plan was developed with input from operationsas well as our business continuity team. We can perform vegetationmanagement (protect/prevent and monitor/detect),which mitigates impact. What our customers and the utilitycare about most are the utility’s response and recoverycapabilities.A cyber-incident response plan will have several sections.To start off, the plan should describe the various types of incidentsthat may occur on the systems. These incidents shouldbe based on the utility’s cyber-risk register and could rangefrom a minor system incident to a full-scale DistributedDenial of Service attack to an outage of the communicationsinfrastructure. It’s important to note that this includes cybersecurityevents as well as system or weather events.The plan should also include an organizational structurethat leverages emergency response frameworks, like theNational Incident Management System, that lay out thecommand structure and who is involved. Finally, it shouldinclude a communication plan covering who you need tocommunicate with, what you will communicate and how.In today’s security environment we are never going to preventall intruders, so being ready to respond and recover isvery important. Is your utility ready for a Distributed Denialof Service attack? A malicious virus outbreak like Aramco?An infected control system? The next Superstorm Sandy? Doyou have a cyber-incident response plan?One last point. One of the most important elements tostrengthen in a utility’s cybersecurity program is collaboration.At Snohomish County PUD we actively participate inlocal cyber forums that bring together many entities, such asExpedia, Microsoft, Starbucks, T-Mobile, the Port of Seattle,the United States Air Force National Guard and the FBI.We also participate in national groups that are more industry-specificsuch as the American Public Power Association,Large Public Power Council and EnergySec. We are membersof ES-ISAC, Water-ISAC, US-CERT, the WashingtonState Fusion Center, InfraGard and several other forums.The more we collaborate, the more we learn, and themore we can prepare to respond to and recover from an incident.None of us has to do this alone.Benjamin Beberness is Snohomish County Public Utility Districtchief information officer.energybiz.com EnergyBiz 27

www.EnergyBizForum.comMARCH 3-4, 2014 l WASHINGTON, D.C.MANDARIN ORIENTAL HOTELDO YOUHAVEA PLAN?1 in 3utilities don’t have a cybersecurity program in placeHEAR TOP UTILITY PLANSThe next catastrophe, from extreme weather to climate change,is not a matter of if, but when UNDERSTAND ROLES OF UTILITY & U.S. GOVERNMENTYour team and your strategy need to be developed nowLEARN HOW TO CREATE THEMReaction time is limitedUNTAGLE THE BEAUROCRATIC COMPLEXITY?$#Session DetailsCEOs Confront, Respond to Threats of DisruptionThe CEOs of America’s utilities face unprecedented challenges in the threatsconfronting their enterprises: terrorists, hostile states, criminals andextremes in weather. Challenges range from security clearances tocoordinating outage restoration efforts – while keeping control of themounting costs of such efforts. Hear how these industry leaders tacklethese challenges.The Federal Role When Catastrophe StrikesApproaching the federal government for intelligence about security threatsand creating standards for dealing with physical threats. Federal agenciescreate obstacles when it comes to coordinating a massive national responseto crippling regional power outages.Bolstering Physical SecurityAddressing new approaches to the increasingly violent weather events thatare causing widespread, prolonged power outages.Responding to Cyber ThreatsFrom a building in Beijing, Chinese army hackers regularly test the defensesof U.S. utility computer systems. Bad actors in the Middle East, criminalsin Russia, terrorists and hackers mount a vast number of cyber assaultseach week on critical power control systems. Explore the dimensions of thethreat – and what new software, hardware and human resource answers areemerging from utilities.States Innovate Energy SecurityConsider taking the path forward where utilities adapt and even benefit from an eraof more dispersed, distributed generation. A handful of states have become leaders indeploying microgrids to build a more robust capability of keeping lights on for vitalgovernment and public services in the event of a weather disaster.Hardening the Supply ChainDefine the scope of the problem and explore new strategies for dealing with threats tothe supply chain. The hardware and software of smart grid and other new transmission,distribution and generation technology have been produced by hundreds of vendorsaround the world. Vendors rely on other vendors. How can utilities know what they arebuying is safe – all the way up and down a supply chain that defies understanding?Building the Correct CultureA new mindset will be required, top to bottom, for utilities to meet the challenge ofsecuring the enterprise from threats unimagined just a decade or two ago. Learn aboutthe heightened expectations, execution of these new responsibilities and how to prepare.Dealing with Policy and RegulationUtility security is of paramount national security. A terrorist assault on an Americanmetropolis leaving it without electricity for days, even weeks, would deal a cripplingblow to that region, the American public and national economy. Given the magnitudeof the potential crisis that would ensue – what are congressional and regulatory leadersconsidering for new policies and directives for the utility industry.

www.EnergyBizForum.comThe threats aren’t a secret; the solutions shouldn’t be eitherPivotal conversations unfold as we identify innovative solutionsCutting-Edge Event Offering An Exclusive VIP & Behind-The-ScenesLook With Business Decision MakersSpeakers / Presenters Include:Patricia HoffmanAssistant Secretary, U.S. Departmentof Energy Office of ElectricityDelivery & Energy ReliabilityJoseph M. RigbyChairman of the Board, President andCEO Pepco Holdings, Inc.Ralph IzzoChairman, President and CEOPublic Service Enterprise Group Inc. (PSEG)Tim FinanSenior Cybersecurity Strategist and CounselU.S. Department of Homeland SecurityEdna ConwayChief Security Officer,Global Supply Chain CiscoGerry CauleyPresident and CEO NERCAnne PramaggiorePresident and CEO ComEdAudrey ZibelmanChair New York State PublicService CommissionNOT PICTUREDJames Woosleyformer director of the CIAMichael HowardPresidentEPRINadya BartolSenior Cybersecurity StrategistUtilities Telecom CouncilJane LutePresident and CEOCouncil on CyberSecurityPaul NicholasSenior Director of Global SecurityMicrosoftColette HonorableChair, Arkansas PSCIncoming President,National Association ofRegulatory Utility CommissionersKevin WailesCEO, Lincoln Electric SystemVice-Chair, Electricity Sub-SectorCoordinating CouncilRegister today www.EnergyBizForum.comOr call (303) 782.5510High-Caliber SpeakersUnparalleled Utility Executive ParticipationUncensored DiscussionsSAVE $ 00with promo codeEBMAGby 1/31/2014Produced ByMARCH 3-4, 2014 l WASHINGTON, D.C.MANDARIN ORIENTAL HOTELExecutive Sponsor Thought Leader Sponsor Thought Leader Sponsor Thought Leader Sponsor

We’re lookingat GPS deviceswe can justmagneticallystick right onthe truck so wecan track wherethey are.MacGibbonMcQuistionPhotos by Mary Mascarenastrue mobile app that incorporates informationabout weather, how to winterizeyour house, how to save on AC cost, astorm tracker and outages. So, we’reworking past that screen scrape to areal app, but we’re not there yet.We are looking at how to developthe applications: Do we in-source oroutsource the development efforts? Itwould seem that going outside wouldbe quicker to market. Once the appsare developed and deployed, we willneed to support them like any of ourother apps. We still have a lot of questionsto be resolved before we wouldstart deploying mobile apps. We’re justat the beginning of the mobile journey.McQuistion We’re in the process ofmoving all of our Web properties tobetter mobile-enable them. Additionally,we have a successful demand-responseprogram with 80,000 customers participating.OGE is researching and testingtechnology that gives our customers theability to control their equipment suchas air conditioning and pool pumpsremotely. We believe that by providing customerswith equipment that will allow them to automaticallyPARTICIPANTSrespond in the event of a load reduction event, we canCindy BergerArizona Public ServiceVice President and CIOJohn FitzgeraldWestar EnergyExecutive Director ofinformation technologyLynn LoveladyEnergenVice President ofinformation technologyCraig MacGibbonUIL HoldingsVice President and CIOCristina McQuistionOG&EVice President ofstrategic planning,performance improvementand CIODoug PetittVectrenVice President of ITand customer serviceand CIOBarbara SuggSouthwest Power PoolVice President of ITincrease the number of customers whowill participate in those events.Petitt From a true app perspective,we currently have an outage app andwill roll out a bill-payment app in thenext couple months. We do not havetwo-way communication with ourmeters; that limits what you can dowith mobile applications. But, we’verolled out a new format for mobiledevices so that our customer isgetting a true mobile app, or mobilepresentation look and feel, as opposedto that screen scrape off of a websitethat Craig MacGibbon mentioned.We just did that within the last twomonths, too; so, we’re migrating ata decent progression.Sugg We don’t have any mobile appsin production today. We do have acouple of developers that really want towork on that and are having fun with it,even creating some proof-of-conceptapps showing public pricing data andmarket items. Being a power poolrather than a traditional utility, whilesome of our members may be interested in pulling upinformation from time to time on a mobile device, wehaven’t received any formal requests. So, it’s pretty farenergybiz.com EnergyBiz 31

»Technology FrontierThoseconversationsgo on out therein the socialmedia spacewhether you’repart of themor not.PetittSugga 24-hour response to any type of Twitter or Facebookinquiry or comment. We’ve been very active in thatspace, really trying to use it as a platform to get moreof our direction and our position on things out to thepublic. And, it’s been very active, I would say, in thelast six months.Fitzgerald We use Twitter and Facebook moreproactively, telling the story about what our utility’sdoing. They’ll do it for outages, yes, and for thenormal utility info. But we’re also doing it for goodcommunity service.down on our radar screen as we focus on our integratedmarketplace.Berger We’re looking at mobile as we replace ourSCADA/DMS. That’s the point when we’ll look at truemobile apps. We’ve got a mobile site, but we’re still aways from a mobile app.EnergyBiz Along with the mobile app, the bigthing today to chat about is social media. Do youuse social media?Berger Arizona Public Service has had a lot ofcontroversy in the news lately. So, in that particulararea, our community corporate communications folkshave done a lot with Twitter and Facebook, trying toget a lock on what’s happening, getting the employeesinvolved, communicating externally with differentgroups and with our customers. Customer service hasMacGibbon We have an initiative this year tointroduce texting back to our customers, which wedon’t do yet. We’re going to allow customers to signup for that on our website. We need to be moreproactive on social media sites as well. Our newcustomers, the millennials, want the information andinteraction anywhere on any device at any time —and all at their fingertips.Fitzgerald We’re monitoring 24/7. Someone isalways paying attention to those sites because that’sthe public face.MacGibbon And, those conversations go on outthere in the social media space whether you’re partof them or not.Kathleen Wolf Davis is editor-in-chief of Intelligent Utility magazine.This roundtable conversation continues in the January/Februaryissue of Intelligent Utility magazine, as the panelists predict howtheir roles and how the industry will change in coming years.32 EnergyBiz January/February 2014

»Technology FrontierFrontier of Energy StorageThe Holy Grail // By Troy DeVries and Joseph CarbonaraWhen Thomas Edison flipped theswitch to his first dynamo in the 19th century,the genius-wizard launched a multitrillion-dollarindustry. Making and delivering electricity leapedfrom infancy to cocky adolescence with speedunseen in new ventures.Edison and his fellow entrepreneurstoyed with but nevermastered storing electricity ona mass scale.Depending on the utilitypundit, energy storage couldbe the next frontier in electricity.This is because utility infrastructureis built to accommodatethe highest energy usage of theyear, typically the hottest dayof the summer. That means aninvestment in infrastructure toaccommodate, for a brief period,energy usage that can be asmuch as three times what itis on average.Energy storage in generalhas been kind of a Holy Grail forutilities. Generation and demand are instantaneous.Utilities are looking at ways to buffer them.“Energy storage is no longer an idea and a theory —it’s actually a practical reality,” Steve Hellman, presidentof Eos Energy Storage, recently told The NewYork Times. “You’re seeing a lot of commercial activityin the energy storage sector.”In the spring of 1963, Con Edison proposed apump-storage facility on Storm King Mountain.The technology was simple: Approximately8 billion gallons of water would be pumped 2 milesfrom the Hudson River to the top of the mountain50 miles north of New York City every night whenelectric costs were low. The water would be stored in areservoir and released during the day, hurtling throughturbines, when electric costs were at their peak.DeVriesCarbonaraCon Edison argued that the growth of air conditionersand other appliances required considerably more,and affordable, electricity.When Con Edison’s plans were published,opponents argued that the plan would cause thedeath of a scenic canvas for Hudson River Schoolartists, destroy a striped bass breeding ground andcreate an eyesore that would change the river forever.Opposition in courtrooms and riverfronts helped defeatthe company’s plan for pump storage seven yearsafter it was born, and the story of Storm King Mountaingave birth to the environmental law movement.Environmental sensibility has matured in 50 years.The quest for safe energy storage has kept pace.An Eos Energy Storage battery, scheduled to beinstalled in a Con Edison facility early in 2014, waschosen for its safety. The zinc-air core is its cornerstone,as are its nontoxic, stable chemicals. The exactlocation has not been chosen yet. It will depend onsize and availability of an appropriate space and interconnectionconsiderations.Con Edison had rejected a hydrogen battery for itspotential volatility and the New York City Fire Department’sreluctance to certify its safety. The companyconsidered using the hydrogen battery in a remote,non-urban community, but even rejected that becauseof safety and environmental concerns.Eos’ Znyth cells are in the laboratory, deliveringcapacity and energy efficiency that makethem attractive for a closer look by ourR&D department. Unproven is the claimof Eos’ $160 per kilowatt-hour pricepoint and 30-year life. The cost and lifeof the Eos cells are the focus of ConEdison’s research into energy storage.Con Edison also has invested in azinc-based battery research project fromUrban Electric Power, recently installedat the City University of New York to helpreduce the Harlem school’s peak energydemands. New York State EnergyGM SteamGeneral Motors andDetroit RenewableEnergy will producesteam from solidmunicipal waste to heatand cool a Detroit facility,the companies said.As a result, 58 percent ofthe Hamtramck, Mich.,assembly plant’s energyneeds will come fromrenewable sources.34 EnergyBiz January/February 2014

Research and Development Authority also is anunderwriter of the program.Con Edison continues to review energy storagetechnologies as they are developed. A key featurefor our congested urban environment and possibleinstallation within buildings is the use of nontoxicchemicals and intrinsically safe technologies andchemistries. Also important are life cycles, cost-effectiveness,maintenance requirements, size, efficiencies,discharge rate and depth of discharge. Con Edisonhas been working closely with Eos during the developmentof their technology to ensure that the finalproduct fits the needs of the utility industry.Troy DeVries is Con Edison’s director of research and developmentand Joseph Carbonara is a project manager in researchand development at Con Edison.The Future of BiogasA Renewable Resource // By Rodger SchweckeIt is time to consider the futureof biogas.Biogas is a mixture of methane and carbon dioxideproduced when organic material decomposes. Thisrenewable energy resource can be usedto produce on-site heat and electricity,conditioned for injection into the naturalgas delivery infrastructure or consumed asa transport fuel.Since 2006, Southern California Gas hasactively implemented a research, developmentand demonstration program and alsofostered commercial programs to increasethe use of renewable natural gas. Early workfocused on studying feedstocks and setting guidelinesfor purifying biogas to pipeline quality. Looking ahead,SoCalGas is working to develop algae as an energycrop and is exploring the use of solar thermochemicalprocesses to create renewable natural gas. We have afull-scale commercial demonstration of biogas cleanuptechnology already in operation at a wastewater treatmentfacility in Escondido, Calif.SoCalGas is also active in aiding regulatory andpolicy efforts to advance biogas. We are currentlyworking with other stakeholders in a California PublicUtilities Commission proceeding to develop statewidestandards and protocols for the cleanup of biogas soit can be injected into a common carrier pipeline. Tohelp stimulate the development of a robust renewablenatural gas, we have a proposal before the commissionto provide gas cleanup services to biogas producers.Today, renewable natural gas can be producedfrom larger biogas sources such as wastewaterfacilities and landfills at prices competitive with otherenergybiz.com EnergyBiz 35

»Technology Frontierrenewable resources. Advances in gas cleanup andconversion technology such as digesters and gasifierswill expand the amount of feedstock that can beeconomically converted.Biogas is considered to be a renewable resourcebecause its production-and-use cycle is continuous,and it generates no net carbon dioxide. Organic materialgrows, is converted and used and then regrows ina continually repeating cycle. From a carbon perspective,as much carbon dioxide is absorbed from theatmosphere in the growth of the primary bio-resourceas is released when the material is ultimately convertedto energy.When carbon dioxide and other minor constituentsare removed, the product is a purified pipeline-qualitynatural gas that is almost 100 percent methane. Thisbiomethane is interchangeable with any other naturalgas, but it is a zero-carbon resource. Coupling thiszero-carbon profile with the ultra-low “conventional”emissions of natural gas makes renewable naturalgas a nearly perfect fuel. It is storable, it boasts a highenergy density that is almost emission-free, and it iseasily transported over existing infrastructure to serveany natural gas application.Gatherings//Technology FrontierFeb. 10-11 SolarTech Germany BerlinMarch 5-7 Smart Cities –Southeast EuropeFor more information about these and other events, please visitwww.energycentral.com/events.Sofia,BulgariaBiogas is plentiful and is available from sourcessuch as landfills, wastewater treatment facilities,and animal and agricultural waste. If fully utilized,the yield from existing organic waste streams couldsatisfy about 20 percent of current natural gasuse. Biogas feedstock may also soon be farmedeconomically. Work is already underway to developlow-cost dedicated energy crops such as algae andother plant species that can be grown on marginalland to serve as a source of biogas production. Futureenergy crops could make the potential availabilityvirtually unlimited.The mix of future uses for renewable natural gas willdepend upon how markets for renewable resourcesdevelop. Because of the high price of oil and limitedoptions for renewable transportation fuel, it’s likely thattransportation uses will be key demanddrivers. Renewable natural gas is alow-cost option for zero-carbon transportationfuel, and the sector will potentiallyconsume the majority of renewablenatural gas produced.Ultimately, technology and marketadvances will help determine the futureof renewable natural gas, but its successalso depends on a level playing field inenergy policy. For the United States tofully realize the economic and environmentalpotential of renewable gas, it is imperative thatpublic policymakers recognize the benefits of renewablenatural gas.ClemsonWind TestRodger R. Schwecke is vice president of customer solutions forSouthern California Gas.Clemson University haslaunched a $110 millioncenter to test windturbines, according tothe Associated Press.The facility will be capableof testing drivetrainsfor 15-megawattwind turbines.36 EnergyBiz January/February 2014

3rd AnnualHOST UTILITYData is the New Asset:Transforming Utility OperationsGain Perspectiveon Data as an AssetHelp your UtilityTurn your Datainto DollarsTransform yourUtility Operationwith AnalyticsApril 9-11, 2014Washington Duke Inn & Golf ClubRaleigh, North CarolinaJoin your utility peers for the Utility AnalyticsInstitute Summit 2014, the third annualconvergence of utility analytics decision makersfor two days of exclusive, analytics-intensivediscussions.The Summit is a closed event; registration isopen only to utility professionals, Institutemembers and a limited number of solutionproviders.To learn more about membership,sponsorship or attending call 800.459.2233or visit UtilityAnalyticsSummit.com.UtilityAnalyticsSummit.comStrategic conference produced by the Utility Analytics InstituteGOLD SPONSOR: LEADERSHIP FORUM SPONSOR: BRONZE SPONSOR: PARTNER: MEDIA PARTNER:

» Introducing yourself. You have circuit board level, chip level andAddressing CybersecurityA Moving Target, An Increasing Gap // By Martin RosenbergSecurity is front and centerat utilities working hard to come up with newways of keeping their power grid as resilient aspossible. Doug Westlund, the chief executive officerof N-Dimension Solutions, discussed some of thekey issues concerning cybersecurity at utilities. Hisedited comments follow.EnergyBiz Is cybersecurity a growing threatfor utilities?The EnergyBiz SecuringPower Forum will explorein depth many of the issuesraised in this article. Learnmore about the March 3-4Washington event atwww.energybizforum.com.Westlund Theproblem has alwaysbeen there. But it isbeing amplified andpropagated througha number of drivers.One is smart grid.Smart grid meansmore interconnection.More interconnection means an increased attacksurface. In addition, this industry is an attractive target.Easy-to-obtain and easy-to-use powerful hacking tipsand scripts have been developed.EnergyBiz What do you mean by attack surface?Westlund The largest attack surface would be theInternet itself. Then second would be the electric utilityinfrastructure and related sectors. An attack surfacemeans there is an ability to attack a set of systems orassets. The utility attack surface, based on smart gridinterconnections, is growing larger. It includes the gaspipeline industry, which is becoming the dominant fuelsource for electric power generation.EnergyBiz How would you describe the utilityindustry’s supply chain security problems?Westlund It’s a big problem that’s gaining moreawareness. It is virtually impossible to eliminate therisks through the overall supply chain. The only wayyou could do that is if you created all components bysystem level. There is risk inherent in the supply chainand there very well could be risks associated with theequipment that you buy that could be nondetectable.The only solution to this is to implement cybermeasures,including a monitoring function.EnergyBiz How can utilities recover costs incurredpreventing a cyberattack? How much needs tobe spent?Westlund Look at mature cybersecurity industriessuch as banking and telecom. In those industries youwill typically see budget expenditures of 15 to 20 percentof any given IT project, asset or system devoted tocybersecurity. Midsized utilities, municipals and cooperativescan obtain very effective and pragmatic solutionsthat are less than 5 percent of the asset value, projectcost or system cost. Some of the large investor-ownedutilities are talking numbers closer to 10 to 15 percent.How do you prove the value? When you monitor, youwill clearly detect issues that you didn’t see before andyou will clearly be able to prove that you are mitigatingissues that may be building or may in the future havethe ability to impair your operations.EnergyBiz Are utilities adequately staffed on thesecurity front?Westlund Definitely not today. There is widespreadacknowledgement that they don’t have the resourcesinternally to do it themselves. Some investor-ownedutilities say they do have the internal resources to doit themselves. But that’s definitely not the case forco-ops and municipalities.EnergyBiz Some utilities say they’re handicappedby not having adequate security clearancesand that limits what they can learn from thefederal government.Westlund Absolutely. There are a number of initiativesincluding a presidential executive order that really38 EnergyBiz January/February 2014 THOUGHT LEADERSHIP Editorial • SPONSORED BY N-Dimension Solutions

It’s typically 10to 20 times moreexpensive torecover than toproperly prepareyourself for acyberattack.addresses this. Plus, I knowthat the American Public PowerAssociation and the NationalRural Electric Cooperative Associationare striving to becomepart of the inner circle when itcomes to critical intelligence.I do see that going in the rightdirection at this point, which isgood. The industry really needssome harmonization of standards. We’ve counted atleast 75 standards that could apply to utilities, whichmakes it totally unmanageable.EnergyBiz What issues are least understood byutilities and policymakers?Westlund The least understood issue is the impactof a cyberbreach. It’s typically 10 to 20 times moreexpensive to recover than to properly prepare yourselffor a cyberattack. The risks being created by IT/OTintegration — interconnections between remote assetslike substations and enterprise information systems —are severely underestimated.EnergyBiz What kind of scenarios do you think aremost likely to threaten utilities?Westlund There are nation states with a purposeand intent to impair the grid or portions of the grid.Workers can unknowingly propagate malware orcyberbreaches. There could be disgruntled subcontractorsand employees who target certain aspects ofoperations. There is a wide range of potential threats.The one that we see most of the time is the authorizedinternal user unknowingly propagating malware withinthe operations.EnergyBiz What key industry assumptions needto change?Westlund They must acknowledge that this is nota compliance issue. This is a matter of reliability andoperational integrity. The industry will not move aheadif one just looks at it from a compliance checkmarkperspective. In fact, we’ll fall behind because theattacks and the threats are increasing.EnergyBiz Some small utilities believe they willnot be targeted.Westlund That’s a misconception. The mostadvanced hacking techniques are typically coordinatedand distributed attacks, meaning that they willattack multiple parties in a coordinated fashion. Thatis far more impactful than attacking one single entity.You can make the argument that attacking a numberof smaller guys in a region actually has a biggerimpact on the grid overall than attacking, say, atransmission entity.EnergyBiz If there is an attack that brings down amajor urban area for weeks, that’s an existentialthreat to a utility, to say nothing about a threat tothe economy and people’s lives. When you try towrap your arms around it for a utility client, howdo you describe what’s at stake?Westlund It is hard to describe the enormity of this.It is really hard to describe the significance. This is amatter of national security. Some say the next 9/11will be an attack on the grid.EnergyBiz Do utilities have all the toolsthey need?Westlund It is a moving target and it’s an increasinggap, meaning that the risks are getting more significant.The good news is there are guidelines, frameworks,technology and capabilities available today toprovide good and effective protection, recognizingthat nothing will ever be 100 percent secure.THOUGHT LEADERSHIP Editorial • SPONSORED BY N-Dimension Solutionsenergybiz.com EnergyBiz 39

»Legal ArenaState Energy InnovatorsAdvanced Energy Options // By Graham RichardThere is a dynamic 21st century energysystem growing rapidly. The architects andbuilders are governors, legislative leaders, public utilitycommissioners and executives of innovativeenergy companies.Leaders in state houses across thecountry are making progress towardsecure, clean, affordable energy — whatwe call “advanced energy.” Laws, regulations,and policies are promoting energyinnovation, investment in new technologies,and increased consumer choice.The movement is not linear, but thetrajectory is clear: Advanced energy is on the rise.Advanced Energy Economy and its 13 state andregional partner organizations logged 60 legislativevictories in nine states across the country in 2013.These include 53 new laws that moved states towardbetter energy options. At the same time, seven proposalsto undermine advanced energy progress wentdown to defeat.California recently began implementationof Proposition 39, the 2012 initiativethat will provide $500 million per year forfive years to pay for energy upgrades ofschools and other public buildings. Legislatorsset aside $28 million of first-yearrevenue for a revolving loan fund, to stretchdollars further. They also passed a law toextend incentives for the purchase of fuelefficientvehicles and to develop up to 100 hydrogenfueling stations in the state. Golden State lawmakersalso made it possible for renters to buy solar and otherrenewable energy through a voluntary “green tariff.”40 EnergyBiz January/February 2014

NuclearFees HaltedA federal appeals courthas told the federalgovernment to stopcollecting $750 milliona year for nuclear wastedisposal, according tothe Associated Press.The court said thatthe government failedto justify continuedcollection of the money.Utilities have over theyears paid $27 billioninto the program.In other state progress, Maryland Gov.Martin O’Malley succeeded in addingan offshore wind carve-out to the state’srenewable portfolio standard in order tofacilitate offshore wind development. TheNew Mexico legislature expanded energyefficiency by switching to a cost-effectivenesstest that gives consumers moremeasures that can save them money.Arkansas legislators passed both performancecontracting for public buildingenergy improvements and PACE legislationthat allows owners of commercialbuildings to pay off energy upgrades ontheir property tax bills.Just as important was the successful defense of theRenewable Portfolio Standard in multiple states whereit was under attack. Kansas, for example, gets 11 percentof its electricity from wind and hosts the SiemensU.S. nacelle manufacturing headquarters. Its governor,Sam Brownback, led a charge that stopped a legislativeeffort to repeal the state’s RPS. In North Carolina,RPS-rollback bills stalled in both the House and Senate.Credit goes to AEE’s partner, the North CarolinaSustainable Energy Association, for rallying the solarindustry there, and to farmers who benefit from RPSsupport of generating energy from organic waste.In fact, not a single attempt to reverse any state’sRPS succeeded last year. Rather, the RPS marketis now larger overall as a result of legislative actionin 2013. That’s because three states increased theirrenewable energy requirements in size or applicability.Nevada not only increased its RPS from 20 percentto 25 percent, but lawmakers required an additional350 megawatts of wind power and 550 megawattsof natural gas generation to take the place of coalfiredpower plants forced to retire. The Minnesotalegislature made changes to its RPS that will boostsolar power in that state from 13 megawatts todayto 450 megawatts by 2020. Colorado had a banneryear, with eight new pieces of legislation adding tothat state’s record of advanced energy leadership.Lawmakers pre-empted a constitutional challenge tothe state’s RPS from the Energy & Environment LegalInstitute by repealing the “in-state multiplier.” The legislaturealso doubled the RPS mandate on rural electriccooperatives from 10 percent by 2020 to 20 percent.Despite the failure of every significant RPSchallenge in 2013, the pressure on state renewableenergy requirements is likely to continue this year. Itmay come in the form of proposals to make purchaseof renewable energy voluntary, wiping out the marketcertainty needed for investment in renewable generation,rather than outright RPS repeal. These efforts toweaken RPS will have to contend with the continuingtrend of lower cost in renewable energy. Wind, solarand technologies like organic waste-to-energy offerincreasing economic value, which is growing evermore attractive to state leaders and regulators.The need to fight attacks will not slow down thegovernors, legislators and public utility commissionerswho are driving development of an energy system forthe 21st century.In the coming year, pay special attention to aconversation that has already begun. Industry stakeholdersare talking about new business models thatwill allow electric utilities to accommodate slower loadgrowth due to increased efficiency, greater deploymentof distributed generation, and the need forinvestments to make the power grid more resilient.The 21st century energy system is coming.Leaders in the states are taking action to acceleratethe transition.Graham Richard is CEO of Advanced Energy Economy, a nationalbusiness association.energybiz.com EnergyBiz 41

» Legal Arena InsufficientBuilding MerchantTransmissionMeet the Challenge // By Mark LawlorThe United States possesses someof the best renewable energy resources in theworld, but it also faces a serious challenge: There is alack of transmission capacity to deliver that energy tomarket. Clean Line Energy Partners, an independentdeveloper of long-haul transmission lines, will deliverthousands of megawatts of renewable power fromthe windiest areas of the United States to communitiesand cities with a high demand for clean, reliableenergy and that lack access tolow-cost, clean energy resources.Insufficient transmission in theUnited States continues to limitconsumers’ access to cost-effectivewind energy and the economicbenefits that accompany newwind farms. The existing transmissionsystem was created primarilyas a result of local utility planningto connect population centers with nearby fossil fuelpower plants. It is insufficient to meet the demandsof our new energy economy. We need long-haultransmission lines to move America’s vast renewableenergy resources to market. At Clean Line, we aredeveloping several long-distance transmission linesto deliver power from renewable energy resources toload centers.One of our projects, the Grain Belt Express CleanLine high-voltage direct-current transmission line,begins in western Kansas and extends to the borderof Illinois and Indiana with an intermediate interconnectionin Missouri. This 750-mile line will deliver up to3,500 megawatts of cost-competitive wind power tostates within the service regions of the MidcontinentIndependent System Operator and the PJM Interconnectionregional transmission organization and thathave a high demand for clean, reliable energy. Thetransmission line will deliver the clean energy viadirect current, which provides the most efficient andcost-effective way to move large amounts of powerover long distances because HVDC has lower electricitylosses and a smaller footprint than comparablealternating-current lines.The benefits of a project like the Grain Belt Expressare not limited to consumers with access to low-costclean energy delivered by the project. Construction ofthe $2 billion transmission line and $7 billion of investmentsin new wind farms willdeliver significant economicbenefits. It is estimated thatthe project will create morethan 5,000 construction jobsto build the transmission lineand wind farms and morethan 500 permanent jobs tomaintain them. The HVDCtransmission line will createemployment opportunitiesin many sectors, includingconstruction, hospitality, andthe manufacturing of windturbine and transmissioncomponents.Clean Line is makingthe extra effort to sourcetransmissionin the UnitedStates continuesto limitconsumers’access tocost-effectivewind energy.materials and labor from qualified local businesses.For example, we are contracting with local manufacturersthat make the components involved in buildingtransmission lines. Clean Line has agreements withcompanies like Southwire, General Cable, ABB andPelco Structural to supply components for projects inthe states where our lines will be constructed. Additionally,we are identifying and coordinating with localcompanies that can supply concrete and aggregateor that provide services such as road and right of waymaintenance, surveying and engineering.42 EnergyBiz January/February 2014

As with any major infrastructure project, the economicactivity associated with construction bringswelcome increases in income and spending to ruralcommunities. As construction workers spend time inlocal areas, they spend money at hotels, restaurantsand gas stations.Other benefits are more direct. In many of ourproject states, property taxes collected on transmissionlines go to local taxing districts such ashospitals, schools, emergency servicesand county governments. Becausetransmission lines remain in operationfor several decades, these taxes providelong-term local benefits. In Kansas,where state law provides a 10-yearproperty tax abatement on new transmissionlines, Grain Belt Express hasoffered each county that will host theline a construction mitigation payment of$7,500 per mile to cover expenses thecounty might incur during construction.Clean Line will also ensure that roadswill be maintained or upgraded duringconstruction. Roads will be left in eitherthe same condition or better after construction.Clean Line has also developed compensationterms for transmission easements based on landown-Waste Site WorkThe Nuclear RegulatoryCommission staff hasresumed work studyingYucca Mountain’ssuitability as a nuclearwaste repository,according to theWashington Times.The agency said itwas responding to acourt order.Sen. Harry Reid ofNevada and PresidentBarack Obama opposeuse of the site fornuclear waste.er input. In addition to the payment for the easementarea equal to 100 percent of the fair market value ofthe acreage, Grain Belt Express is offering landownersthe choice of annual payments for each structureon their properties or a larger one-time structure paymentup front. This approach has been well receivedby landowners in Kansas.Communication and collaboration at the local levelis essential, and Clean Line continues to spend agreat deal of time and resources to build relationshipsand maintain an open dialogue. We look forward toworking with communities for many years to comeas we advance our projects and help to build the infrastructurenecessary to support the wind-rich energymix of the future.Mark Lawlor is Clean Line Energy Partners director of development.Gatherings//Legal ArenaFeb. 27-28 Global Energy Career Expo LondonMarch10-12Global Energy SecurityConferenceFor more information about these and other events, please visitwww.energycentral.com/events.Abu Dhabi,United ArabEmiratesenergybiz.com EnergyBiz 43

»Legal ArenaGetting Clean Energy Policy RightA Continent Apart, Similar Paths // By Daniel C. Esty and Dr. Varun SivaramConnecticut and Los Angelesmake an unlikely comparison, a state and citydisparate in geography, climate and urban density. Yetboth have about 4 million people, similar peak electricitydemand and ambitious renewable energy targets —20 percent and 33 percent of total electricity supplyby 2020, respectively.Both are pursuing cheaper, cleaner and more reliablerenewable power generation. In October, ConnecticutGov. Dannel Malloy announced a nearly $2 billioncommitment over 20 years to procure 270 megawattsof solar and wind power — just under 4 percent of thestate’s total electricity consumption — from privatedevelopers. And earlier in 2013, then-Mayor AntonioVillaraigosa signed agreements committing the utilityserving Los Angeles to end coal power by 2025, to bereplaced in large part by privately financed renewableenergy projects similar to those in Connecticut.The national outlook for clean energy is ratherbleak. Although President Barack Obama recentlyfollowed through on his pledge to address climatechange by unleashing the Environmental ProtectionAgency to set CO 2 emission limits on new coal-firedpower plants, those regulations must survive SupremeCourt scrutiny, and Congress is deadlocked on climateand energy issues.Federal funding to support clean energy projects isslated to fall by 75 percent this year, compared withthe levels of investment during the past few years.Connecticut and Los Angeles are among the citiesand states on both coasts that have stepped into thisleadership vacuum to offer creative new approachesto financing clean energy projects. The centerpiece ofplans in Connecticut and Los Angeles to ramp up renewableenergy is private financing through competitiveauctions for large-scale renewable projects. Both Connecticutand Los Angeles have previously tried subsidybasedincentives for renewable energy, for example byoffering a rebate off the sticker price of a residentialsolar panel installation, but the high up-front costs ofrenewables quickly consumed government incentivedollars, limiting the amount of new capacity.Conversely, power purchase agreements mobilizeprivate capital and lock in predictable power ratesthrough a private developer who can finance theproject in return for a contract to sell power for up to20 years. Los Angeles used wind PPAs to ratchet upits renewable energy percentage to 20 percent by2010 and is well on its way to awarding1 gigawatt of solar this decade. Connecticut’srecent “reverse auction” had wind,solar, biomass and tidal power projectsbidding down the price ratepayers wouldpay to below 8 cents per kilowatt-hour.Renewable Portfolio Standards provedinsufficient to drive the recent advancesin clean energy development. It also took Estyleadership, committed to a transformedenergy future through 15- and 20-yearpower purchase agreements, to makeinvestments in renewable power bankable.Connecticut’s Green Bank aims to encouragethe flow of private capital to cleanenergy projects by de-risking these investmentsand cutting costs through scaled-updeployment, reduced regulatory burdens,Sivaramstandardized contracts and various otherrisk mitigation strategies.Moreover, Los Angeles and Connecticut are promotinglocal distributed generation. With incentivesto promote residential and commercial rooftop solarpower and other small generators — L.A.’s solar “FeedinTariff” financing scheme is the largest of any city inthe country — and Connecticut has increased in-staterenewables by 10 fold over the past two years.In our federal structure, it often falls to state andlocal leadership to break new ground and blaze a pathforward. In this spirit, Los Angeles and Connecticuthave led the way to an energy future that is cleaner,cheaper and more reliable.Daniel C. Esty is commissioner of the Connecticut Departmentof Energy and Environmental Protection. Dr. Varun Sivaram wassenior adviser on energy and water policy to Los Angeles MayorAntonio Villaraigosa and is currently a Rhodes Scholar.44 EnergyBiz January/February 2014

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»Legal ArenaPriorities after FERC OverturePreparing for a Low-Carbon Economy // By Ron BinzWho says Washington can’t movequickly? President Barack Obama announcedmy appointment to lead the Federal Energy RegulatoryCommission on June 27. Ninety-five days later,my nomination died in the Senate Energy and NaturalResources Committee. I withdrew because of oppositionfrom the coal industry andthe political far right, championsof the status quo in U.S. energyand environmental policy.OK, no more dark humor.EnergyBiz Editor-in-Chief MartyRosenberg invited me to explainwhere I’m headed “now that theFERC chairmanship is in yourrear-view.”FERC must ensure that the U.S. electric grid andits markets are able to deliver a low-carbon energyeconomy with an unknown future combination ofrenewable energy, clean coal and gas, nuclear powerand demand-side services. The exact final mix of theseclean resources will depend on their relative economics.Actually, each of us has that same responsibility —to make sure actions taken today are consistent witha future where the electric power sector leads theeconomy in decarbonization.My renewed consulting practice will focus onfour areas.Regulatory reform // The electric utilityindustry has been asked to transform itself during thenext two decades and to craft a new business model.To succeed, the industry will need some help fromlawmakers and regulators. Today’s regulatory schemeworked well when the electric industry was much simplerand our understanding of environmental issueswas primitive. But regulation developed in the 1950sno longer serves our complex present and future. Wemust begin rewarding utilities for what society actuallyasks them to do. Performance-based regulation cando that. Energy regulators must begin to assess notonly the cost of large capital decisions, but also therisk to consumers of those commitments. Balky, overlyjudicial regulation needs to evolve to a more nimblepractice. I will continue my work begun with Ceresand Utilities 2020 in bringing risk-aware regulation tostates and advocating regulatory regimes that giveutilities the correct incentives so they can move to amore appropriate business model.EPA rules // The failure of Congress to deal withgreenhouse gas emissions means that duty falls tothe Environmental Protection Agency under the CleanAir Act. It may not be the most elegant or preferredapproach, but it’s the law today. For electric power,thoughtful EPA rules for existing power plants can putus on a trajectory to deep greenhouse gas cuts at anacceptable cost. But industries that profit from theatmosphere as a carbon dumping ground will resist,and the EPA will be dogged each step of the way. Therest of us must engage constructively with the EPAand with states implementing these rules. Details willvary by region and state, but the goal should be thesame: to move as quickly on carbon reductions as wecan afford.Smart grid // It’s just a matter of time before ITtransforms the electric sector, just as it has remadecommunications, entertainment, information and commerce.After smart meter installation, policymakersmust allow or require utilities to establish smart prices.Dynamic pricing will create an instant market for retailsmart grid products.Market innovations // A smarter grid, newtechnologies and increased environmental demandsare creating market opportunities for new players inelectric power. FERC Order No. 755 sets the stagefor entrepreneurs to supply essential grid services,including frequency regulation and electric storage. Iwill be working with these new players to make electricmarkets and grid operations more efficient.Yes, the FERC chairmanship is in my rear-view.Critical but solvable challenges are before us.Ron Binz is a former chairman of the Colorado Public UtilitiesCommission and a recent nominee to the Federal EnergyRegulatory Commission.46 EnergyBiz January/February 2014

»Final TakeJohn and Jeanne Rowe at a Chicago school where they are assisting students. Photo courtesy of John RoweBack to SchoolGiving Back // By John RoweDouglas MacArthur famouslysaid, “old soldiers never die, they just fadeaway.” Retired utility CEOs die sooner or later, Iexpect, but they spend a good part ofthe interim chairing civic boards andserving on corporate boards. So it isfor me, chairing The Field Museum andWisconsin Alumni Research Foundationboards and having just finished chairingthe board of the Illinois Institute ofTechnology. I also enjoy working on theboards of Northern Trust, Allstate andSunCoke Energy.Twenty-eight years of heading utilities was a calling,a set of responsibilities and privileges conductedwith as much honor as I could muster and as muchsuccess as I could grasp. Retirement, too, must havea calling. For my wife, Jeanne, and I, that calling hasbeen working with urban schools. In spite of the bestefforts of many teachers and administrators,urban schools are not, and in someways cannot, meet the combined challengesof broken communities, brokenhomes, neighborhood politics, unionpressures and constrained budgets.There are many efforts to respond tothese problems, but charter schools andtraditional parochial schools are amongthe most effective.A charter school in Illinois and many other states isa public school, open to all, without tuition, funded bya mix of public, per capita payments and private finan-energybiz.com EnergyBiz 47

» Final Take Company Page URLcial assistance. In Illinois, those per capita paymentsare about two-thirds of the average cost per pupil ofthe public school system and come, sometimes, withaccess to old school buildings. Parochial schools youknow, but you may not be aware how many of themare now populated by minority students with little orno connection to the Catholic Church. Both charterschools and parochial schools have mixed successacademically, but the better ones substantiallyoutperform their neighboring standard public schoolsand work very hard to strengthen the cultural values ofthe students. Parochial schools have long worked onvalues, and most charter schools stress self-discipline,higher expectations, constructive opportunities, andharder work, all in their own way. In Chicago, charterschool students, on average, score about 14 percentbetter than their peers on standardized tests.Jeanne and I are directly involved in three schools.Jeanne, who spent 12 years in Catholic schools, volunteerseach week to tutor children at Pope JohnPaul II Catholic School in a largely Latino neighborhood.We back up her work with financial contributionsthrough Big Shoulders, a community parochial schoolsupport organization. We helped open two charterschools, Rowe-Clark Math and Science Academyand Rowe Elementary School. Jeanne runs “Girl Talk,”the most popular extra credit activity at Rowe-Clark,and tutors at Rowe Elementary every week. I kibitz onhistory classes at Rowe-Clark and conduct my ownadvanced history seminar, this year on Islam, last yearon China, and the year before on World War II and theHolocaust. Again, we back up our efforts with money,in this case in large quantities. We get to know asmany students as we can and as many teachers aswe can. Both are rewarding.I wish I could claim that our test scores show totalsuccess, but we have not yet achieved our wishes.Our average ACT scores at Rowe-Clark are around18.5 — not acceptable, but three points better thanthe neighboring standard school. Other charterschools in the Noble Network of Charter Schoolshave achieved averages over 20. At Rowe Elementarywe are having very good results in the first years butmust work harder on the higher grades. But here isthe punchline. Nearly all of our Rowe-Clark graduatesgo to college. Out of our first three graduating classes,totaling around 330 kids, over 300 are attendingcollege and many are in verygood colleges indeed. Weare getting these results in acity where something under10 percent of similarly situatedstudents attend college.We follow the students’progress and help themwith scholarships.Neither in retirement nor inmy paid employment have Ifound the Holy Grail, but wehave found work worth our timeand money. Our teenagers areno more perfect than any otherteenagers, but many of themare much better people thanyou or I have a right to expect.They write, erratically but powerfully, to say thank-youor to share a new problem. In retirement as in ourwork, to paraphrase a scripture, “we are not requiredto finish the work; neither are we permitted to desistfrom it.” This work is our answer to the problem offading away.John Rowe is the former Exelon chairman and chiefexecutive officer.»advertiser indexBlack & Veatch inside front cover www.bv.com/assetsCS Week 3 www.csweek.orgElster 15 www.elster.comEnergy Central Professional inside back cover pro.energycentral.comEnergyBiz SecuringPower Forum28-29 www.energybizforum.comGeneral Electric Corporation 20-23 www.gedigitalenergy.comInteractive Intelligence 1 www.inin.comQuanta Services back cover www.quantaservices.comRaytheon 5 www.rps.comUtility Analytics Institute 45 member.utilityanalytics.comUtility Analytics Summit 37 www.utilityanalyticssummit.comNeither inretirementnor in my paidemploymenthave I found theHoly Grail, butwe have foundwork worth ourtime and money.48 EnergyBiz January/February 2014

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