DOE Office of Electricity Delivery and Energy Reliability

DOE Office of Electricity Delivery and Energy Reliability Developing Policy Options To Enhance Security of Energy Supply for Electricity Generation David Meyer – May 2005 1

Premises • Rising natural gas prices, security issues focus new attention on relations between policy concerns and energy markets • Resource endowment affects policy concerns and policy options • Risk exposure varies with resource endowment and geography • Security of supply should affect, not determine, policy choices 2

Need for Situation Assessments • Assessments should be both national and sub-national • Should be done in context of existing policy processes and concerns • E. g. , in U. S. context, consonant with Interim National Infrastructure Protection Plan (issued Feb. 2005) 3

Interim National Infrastructure Protection Plan • Plan establishes U. S. framework for Ø Ø Identifying “critical infrastructure and key resources” Assessing vulnerabilities Prioritizing corrective actions Implementing corrective actions • Plan identifies 17 sectors, 10 to be addressed directly by Dept. of Homeland Security, and 7 to be the responsibility of other federal agencies (e. g. , Energy Dept. ) • Plan focuses chiefly on protection of existing infrastructure • DHS and “sector-specific agencies” (e. g. , Energy) are responsible for providing guidance on design of 4 new infrastructure

Sector-Specific Guidance from DHS and DOE • DOE published interim energy-sector infrastructure protection plan • DHS published Guidance on Risk Analysis and Safety Implications of a Large Liquefied Natural Gas (LNG) Spill Over Water • Other studies planned or in preparation 5

Need for Regional Energy Planning In U. S. • Two-thirds of U. S. now covered by Regional Transmission Organizations (RTOs) • RTOS are responsible for coordination of transmission planning • Regional generation planning also needed, but not part of RTOs’ mission • Likely to be coordinated by state-based organizations with same footprint as RTOs • Generation planning being done in western U. S. -- other areas considering how to start • Security concerns must be included 6

Federal Policy Initiatives Strong support for • Federal siting of LNG facilities • Development of new nuclear capacity, wind, other renewables, clean coal capacity • Modernization of grid and development of new transmission capacity 7

Policy Options re Security of Supply Policy options emerge naturally from the methodical process outlined above. Examples: – To enhance security of LNG supply, set portfolio diversity requirements for importers – Build infrastructure physical security requirements into application criteria market players must meet – General strategy: Set appropriate security criteria and rely on markets to find ways of meeting them efficiently 8

Questions? David. Meyer@hq. doe. gov 9