Utility representatives and state regulators joined a who's-who of federal energy administrators in Washington to discuss transmission-related topics like regional planning, cost recovery and siting.

In a nutshell, the National Electricity Delivery Forum was all about "efficiency" while the main buzzword at the summit was "reliability." The latter's focus was understandable given that many of the provisions in the Energy Policy Act of 2005 had recently reached milestones (e.g., the completion of the Act's mandated congestion study), so there was a lot to talk about. But the shift in language, if not sentiment, toward the concept of energy efficiency was not as expected. Indeed, if one were to count up all the times where the word "efficiency" was used by one of the speakers vs. the number of times "reliability" was spoken, the ratio would have been something like 3 to 1.

The ongoing disparity between transmission expansion and demand growth remains an issue. As the Department of Energy's Deputy Secretary Clay Sell noted in his opening remarks, the Energy Information Administration projects that demand will grow by 43 percent in the US by 2030. However, while transmission investments have increased over the last few years, the growth from one year to the next is still lagging the annual increase in demand for electricity.

This simply cannot hold. As Idaho PUC Commissioner Marsha Smith observed, the United States has the most reliable power grid in the world, but we have reached an "inflection point" where the continued reliability of our electricity infrastructure is at best unclear and at worst in serious jeopardy. Without a significant increase in investment, reliability will eventually suffer. What is becoming clearer, however, is that the US will need to deploy a variety of tactics to ensure the grid we depend on today will continue to be among the most reliable in the world.

North American Electric Reliability Council President Rick Sergel, for example, said that while transmission underlies all other approaches to meeting requirements, demand response is his top priority because it is most likely to succeed in having a real impact on reliability in the near term. California ISO President Yakout Mansour agrees, saying that automated demand response will be the key to meeting future carbon dioxide regulations.

With that kind of imbalance plus the consensus among regulators and industry players alike on the need for a smoother siting and permitting process, and FERC's newly minted backstop siting authority, one might assume that large transmission projects might have an easier time. But old ways die hard and the new siting regime has yet to be tested. In fact, the energy department has yet to even designate the National Interest Electric Transmission Corridors.

Long Term Prognosis

The long-term prognosis for transmission expansion looks reasonably good. But, we are still left to deal with the near term, which brings the discussion back to efficiency.

Jim Rogers, Chairman and CEO of Duke Energy made his views very clear when he pronounced efficiency as the "fifth fuel." He said that the industry needs to revitalize its focus on efficiency in spite of the greater attention paid to fuel costs, security and environmental issues. Rogers cited the energy department's proposed efficiency standards for distribution transformers as an example noting that, once implemented, they would produce 8.5 billion kWh in savings each year. That, of course, doesn't take into consideration avoided CO2 emissions, another key factor in efficiency that will likely have more compelling economic ramifications in the near future.

Keep in mind that the increases in efficiency defined by the proposed standards are small, only a few percentage points. But when multiplied across the installed base of distribution transformers, the impact is enormous.

Now consider another example from the end-use side of the equation. The single largest consumers of electric power are industrial motors, which use roughly 65 percent of all the electricity for industrial applications. The vast majority of those motors run at full speed all the time because they lack a variable speed drive to control them. With a variable speed drive, the user can program the motor to run at any given speed, and only when needed. The result is an energy savings of up to 60 percent, which makes for a swift return on investment on top of the ongoing advantage in efficiency.

All of that saved energy represents power that generators don't have to make and the transmission and distribution system doesn't have to deliver. Fuel costs can therefore be avoided while maintenance can be deferred. And it's megawatts that can be used to serve other purposes during peak periods -- all without a single dollar invested in transmission.

In June, the reliability council will begin to enforce some of the 107 reliability standards it has established and FERC has approved. Around the same time, we should see some activity from the energy department on National Corridor designations. These are major steps, and they are integral to the continued health of the nation's transmission system, and by extension to grid reliability as a whole. But there are many other, smaller changes that can be made right now to improve energy efficiency along the supply chain from the power plant to the end consumer, and especially within the realm of end use itself.

If the National Electricity Delivery Forum was any indication, there seems to be a renewed appreciation of just how interrelated efficiency and reliability really are.