north carolina energy policy council · nucor corporation july 15, 2015 cape hatteras clt triad rdu...

NORTH CAROLINA

ENERGY POLICY COUNCIL

July 15, 2015

John Evans Deputy Secretary

NCDENR

NC Power Plant Emissions

3

0

100,000

200,000

300,000

400,000

500,000

600,000

Em

issi

on

s (s

ho

rt t

on

s)

SO2

Coal

Total

0

50,000

100,000

150,000

200,000

250,000

Em

issi

on

s (s

ho

rt t

on

s)

NOx

Coal

Total

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Em

issi

on

s (1

000 m

etr

ic to

ns)

CO2

Coal Natural Gas Total

Pollutant 2002 2013

NOx 29% 17%

PM2.5 17% 5%

SO2 86% 57%

Contribution to Statewide Emissions

Statewide Emissions

4

CRITERIA POLLUTANTS AIR TOXIC POLLUTANTS

North Carolinians breathe cleaner air today than in decades.

Air Quality Developments

6

http://www2.epa.gov/hfstudy

EPA's Study of Hydraulic Fracturing for Oil and Gas finds no widespread,

systemic impacts on drinking water resources in the United States.

DAQ’s Study of Air Emissions from Shale Gas Development and Production

in North Carolina anticipates no ozone attainment concerns. http://daq.state.nc.us/news/shale/

Supreme Court strikes down EPA’s Mercury and Air Toxics Standards. http://www.supremecourt.gov/opinions/14pdf/14-46_bqmc.pdf

H.R. 2042, The Ratepayer Protection Act of 2015, co-sponsored by NC

Representatives Ellmers, Hudson, Jones and Rouzer, to extend the Clean

Power Plan compliance dates to after judicial review and to provide a safe

harbor for states to protect ratepayers, passed the U.S. House on June 24,

2015 and is at the Senate.

https://www.congress.gov/bill/114th-congress/house-bill/2042/all-info



http://daq.state.nc.us/news/shale/



http://www.supremecourt.gov/opinions/14pdf/14-46_bqmc.pdf













Jennifer Diggins Public Affairs Director

NUCOR

8

Keeping the Lights On Why North Carolina’s Future Depends on Affordable and Reliable Energy

Jennifer Diggins Director of Public Affairs

Nucor Corporation July 15, 2015

Cape Hatteras

CLT

Triad

RDU

Fayetteville

Wilmington

Hertford

County

9

Nucor Today

• Over $21 Billion in Sales in 2014

• Ranked #139 in Fortune 500

• Largest Steel Producer in the U.S.

• Largest Recycler in North America

• Over 23,000 Teammates

• Average compensation more

than $75,000/year

• Have NEVER laid off a single

teammate at one of our steel

mills due to a lack of work

10

Nucor Steel in North Carolina

• Nucor Steel Plate Mill

– Cofield, NC

• Nucor Corporate Office

– Charlotte

• David J. Joseph Co.

– Marion, Gastonia,

Monroe, Whitesville

• Harris Rebar

– Charlotte, Benson,

Creedmoor, Lumberton

Nucor Steel – Hertford County

11

Perception of Steel Steel mills of the early 20th Century

12

Today’s Steel Mill

13

Processes Used to Manufacture Steel

• Electric Arc Furnace (EAF)

• Accounts for about 60% of

Steel made in U.S.

• Uses 75%-100% scrap steel

to make new steel

• Nucor operates 24 scrap-

based steel mills

• EAFs use one-quarter the

energy of blast furnaces to

produce a ton of steel

• Blast Furnace

• Accounts for about 40%

of Steel made in the U.S.

• Uses 25%-35% scrap

14

• Nationwide, Nucor uses

billions of kWh annually

• Company-wide electric demand

and use equal to the entire

customer base of a small utility

• A single EAF can use 50 to 150

MW of power by itself

– Equivalent to switching

on a million or more light

bulbs in the same instant

• In many states where we

operate, Nucor is the largest

single electric customer

Energy Use By Nucor Steel Mills

15

Nucor’s Last Two Steel Mills Electricity Availability & Rates Key to Siting

1995 Berkeley County, SC (Built) King William County, VA (Considered)

1998 Hertford County, NC (Built) Coos Bay, OR (Considered)

16

Nucor Steel – Hertford County

Impact on State/Local Economy

• Every steel job supports seven additional jobs in

other sectors of the economy

• Investment in a rural section of state where poverty

rate was twice the state average

– In 1990s, Hertford County had been 4th poorest county in NC

• Per capita income in Hertford County rose 27.8% as

mill was built and became operational (1997-2002)

• Mill represents 450+ North Carolina manufacturing

jobs averaging $90,000/year

• No one has ever been laid off due to a lack of work

AP--10/28/00

17

Nucor Steel – Hertford County Impact

• Total capital investment – $624.3 Million – ~$200M invested during/since Great Recession

– Original planned investment was $300M

• Approximate annual economic impact

– $1.8 Billion

• Total cumulative economic impact (2003-

2015): $19 Billion – Represents all direct, indirect and induced effects of

Nucor’s Hertford County mill on the North Carolina

economy

18

• Responsible for 21% of NC’s GDP • 4th highest percentage of any state

• Manufacturing jobs are high-paying, high-quality jobs • The average NC manufacturing job pays over $69,000 per year

• Manufacturing jobs create jobs in other sectors of the economy

NC Manufacturing Why it still matters

0

50

100

150

200

250

300

350Jo

bs

Cre

ated

per

100

Jo

bs

Steel

Man

ufactu

ring

Con

struction

Bu

siness

Services

Restau

rants &

Bars

Retail Trad

e

Employment Multipliers For every 100 Jobs in an Industry, Jobs Created:

19

400.00

450.00

500.00

550.00

600.00

650.00

700.00

750.00

800.00

850.00

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

North Carolina Manufacturing Employment (in thousands of jobs)

How many more jobs can we afford to lose?

Almost

Almost

ONE-HALF

(46%) of

NC’s Mfg.

Jobs have

Vanished

over the

last 20

Years

20

4.00

4.50

5.00

5.50

6.00

6.50

7.00

Average Industrial Electric Rate North Carolina

Heading in the wrong direction

Rates

have risen

30-40%

over last

20 years

21

Energy costs are already suffocating NC’s Families (especially the poorest). . .

70%

23%

16% 10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

<$10K $10-$30K $30-$50K >$50K

North Carolina Family Energy Costs As Percent of After-Tax Income

Annual Gross Household Income

*ACCCE, American Coalition for Clean Coal Electricity, Dec. 2013

22

. . .and new federal rules will make a bad situation worse

• The economic costs of effectively eliminating coal-based

electric generation in 5 short years are staggering

• NC Power Generation still Coal Heavy

• 44 % Coal

• 34 % Nuclear

• 17 % Natural Gas

• 3 % Hydro

• 2 % Biomass

• EPA picking WINNERS & LOSERS

in North Carolina’s energy mix

23

Increase in Energy Regs =

• PAY MORE for electricity • Average annual NC household electricity

and gas bills would increase by more than

$430 in 2020

• Average annual power bills will increase by

more than $135

• Average home gas heating bills will

rise by almost $300

• Loss of JOBS and Income • North Carolina’s economy will lose

32,120 jobs by 2030

• Real disposable income would fall by

$3.5 billion per year by 2030.

• PAY MORE for goods/services • Increased costs for employers and

farmers will be passed on to consumers

in the form of higher prices on products

(not only steel, but also food, milk, etc.)

24

WHAT CAN YOU DO?

24

25

Today’s Federal Energy Policy

Jeopardizes

Reliable Power

Service

Higher

Electric &

Gas Bills

Kills Job

Creation

26

North Carolina’s Best Years are Ahead of Us!

27

Let’s Keep the Lights On

Cape Hatteras

CLT

Triad

RDU

Fayetteville

Wilmington

Hertford

County

Andrew Ott Executive Vice President, Markets

PJM

PJM©2015 www.pjm.com 29

PJM Interconnection

Regional Transmission Organization

(RTO) Andy Ott

Executive Vice President, Markets

Mike Kormos

Executive Vice President, Operations

NC Energy Policy Council

July 15, 2015

PJM©2015 www.pjm.com 30 30

PJM as Part of the Eastern Interconnection

KEY STATISTICS

Member companies 940+

Millions of people served 61

Peak load in megawatts 165,492

MWs of generating capacity 183,604

Miles of transmission lines 62,556

2013 GWh of annual energy 797,461

Generation sources 1,376

Square miles of territory 243,417

States served 13 + DC 21% of U.S. GDP

produced in PJM

As of 6/1/2014


PJM ‒ Focus on 3 Things

Market Operation • Energy

• Capacity

• Ancillary Services

Regional Planning •Infrastructure for the Future

•15-Year Outlook

Reliability • Grid Operations

• Supply/Demand Balance

• Transmission monitoring

2

1

3

RTOs own no transmission or generation assets

and have no financial interest in the wholesale

market or in any of the market participants


How Is PJM Different from a Local Utility?

Agreement for Operational Coordination

Independent, Neutrality

Open Access, Transparency


PJM Value Propostion

• Increased operational

diversity

• Increased resiliency

• Reliability at lower cost

• Economic benefits through

economies of scale and

operational efficiency

• Regional planning

processes which are more

efficient than individual

transmission owner

planning

• Reductions in barriers to

renewable integration


Managing Change


PJM Average Emissions (lbs/MWh)


Biomass, 27

Coal, 1,957

Diesel, 40

Hydro, 292

Methane, 98

Natural Gas, 50,595

Nuclear, 2,040

Offshore Wind, 385

Oil, 401

Other, 132

Solar, 2,916

Storage, 723

Wind, 14,632

Wood, 79

Total PJM Interconnection Queue

PJM Interconnection Queue –

Volume by Fuel (MW) (As of May 19, 2015)

Solar, 1,268

Wind, 974

Wood, 63

NC Only


PJM Backbone Transmission


Renewable Energy in PJM


Capacity Market Enables Demand Resources


Solar Capacity in PJM by State


Large Power Grids Can Handle Variability

Laurel Mountain, WV

Wind + Storage 98 MW, 61 turbines

+

32 MW, 8 MWh, 1.3M cells

Total Advanced Storage

Grid connected 135 MW

Behind-the-meter 15 MW

Under construction 89 MW

Under study 495 MW


PJM Market Expansion – A Case study

AEP / Dayton / ComEd Integration into

the PJM Market

Change in Transmission Interconnector Flows

Referenced with Permission: Source: Erin T. Mansur and Matthew W. White, “Market Organization and Efficiency in Electricity Markets,” March 31, 2009,

Figure 2,pg 50, discussion draft, (available at http://bpp.wharton.upenn.edu/mawhite/ ).

Key Study Conclusions

• Bilateral Trading could only achieve

40% of the efficiency gains of LMP-

based market

• Incremental benefit of LMP Market

Integration = $180 Million annually,

Net Present Value over 20 yrs is

$1.5 Billion


Dominion Integration Benefits

ECAR to DVP Transfer

Capability = 2750 MW

PJM to DVP Transfer

Capability = 2,800 MW

Western Market Area to DVP

Proxy for Transfer Capability = 3,950 MW

Northern Market Area to DVP

Proxy for Transfer Capability = 4,000 MW

Prior to Integration After Integration

• Projected Benefit to Dominion Zone customers was $291 to $542 Million for Ten year period (2005-2014)1

• Actual Benefit 2

- $750 Million in avoided fuel costs for the four year period from May 2005 through May 2009

- In 2008, measured benefit of $240 Million in energy cost savings and $90 Million in net FTR revenue

1. Dominion Study, Reported result in filing before VA State Corporation Commission, 2004

2. Greg Morgan, Dominion Executive, Testimony @ VA State Corporation Commission, June 2009


Compete Coalition Comparison of Rate Changes


Benefits of Regional Markets

• Larger regional markets provide increased operational diversity,

more resiliency, and reliability at lower cost

• Larger regional markets provide economic benefits through

economies of scale and operational efficiency

• Large diverse markets reduce barriers to renewable integration

• Regional planning processes are more efficient than individual

transmission owner planning

Michael Kormos Executive Vice President, Operations

PJM

PJM©2015

Cyber and Physical Security

for the Power Grid

Michael J. Kormos

Executive Vice President,

Operations

PJM Interconnection

NC Energy Policy Council

July 15, 2015

www.pjm.com

PJM©2015 49

Black Sky Day: High-Impact/Low-Frequency

Events

Opportunities to Improve Grid Resiliency Source based on: EPRI

PJM©2015 52

Security Threats

www.pjm.com

eData

NATION

STATES Phishing,

Malware, APT,

Sabotage,

International

Travel

CRIMINALS

Phishing,

Malware, Drive-

by Attacks, Theft

HACTIVISTS DDoS,

Defacement,

Hoax Devices,

Sabotage

INSIDERS

Cooperation with

outside actors,

policy abuse,

disgruntled

TERRORISTS DDoS, Electronic

Jihad, Sabotage,

Explosive

Devices

PJM©2015 53

Vulnerability Management

Vulnerability Assessment

Security Patch Management

Penetration Testing

Security Assessment Committee

Various programs that collectively mitigate vulnerabilities to improve defense.

PJM©2015 54

Elements of Physical Security

• Physical Security Perimeter Protection

• 24x7 Access Control and Monitoring

• Two Factor Authentication

• Emergency Response

• Personnel Risk Assessment

• Investigation

• Security Assessments

• Penetration Testing

• Security Education

• Mail Screening

• Redundant Facilities

All of these elements together comprise a

strong and comprehensive physical security program.

Physical Security Program Elements

PJM©2015 55

Physical Protection of the PJM Region

www.pjm.com

PJM Analysis

Communication

PJM acts as third-party reviewer (optional)

(R2)

TO Risk Assessments

(R1)

Identification of

transmission

assets that are

critical to

derivation of

IROLs

PJM issues

letters to

responsible

entities

TOs conduct risk

assessments for

Physical Security

(CIP-014-1)

PJM is developing plans to coordinate identification and protection of critical transmission facilities within the

PJM footprint.

PJM©2015 56

SOC / ITOC Co-Location

www.pjm.com

Security Operations Center (SOC)

IT Operations Center (ITOC)

Cyber Attacks

Failed Logins

Denial of Service

Malware Se

curi

ty /

Op

era

tio

ns

Ev

en

ts

Service Disruption

System Degradation

Job Failures

Service Restoration

Co-location improves communication during cyber and operational events.

Helps surface issues not easily identified in isolation.

PJM©2015 57

Cyber Attack Metrics

2,262

3 160

- - -

3,057

1 178

- - -

2,796

5

789

- - - -

500

1,000

1,500

2,000

2,500

3,000

3,500

1 - Recon 2 - Deliver 3 - Exploit 4 - Install 5 - C2 6 - Action

Jan Feb Mar

PJM’s security posture continues to push attacks to earlier in the attack life cycle.

PJM©2015 58

EMS Recovery & Resilience

Virtual Back-up Control Center

Updated Daily

~15 minute recovery

Golden Image

Air-gapped

~ 4 hour recovery

System Control Only

AC1 AC2

Traditional Recovery

Normal Operations

Application or

Database

Failure

Cyber Security

Incident

Component Failure

www.pjm.com

PJM©2015 59

Resilience – Managing Denial of Service

Denial of Service attacks cannot be prevented—only managed.

Technology Solution (PJM)

• Third-party monitors for abnormal traffic and bandwidth utilization.

• Malicious network traffic is scrubbed before arriving at the PJM network.

Business Processes (PJM)

• Documented a Loss of Internet

Incident Response Plan.

• Developed contingency processes

for major business functions.

• Conducted table top exercises

of denial of service and loss of

internet.

www.pjm.com

PJM©2015 60

PJM Response Exercises

Loss of Internet

• Incident Response & Recovery

• Manual & Technical Procedures

• Roles & Responsibilities

Cyber / Physical /Weather Incident

• Loss of critical substations

• Grid Ex II / III

• Operator Communications

PJM / Transmission Owner Cyber Event

• Incident Recognition

• Triage and escalation procedures

• Coordination / communications between PJM and transmission owners

Red / Blue Training and Hand-On Drills

• Security Platform Analysis

• Web Application Assessment

• Advanced Penetration Testing

• Team Exercise

www.pjm.com

PJM©2015 61

Examples of PJM Security Program Partnerships

www.pjm.com

Sponsor of national laboratories,

grants, and university projects.

Cybersecurity Maturity Model

Honeynet research project

Collaboration with ISO/RTO

security leaders

Smart grid demonstration grant

Cyber Risk Information Sharing

Program (CRISP)

DHS industrial control systems

intelligence and services

FBI InfraGard Public Private

Partnership

State, County & Local

Public Private Partnership

United States Secret Service

Public Private Partnership

//upload.wikimedia.org/wikipedia/commons/7/70/US-FBI-ShadedSeal.svg

//upload.wikimedia.org/wikipedia/commons/7/75/US-SecretService-StarLogo.svg

The next Energy Policy Council meeting

is tentatively scheduled for

Wednesday, Sept. 16, 2015

at 10 a.m. in the N.C. Nature Research Center Environmental Conference Center

north carolina energy policy council · nucor corporation july 15, 2015 cape hatteras clt triad rdu...

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