Leadership Dialogue VI: Clearing Obstacles to a National Transmission Superhighway and Smart Grid

On this panel:

• Daniel Gross — Economics Editor, Newsweek
• Russell M. Artzt — Vice Chairman and Founder, CA Inc.
• Dr. Richard H. Herman — Chancellor, University of Illinois at Urbana-Champaign
• Dr. Ralph Izzo — Chairman, President and CEO, Public Service Enterprise Group Incorporated
• Andrew C. Taylor — Chairman and CEO, Enterprise Holdings, Inc.
• Joseph L. Welch — Chairman, President and CEO, ITC Holdings Corp.

Transmission superhighway is the "fourth pillar" of energy.

Ralph Izzo: What is a smart grid? Everything that goes from a plant to your home. It's a sophisticated system, and as you move closer to the customer, it gets less intelligent. Smart grid: more intelligence at the consumer level.

Joseph Welch: The grid is vulcanized: transferring produces different results. There has not been a regional focus on this.

Russell Artzt: CA manages and secures large networks. CA has joined with IBM and NY utilities a smart grid consortium, which combines power with a digital network, allowing for flexibility and control, but also other problems. A goal would be better sustainability and more intelligent use of resources.

Question: how do we engage the consumer? Are they demanding this technology?

Ralph Izzo: pilot programs of smarter grids, reducing peak consumption by 14%. Not as much power is demanded when demand is spread out. But interesting consumers is difficult. The concern: you deploy infrastructure but few would benefit. It's because electricity is a small part of most people's disposable income.

Andrew Taylor: No clear answers on what consumers what in terms of energy-efficient cars. Two-thirds of transactions from Enterprise cars are in-city -- people needing a short-term car where they live. Right now, consumers aren't making energy efficiency a top-of-mind priority. Only now is it emerging that consumers should care about efficiency. We want to be a petri dish for experiments in how consumers use transportation.

Ralph Izzo: The grid is 99.999% reliable -- it's the most reliable in the world. Some of our equipment is old, but we constantly test it. We need to put accurate pricing on energy, not choose new technology. The panacea is accurate pricing and letting the market distribute things appropriately. You have to consider the cost of producing and delivering energy -- you can't just think about the sheer power of new production.

Russell Artzt: The current system isn't an end unto itself -- we need new technology as well.

Joseph Welch: We're not the best grid -- independent benchmarking shows that France, Korea, Japan are more efficient. Our grid wasn't built to be robustly interconnected. We can't build renewables without moving to an electric grid.We shouldn't built a system without taking in cost, but it's cheaper to move to a smart grid. We're letting resources go to waste -- we need to move to unlock the efficiencies of the grid.

Richard Herman: We have a demonstration project in Decatur, IL. Getting public-private partnerships is important -- all the talent isn't in the same place, and communication through collaboration will encourage people who would never really compete to work together.

Ralph Izzo: Government needs to have a renewable portfolio standard and make federal national energy commission step in and regulate grid connectivity.

Andrew Taylor: This is heresy from a man who doesn't like big government, but the United Kingdom has high -- but stable -- gas costs. Consumers know what to expect, our vehicles are smaller, cars have fewer features, but it's stable. Our system here is more flexible, but less stable because US government doesn't have stable policies.

Joseph Welch: We need a national energy policy. What's frustrating is that legislators rarely go deep into legislation. The market will drive competitiveness, because the current system is dysfunctional. The money's available for this, we just need the authority.

Audience question: NIMBY issues -- will private properties object ot transmission lines? How big is this problem?

Joseph Welch: Everyone should have a "hard stop" when dialogue ends -- after people have made their points and state has made a decision. But it only takes one community -- or even one person -- to stop an entire project.

Ralph Izzo: The only place we want federal override is on reliability. Some of this is part of the cost of doing business.

Audience question: how are we going to shift demand from the consumer end and make them act more efficiently?

Ralph Izzo: Bad answer: raise the price on energy. Better answer: the consumer is an investor. Change the investing so that infrastructure includes consumer devices and give companies a chance to profit off of basic infrastructure.

Question: consumers don't always do the rational thing. Are we seeing certain consumers acting more efficiently?

Artzt: Big companies come to us and want to use efficiency technology to manage not just computers and data, but lighting, refrigerators, and other non-IT appliances. Providing businesses and consumers with control will make them use it.

Taylor: First movers are government agencies and corporations wanting to have a good reputation for efficiency. We're being asked to convert vehicles into hybrids.

Joseph Welch: consumers are rational. In the lower 48, we have separate regulatory pricing agencies, but no one pays the actual price of energy. The bill is complicated, and consumers don't want to get into it.

Closing comments coming up. Thanks for tuning in so far -- see you tomorrow morning for day two of the National Energy Summit & International Dialogue.

— Sarah Spooner

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