focusing the power plan what did we learn from public comment? how do we incorporate it?

Focusing the Power Plan

What did we learn from public comment?

How do we incorporate it?

Northwest Power Planning Council

Issues for the Fifth Power Plan

• Issue paper identified 9 issues and asked– Are these the right issues?– Are they described accurately?– Are there others we should consider?– Where’s the priority?


1. Incentives for development of generation

-500

0

500

1000

1500

2000

MW

1994

1997

2000

2003

2006

2009

Net Capacity Additions

• 1990’s – low power prices, regulatory uncertainty, immature market -- power plant construction didn’t keep pace with load growth

• Price spikes of 2000-2001 resulted in new construction – most of which will be completed by 2003

• Then what? How do we assure adequate levels of development?


2. Increasing the price responsiveness of demand

• Most commodities, demand drops with higher prices – limiting how far prices rise

• Electricity – – Most demand does not see

effect of higher wholesale prices until after the fact

– Little discipline on prices

• How can we increase the price-responsiveness of demand in ways that are effective and acceptable?

Supply

Quantity

Who

lesa

l e P

r ic e

Non-price responsiveretail demand

Price responsiveretail demand

Pricemitigation


3. Sustaining economically-efficient investment inefficiency

• Investment in efficiency followed roller-coaster pattern– Low market prices – lower

than cost-effective investment– High prices – Crash programs

• Would sustained investment at cost-effective levels make sense?

• If so, how can region achieve it? Systems benefits charges, alternative rate setting …?

Northwest Utility Annual Northwest Utility Annual

Conservation SavingsConservation Savings

0

20

40

60

80

100

120

140

Sa

vin

gs

(a

MW

)

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Approximate cost-Effective levels

*

* Estimated


4. Assessing supply adequacy and market performance

• 2000-2001 highlighted need for timely, accurate information to assess power supply adequacy and market performance

• Such information can now be difficult to obtain

• Council will assess data needed for planning and market assessment and make recommendations for obtaining that data


5. Fish operations and power

• 2000-2001 electricity crisis forced trade-offs that improved power supply at expense of fish

• Progress on preceding issues should reduce need for such trade-offs

• But conflicts likely to persist• Affects incentives for other resources

• Are there operational strategies and/or incentives to minimize impacts on fish recovery and mitigate impacts?


6. Transmission

• Transmission policy and planning critical to maintaining adequate, efficient, economic and reliable power system

• Separation of generation and transmission – Disaggregated decision-making

• • Regional Transmission Organization addressing issues, but will be several years before formed, if ever

• Council will address alternatives for transmission pricing, planning, and policy affecting Council’s mission


7. Value of/barriers toresource diversity

• Most new and planned generation natural gas fueled

• Would there be a value to a more diverse resource mix?

• Are there barriers to alternative generation and generation substitutes?

• If so, how could they be remedied – e.g. locational pricing, interconnection policies…?

Wind Other

Natural Gas

New and Planned NW Capacity*

*Operational, under-construction, permitted, permits pending and planned projects


8. Future role and Obligations of the BPA

• Many question Bonneville’s acquisition of new resources to serve growing loads in terms of:– Exposure to risk; effect on competitive

wholesale power market; obscuring real cost of serving growing demand

• Limiting acquisition authority means limiting ability to serve growing public agency loads

• Customer groups currently working on proposals for long term allocation of Bonneville’s existing power

• Council to evaluate pros and cons, make recommendation


9. Climate change risks to power system

• Climate change poses risks to the power system– Impact on hydro system

capability

– Impact of possible future climate change mitigation measures on power system costs, resource choices

• Plan will assess impacts and effect of strategies to address climate change impacts, e.g. carbon tax


Public comment

• Council received over 20 written comments• Took comment from 7 organizations at

meetings in Eugene and Boise• Power Committee held consultations with

Bonneville, utility groups, environmental groups, industrial customers, state regulators

• Individual members consulted with groups in their states


What did we hear?Don’t…

• Spend a lot of time on transmission EXCEPT– IRP for transmission – assess role of

conservation, demand management, distributed generation as alternatives to transmission investment

• Try to solve global climate change BUT– Should be considered as source of risk


1. Do…

• Describe and make sense of what happened over last few years –– The mix and tension between competition and

regulation

• Describe the current context, the situation in which utilities find themselves.

• Develop a vision for the future of the industry in the NW

• Explore how to get there


2. Do…

• Engage the Bonneville future issue– “Should be the centerpiece of the Plan”– Engage particularly on those issues central to

Council’s responsibilities• Conservation, fish and wildlife, potential effects on

the federal system

• The counter view – Don’t mess it up!


3. Do…

• Fish and Power

Industry – Evaluate cost-effectiveness of fish

measures

Fish advocates – Plan to reliably meet fish

requirements

?


4. Do…

• Produce the data – – Demand forecasts– Fuel price forecast– Electricity price forecasts– Resource characteristics, cost, potential– Development activity– Reliability assessment

• And do it regularly – not tied to plan cycle


The “Vision Thing”

• Where is it that this plan is trying to take the region?– The Act provides some direction, e.g.

• “Adequate, efficient, economic and reliable”;

• “Protect, mitigate and enhance”

• Priorities of the Act

– Should there be more?

• Important not to mix up ends with means


A “strawman” vision

• A Northwest power system that:– Provides electricity services at low cost – Provides equitable access to electricity services

throughout the region– Preserves low-cost hydro for the region– Uses hydro system efficiently– Provides electricity at low environmental impact– Supports recovery of threatened and endangered

species and Fish and Wildlife goals of Power Act


Example (cont.)

– Provides an acceptable level of power system adequacy and reliability, price stability

OR– Provides entities means of managing supply

and price risk– Implements least cost solutions to power and

transmission supply problems– Supports the development, demonstration and

deployment of promising new technologies


Vision (cont.)

• The dangers…– Can easily be pap doesn’t provide much

guidance– Can be polarizing

• The alternative…“When you come to a fork in the road, take it.” -- Yogi Berra

• Where to?


Future Industry Structure

Tying it together…

Vision (with Metrics)

FutureRoles,

ObligationsOf

BPA

Policy Environment:EPACTFERC RTOs, SMD,States Generation

Transmission

Efficiency

PriceResponsive

Demand

Fish,Environment

Recent History:What happened?Why?What did welearn?


It can’t be your father’s power plan

• World of the Power Act envisioned centralized planning and decisions, costs and risks borne by region’s consumers

• World of today and tomorrow – we can do centralized planning but – decision more likely resides with individual

actors • utilities, independent developers, end users…

– Same with costs and risks, differing risk tolerances


Analytically how…

Strategies• Resource

• Structural/Policy

Vision

Data• Resource characteristics, costs, potential, status, forecasts of demand, prices…

Scenarios

Factors outside our control • Physical/Economic e.g. water, loads, fuel prices• Policy, e.g. FERC and RTO, SMD, Climate

Analysis• Objective – measures of cost, risk, reliability• Qualitative – how well do strategies satisfy the non-quantifiable elements of the vision


Action Plan

• To effect preferred strategies…– Who needs to do– What– When

focusing the power plan what did we learn from public comment? how do we incorporate it?

Documents