Focusing the Power Plan
What did we learn from public comment?
How do we incorporate it?
Issues for the Fifth
Power Plan
• Issue paper identified 9 issues and asked
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Are these the right issues?
Are they described accurately?
Are there others we should consider?
Where’s the priority?
Northwest Power Planning Council
1. Incentives for development
of generation
Net Capacity Additions
2000
1000
500
2009
2006
2003
2000
-500
1997
0
1994
MW
1500
Northwest Power Planning Council
• 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
Non-price responsive
retail demand
Price responsive
retail demand
Price
mitigation
Supply
Quantity
Northwest Power Planning Council
•
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?
3. Sustaining economicallyefficient investment inefficiency
Northwest Utility Annual • Investment in efficiency
followed roller-coaster pattern
Conservation Savings
140
120
Approximate costEffective levels
100
*
60
40
2008
2006
2004
2002
2000
1998
1996
1994
0
1992
20
1990
Savings (aMW)
80
* Estimated
Northwest Power Planning Council
– 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 …?
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
Northwest Power Planning Council
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 tradeoffs
• 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?
Northwest Power Planning Council
6. Transmission
• Transmission policy and planning
critical to maintaining adequate,
efficient, economic and reliable
power system
• Separation of generation and
transmission – Disaggregated
decision-making
• Organization addressing issues,
• Regional Transmission
but will be several years before formed, if ever
• Council will address alternatives for transmission
pricing, planning, and policy affecting Council’s mission
Northwest Power Planning Council
7. Value of/barriers to
resource diversity
New and Planned NW
Capacity*
Wind
Other
Natural Gas
• 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…?
*Operational, under-construction, permitted, permits pending and planned projects
Northwest Power Planning Council
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
Northwest Power Planning Council
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
Northwest Power Planning Council
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
Northwest Power Planning Council
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
Northwest Power Planning Council
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
Northwest Power Planning Council
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!
Northwest Power Planning Council
3. Do…
• Fish and Power
Industry – Evaluate costeffectiveness of fish
measures
Northwest Power Planning Council
?
Fish advocates – Plan to
reliably meet fish
requirements
4. Do…
• Produce the data –
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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
Northwest Power Planning Council
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
Northwest Power Planning Council
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
Northwest Power Planning Council
Example (cont.)
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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
Northwest Power Planning Council
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?
Northwest Power Planning Council
Tying it together…
Vision (with Metrics)
Policy
Environment:
EPACT
FERC RTOs,
SMD,
States
Recent History:
What happened?
Why?
What did we
learn?
Future Industry Structure
Generation
Transmission
Efficiency
Northwest Power Planning Council
Price
Responsive
Demand
Fish,
Environment
Future
Roles,
Obligations
Of
BPA
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
Northwest Power Planning Council
Analytically how…
Vision
Strategies
• Resource
• Structural/Policy
Scenarios
Factors outside our control
• Physical/Economic e.g.
water, loads, fuel prices
• Policy, e.g. FERC and
RTO, SMD, Climate
Northwest Power Planning Council
Analysis
• Objective – measures of cost,
risk, reliability
• Qualitative – how well do
strategies satisfy the nonquantifiable elements of the
vision
Data
• Resource characteristics, costs,
potential, status, forecasts of
demand, prices…
Action Plan
• To effect preferred strategies…
– Who needs to do
– What
– When
Northwest Power Planning Council