Jerrold Oppenheim DRAFT New England Electricity Restructuring Roundtable 110 Boston April 3, 2009

Jerrold OppenheimJerrold OppenheimDRAFTDRAFT

New England Electricity Restructuring Roundtable New England Electricity Restructuring Roundtable 110110

BostonBostonApril 3, 2009April 3, 2009

Pursuing Sustainable Energy Pursuing Sustainable Energy in New England: the Promise in New England: the Promise

of Stimulus Funds and the of Stimulus Funds and the Reality of Recession – a Reality of Recession – a Low-Income PerspectiveLow-Income Perspective

““America sees 18% of America sees 18% of Wealth Vanish”Wealth Vanish”

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Only top 20% had significant Only top 20% had significant income increasesincome increases

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New EnglandNew England

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CBPP

Unemployment 8.1%Unemployment 8.1%>10% in CA, MI, >10% in CA, MI, NV, NC, NV, NC,

OROR, RI, SC, RI, SC

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January 2009 (US: 7.6%)

Feb. '09 from Feb. '08US 8.1% +69%New EnglandConn. 7.4% +42%Maine 8.0% +63%Mass. 7.8% +70%NH 5.3% +43%RI 10.5% +62%Vt. 7.0% +59%Source: US BLS (March 27, 2009)

LIHEAPLIHEAP

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2008 to 2009US +25%New EnglandConn. +23%Maine +15%Mass. +25%NH +25%RI +10%Vt. +17%Source: NEADA (Jan. 2009)

Massachusetts at March 302008 2009 increase

157000 197500 26%

DHCD

Regional differencesRegional differences

http://www.creditslips.org/photos/uncategorized/2008/04/15/bankruptcyfilingratemapapr2008small.jpg

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..

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Other Headline Impacts of Other Headline Impacts of The Great RecessionThe Great Recession

Millionaire Population FallsMillionaire Population FallsThe numbers are in: Millionaires The numbers are in: Millionaires are getting clobbered by the are getting clobbered by the financial crisis. … the latest survey financial crisis. … the latest survey from Spectrem Group showed that from Spectrem Group showed that the number of U.S. millionaires fell the number of U.S. millionaires fell 27% last year. 27% last year. wsj.com/marketbeat March 14, 2009wsj.com/marketbeat March 14, 2009

Citigroup Climbs to $1.78 / Bank's Citigroup Climbs to $1.78 / Bank's Stock Solidly Over $1 Apiece After Stock Solidly Over $1 Apiece After Nearly Closing Under It Recently Nearly Closing Under It Recently wsj.com/Large Stock Focus March 14, 2009wsj.com/Large Stock Focus March 14, 2009

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RATE INCREASESRATE INCREASES

T&DT&D GenerationGeneration Natural Gas commodityNatural Gas commodity FinancingFinancing Carbon managementCarbon management

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Transmission and Distribution Transmission and Distribution

Source: Transforming America’s Power Industry: The Investment Challenge, The Brattle Group, November

2008

Investment Including Smart Grid (2010-2030)

$113.4

$184.4

0

200

400

600

Transmission Distribution

Billi

ons

of D

olla

rs (

Nom

inal

)

? 230 kV < 230 kV

$297.8

$581.5

EEI

Value of reliabilityValue of reliabilityEstimated Cost-per-Outage-per-Customer Estimated Cost-per-Outage-per-Customer

(U.S.)(U.S.)11

Duration Duration Residential Commercial Residential Commercial IndustrialIndustrial

0 sec 0 sec $2.18 $2.18 $605 $605 $1,893$1,8931 hour 1 hour $2.70 $2.70 $886 $886 $3,253$3,253Sustained Interruption Sustained Interruption

$2.99 $2.99 $1,067 $1,067 $4,227$4,2271 Costs shown in U.S. 2002 CPI-weighted dollars1 Costs shown in U.S. 2002 CPI-weighted dollars

Source: Kristina Hamachi LaCommare and Joseph H. Eto ,Understanding the Cost of Power Source: Kristina Hamachi LaCommare and Joseph H. Eto ,Understanding the Cost of Power Interruptions to U.S.Interruptions to U.S.

Electricity Consumers (LBL, 2004), Table 10, Electricity Consumers (LBL, 2004), Table 10, httphttp://eetd.lbl.gov/ea/EMP/EMP-pubs.html://eetd.lbl.gov/ea/EMP/EMP-pubs.html

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GenerationGeneration

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Frank Graves, The Brattle Group, at The Santa Fe Conference 2009

Nominal Levelized Cost (2010 cents/kWh)Nuclear 7.3-11.2Onshore Wind 12.0-14.1Carbon capture/storage 12.1-14.2Combined Cycle 10.9-14.4Solar Thermal 16.3-20.1Combustion Turbine 18.2-22.7

Natural Gas FuturesNatural Gas Futures

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Synapse Energy Economics

EIA Gas ForecastsEIA Gas Forecasts

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SynapseEnergyEconomics

Financing costs (EEI)Financing costs (EEI)

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Impact is not uniformImpact is not uniform

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DOE

CarbonCarbon

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Range of Potential Impacts Range of Potential Impacts From Climate Legislation (EEI)From Climate Legislation (EEI)

Cost per household $446 - $2927 in 2020 / yearCost per household $446 - $2927 in 2020 / year

Electricity prices 21% - 35% in 2020Electricity prices 21% - 35% in 2020

Natural gas prices 20% - 39% in 2020Natural gas prices 20% - 39% in 2020

GDP 0.7% - 1.74% (~ $336B out of $~19.2T GDP)GDP 0.7% - 1.74% (~ $336B out of $~19.2T GDP)

Employment 1.1 - 2.78 million in 2020Employment 1.1 - 2.78 million in 2020

Coal consumption 42% - 66% in 2020Coal consumption 42% - 66% in 2020

Permit prices ($ / ton COPermit prices ($ / ton CO22 equivalent) $18 - $48 / ton in 2020 equivalent) $18 - $48 / ton in 2020

Total US GHG emission (mmtCOTotal US GHG emission (mmtCO22-equivalent) 4887 – 6654 in 2030 (“Business -equivalent) 4887 – 6654 in 2030 (“Business As Usual” 9672 in 2030)As Usual” 9672 in 2030)

COCO22

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WorldResourcesInstitute

Minnesota 1.78% 24.1 -25Wisconsin 1.88% 23.5 -26Delaware 0.28% 23.1 -27South Carolina 1.42% 23.1 -28Nevada 0.79% 22.6 -29I llinois 4.11% 22.4 -30Georgia 2.92% 22.2 -31Michigan 3.13% 21.5 -32North Carolina 2.55% 20.3 -33Hawaii 0.37% 20.3 -34Virginia 2.14% 19.6 -35Maine 0.37% 19.5 -36Idaho 0.39% 19.1 -37Arizona 1.55% 18 -38

New Hampshire 0.32% 16.8 -39Maryland 1.35% 16.8 -40New Jersey 2.07% 16.6 -41Florida 4.20% 16.4 -42Washington 1.45% 16 -43Oregon 0.78% 14.9 -44Massachusetts 1.30% 14 -45Connecticut 0.68% 13.4 -46Vermont 0.12% 13.1 -47California 6.62% 12.8 -48New York 3.45% 12.4 -49Rhode I sland 0.19% 12.1 -50

District Of Columbia 0.06% 7.4 -51

COCO22

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New EnglandNew England

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Cap and Trade rebates?Cap and Trade rebates?

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ConsumersConsumers

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ENERGY BURDENENERGY BURDEN

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0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Gas Oil

Energy Burdens 2008

Low-incomeAverage

8.3%

12.0%

2.6%

3.4%

Sources: US Census, US DOE EIA, Mass. DHCD, US DOL

CONTROLLING LOW-CONTROLLING LOW-INCOME BILLSINCOME BILLS

StimulusStimulus EfficiencyEfficiency Demand management?Demand management? LIHEAPLIHEAP Arrearage managementArrearage management Low-income ratesLow-income rates

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StimulusStimulus Energy efficiency / RenewablesEnergy efficiency / Renewables

Energy Efficiency and Renewable Energy Programs - $16.8 Energy Efficiency and Renewable Energy Programs - $16.8 BillionBillion

Renewable energy project / transmission loan guarantees - $6 Renewable energy project / transmission loan guarantees - $6 BillionBillion

Federal building efficiency - $4.5 BillionFederal building efficiency - $4.5 Billion Weatherization - $5 BillionWeatherization - $5 Billion State block grants for energy projects - $6.3 Billion State block grants for energy projects - $6.3 Billion

TransmissionTransmission Federal loans for transmission (WAPA and BPA) - $6.5 BillionFederal loans for transmission (WAPA and BPA) - $6.5 Billion Electric transmission loan guarantees - $2 BillionElectric transmission loan guarantees - $2 Billion

Smart Grid - $4.5 Billion Smart Appliances - $300 MillionSmart Grid - $4.5 Billion Smart Appliances - $300 Million PHEVPHEV

Fuel efficient vehicles - $300 Million States, $300 Million FedFuel efficient vehicles - $300 Million States, $300 Million Fed PHEV charging infrastructure - $400 MillionPHEV charging infrastructure - $400 Million Advanced battery manufacturing - $2 BillionAdvanced battery manufacturing - $2 Billion

Carbon Capture and Storage - $3.4 BillionCarbon Capture and Storage - $3.4 Billion

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EfficiencyEfficiency

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WAPWAP

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WAPTAC

New EnglandNew England

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WAP 2008 2009 2010?Conn. 2.5 6.0Maine 2.6 6.2NH 1.5 2.8RI 1.2 2.4Vt. 1.3 2.2

(+ ARRA)Ratepayers 2008 2009 2010?NH (NGrid) 572,000$ 850,000$ 1,275,000$ RI (NGrid) 3,200,000$ 4,100,000$ 6,150,000$ VT (EVT rpt) 932,726$

( 3 year average)

2007 2008 2009Conn. 8,336,263$ 9,133,494$ 9,765,387$ Effcy Maine 2,136,737$ 2,797,927$ 2,600,000$

goals are flat

MassachusettsMassachusetts

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MASSACHUSETTS 2008 2009 2010?WAP* 6.5 13.3 6.5HEARTWAP 8 10 8.0RGGI - htg n/a 4 n/aARRA* (est.) n/a n/a 22.0Utilities 21.7 32.6 42.4TOTAL 36.2 59.9 78.8

*Wx units 2623 5174

Sources: WAPTAC, Mass. DHCD, Mass. Utilities, author's est.

Demand managementDemand management

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LIHEAPLIHEAP

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LIHEAPClearinghouse

RenewablesRenewables

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Cocoa bean shells(PSNH-Lindt experimentAt Schiller Station,Portsmouth)

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..

www.DemocracyAndRegulation.com

+1-978-283-0897

JerroldOpp@DemocracyAndRegulation.com

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About theAbout the SpeakerSpeakerJerrold Oppenheim is an independent consultant and

attorney who has advised and represented low-income and other utility consumer advocates, government agencies, labor, and utilities across the country for more than 35 years. A graduate of Harvard College and Boston College Law School, he led utility litigation and argued precedent-setting cases for four Attorneys General in New York State and Massachusetts; for Legal Services in Boston, Chicago and New York City; and for the National Consumer Law Center. He is a member of the Center for Public Utilities Advisory Council, New Mexico State University, and has spoken and published on four continents, including Democracy And Regulation with Theo MacGregor and Greg Palast, published by Pluto Press (London) and winner of the ACLU Upton Sinclair Award.