ENERGY TECHNOLOGY REVIEW
Published by MIT

PREDICTING UTILITY LOAD	WEC - MONTREAL 2010
Jean-Louis Poirier	Stephane Bertran
Predicting load in the utility business has never been easy. Witness the track record that the industry has accumulated by reviewing the NERC projections over the years. Even though NERC substantially improved its forecasting capability, projections have always been off. There are many reasons for this among which hard-to-forecast weather, shifting customer population trends, a shift from industrialization to services, and an unproven relationship between electricity demand and either GDP or the increased use of electronics in households. Of course, the last 18 months have not made load forecasts any easier. For the most part, forecasts have always been up, with the exception of the 1991- 92 and 2000-2002 recessions. But the 2008 crisis has resulted in an unprecedented drop of 7.5% in energy sales down from its 2005 record. The latest statistics show that the total US utility load in 2009 (3575 TWh) was back to its 2004 level (3547 TWh) but several utilities have experienced load drops in the 6-10% range from their peak this past decade. Of course, industrial sales took the biggest hit (down by 13%). By contrast, residential sales have only dropped by 2-3% across the board but the small customer market may take another 2-3 years to recover in some franchise areas. (continued)	Montreal will host the 21st Congress of the World Energy Council from September 12 to 16, 2010. More than 3,500 delegates from over a hundred countries, representing all energy sectors, will meet to discuss the challenges the energy sector will face over the next 25 years. The World Energy Congress takes place every three years and is the premier global energy forum with exhibition to forge a better understanding of energy issues and solutions on a global basis. This is the second time the Congress has come to Montreal. The city previously hosted the 14th Congress in 1989. The Montreal Congress also comes at a strategic moment for the energy industry, nine months after COP15 in Copenhagen, and two months after the G8/G20 Summits, where energy was front and center on the agenda. Taking place barely two months before COP16 in Cancun, Mexico, the Montreal Congress is de facto the key moment for all leaders and decision makers in the energy sector. Why? COP15 in Copenhagen was the largest gathering of heads of state in the history of the United Nations. Even if the conference didn’t achieve all it had hoped (continued)

Richard T. Flanagan

We enter the second half of 2010 without an energy bill, pushed aside by health, financial regulation, and immigration bills. The energy industry is setting record attendance at conventions, looking to growing their businesses collaboratively. World-Gen is a media sponsor for over a dozen conventions. In the second half, we are working with the World Energy Congress, two of PennWell’s, Solar Power International, Grid Week, GTC and the American Nuclear Society. Their ads appear in this issue. Our editors shed light on the pressing questions the industry faces. Who knows, maybe our editors will be reporting on an energy bill before the end of the year. Let us know what you think… Forecasting utility load is subject to a number of variables, Jean-Louis Poirier, Class of 2000, tells us on page 1. Weather, population shifts and household electronics made NERC projections uneven over the years. The utilities –IOU’s, muni's and coop’s-will be installing between 70 and 90 million smart meters by 2020, deploying new dynamic rate structures and triggering increased energy efficiency. He smartly illustrates the range of uncertainties and estimates the potential of load imbalance in a chart on page 21. World-Gen is a media sponsor for the 21st World Energy Congress being held in Montreal September 12-16. Stephane Bertran, Executive Director, says on page 1 that WEC-2010 comes at a strategic moment, nine months after COP 15 and two months before COP 16. The challenge of climate change, reliable energy supply to a third of the world’s population and a doubling of energy demand by 2050 will be addressed by 250 speakers. 21st WEC will draft a “Montreal Declaration”, to measure the results leading up to the 22nd WEC in Daegu in 2013. The Los Angeles Department of Water and Power is the largest municipal utility in the US serving four million customers. It’s facing selling assets to pay for renewable resources, Lyn Corum, Class of 2003, tells us on page 13. LADWP released its 15 year strategic blueprint in June and plans to sell assets in Arizona, Utah, Malibu and lease-back its headquarters building in downtown LA. LADWP has no wind or solar projects under construction. It is planning to install 250 mw’s of solar systems on city building rooftops. In “Forecasting Recessions and Investment Strategies” on page 14, Judah Rose and Sunita Surana of ICF International, formulate a simple strategy to show that business and other economic decisions can significantly benefit from foregoing (or withdrawing) large investments in periods preceding recessions and making investments in periods preceding economic recoveries. They discuss the strategy in terms of stock investing and intend the scope of investments to be construed broadly to include business investments in general (e.g. M&A, capital allocation) for all cyclical industries. This logically follows because recessions cause both large decreases in the prices of financial assets, and large disappointments in the performance of business investments. Moreover, even though the approach to forecasting economic downturns is in part based on oil price trends, they believe the investment strategy is not limited to the energy sector alone (e.g. when to purchase oil refineries, or E&P plays), but rather applies across all cyclical sectors due to the high correlation between the general economy and sector-by-sector performance. Roger D. Stark and M. Adil Qureshi tell us on page 15 that despite declarations by some economists that emerging economies are no longer interdependent with developed ones, the countries of the Gulf Cooperation Council saw a drop of US$44.6 billion in project lending in the first quarter of 2009 as compared to the same period in 2008. Declining oil prices put additional pressure on GCC government budgets, while lenders tightened credit standards, increased spreads and shortened loan tenors. In this harsh environment, well-structured Public Private Partnerships are viable alternatives for implementing major infrastructure pro-jects, and comprehensive legislation to support programmatic deployment of P3s is receiving increased attention. Over the past decade, members of the GCC have been at the forefront of global infrastructure spending as measured by volume of expenditures. Governments in the region have responded decisively, undertaking projects valued at over US$2 trillion dollars through January 2010. However, significant additional infrastructure needs remain unmet. Brian Seal and Mark McGranaghan of EPRI tell us on page 16 that electricity is not like other commodities because it is consumed in real-time. Over the last decade, major electricity meter manufacturers have introduced solid state models and discontinued electromechanical production. The transition to solid-state electric meters is therefore not one of choice, but of necessity. During this transition, there will likely be both real and perceived issues with solid-state designs that need addressing. Ideally, each investigation should both resolve any homeowner concerns, and discover any product imperfections so that solid-state meter designs may be continually improved. The methodological approach for estimating the benefits and costs of Smart Grid demonstration projects, sponsored by EPRI and Oak Ridge National Laboratory experts, addressed the challenges associated with estimating estimating the benefits and costs associated with Smart Grid demonstration projects. This report by Matt Wakefield on page 17 presents a framework for estimating these costs and the benefits of smart grid projects and a step-by-step approach for making estimates. The framework establishes categories to distinguish benefits attributable to smart grid project functions and identifies the beneficiaries of these benefits. Victor Milligan, Chief Strategy Officer at Martin Dawes Analytics, discusses why utility companies are actively engaged in a range of activities with the goal of reducing the effects of weak demand, a higher uncertainty in energy costs, increased capital costs, and stagnant rate cases. Among these efforts, a rigorous revenue assurance capability is likely to produce the greatest immediate and long-term return, as it can produce 1-2 points of revenue recovery through a single, unified investment. On page 20, he reveals that through a Proof of Concept and a Proof of Value process, utilities can validate the benefits of a rigorous process analytic capability without taking on the risk that these tools and practices would not fit or produce in the order-to-cash environment. World-Gen’s September-October issue will have bonus distribution at Grid Week, Solar Power International and the American Nuclear Society conventions. Please visit www.world-gen.com and scroll the “Media Kit” for advertising details. Advertisers receive a linked banner ad.

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WESTINGHOUSE APPOINTS Westinghouse Electric Company appointed Jim Ferland as president of the Americas Region. He will be located at Westinghouse's Cranberry, USA, headquarters facility. Anders Jackson was named to be president of the Europe region effective July 1 and will be based in Brussels. Jack Allen is appointed president of the Asia region and will be based in Tokyo.		BAKER NAMED CEO Joseph Baker was appointed CEO of ACCIONA Windpower North America. Baker joins ACCIONA from ABB.	Joseph Baker
EPRI ELECTS CEO The Board of Directors of the Electric Power Research Institute (EPRI) has elected EPRI Senior Vice President Michael Howard as its next president and CEO, effective in September at the retirement of current President and CEO Steve Specker. Specker is a member of World-Gen’s Class of 2009. Howard holds a doctorate in engineering science from the University of Tennessee.	Michael Howard	ABB NAMES ABB announced that Anders Sjoelin has been named region division manager of the ABB Power Systems division for North America, and Deidre Cusack was named to the power transformers business.	Anders Sjoelin
GEH REORGANIZES Caroline Reda will become president and CEO of GE Hitachi Nuclear Energy. Reda also served as CEO of GE Energy Parts and president of GE Energy Rentals.	Caroline Reda	NYISO PROMOTES The New York Independent System Operator (NYISO) named Rick Gonzales as its new Chief Operating Officer. Mr. Gonzales has been with the NYISO since it began operations in 1999.	Rick Gonzales
LUDLOW TO CEO Sharon Ludlow has been appointed CEO of Swiss Re in Canada and head of Canadian & English Caribbean operations.	Sharon Ludlow	RAGUCCI JOINS PB Vincent J. Ragucci, III has been named a Vice President in the Boston office of Parsons Brinckerhoff. ZURICH EXPANDS Zurich expanded its Global Energy operations in Western US and Latin America and appointed Margo Williams onshore property manager for Western North America, Juan Pablo Gatica will lead Zurich’s Global Energy onshore property underwriting operation in Latin America, and Jairo Cardoso joins the Latin America Risk Engineering team as a senior power generation risk engineer.
ANS ELECTS The American Nuclear Society elected Dr. Eric Loewen, GE Hitachi Nuclear Energy chief consulting engineer for advanced plants technology, as the organization’s president for 2010-11.		WINDTAMER NAMES WindTamer Corporation announced that William A. Schmitz has been named Chief Executive Officer, succeeding Company founder Gerald E. Brock.

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