HomeMy WebLinkAboutAgenda Packet 06/03/2009
City Council/Utility Advisory
Committee Special Meetings
June 3 & 4, 2009
Northwest Public Power Association
Tier 2 Power Supply Planning Workshop Agenda
Day 1
Power Supply Consideration Topics Wednesday, June 3, 2009
........~.........~.~.~~~~.~.~~.i.~.~.~...~..!.~.~.~.Y.~.~..~~J~~.~.~y..!:~.............................................................................................~~.!:.~.~...~~.~~.~.~.............~.:.~.~~.~..
.......3.........~.I.!:.~~~.~~...~.~~.~.~~y....~..!.~~.~~.~...~~~~.~..~..~!:~.~.~.~~...!..~~...~.~~~!:.........................................~.ry.~.~...~.~.~.fJ..!~.~.~ry.............~.:.1.~~.~..
3 SPA Tier 2 FY2012-2028 Load Forecast Phil Lusk 9:00AM
.................................................................................................................................................................................................................................................................................................
.......~........~.~.~..!.~.!:~..~...~.~~.~.~.~~..9.p.~.~.~~.~!...~.~~.i.~.~~..~...~.~.~.~.~.~.~!:.~~.~...........................~.~~.~.~~~...~E!:~.~.~.............~:.~..~~.~..
Break: Is the Price Right? Any Number & Switcheroo
Games 10:00AM
5 SPA Transmission Considerations Melanie Jackson 10:15AM
.................................................................................................................................................................................................................................................................................................
Tom Krueger
.......~.........~.~!:E~.Y...~.~.~~.~~~.~..~.~~~.~..~.~.p..P..~y....9.P~~.~.~.~.................................................................................!.~.~...~.!:~.~~y....................~.1.~.~..
..................~~.~.~~..{~~.~~.y~~~.~~..~.~.~!~~.~~.~!:...~~.~.~J..............................................................................................................................................~~~~..
.......!.........~.~.~..~.~.~~.~.~~.~.~~...~~~.~~.~.~~.i.~.~...~.~~.~~.~~.~~...~.~~.~y...................................................................~.~y..~.~..~~.~~.............1..:~.~.~.~..
Break: Is the Price Right? That's Too Much & Showcase
Showdown Games 1 :45PM
.......~........9.~~.!:.~..~.~~.~.~..~~.p..p..~y....~.~.~.~.i.~.!:~~~.i.~.~.~..........................................................................................~.~~.ry.P.~.~.~~E.............~.:.~.~.~.~..
..................~.~J.~.~.~.~.................................................................................................................................................................................................................................~.:.~.~.~.~..
Lunch, along with refreshments at morning breaks, will be provided.
tlWPPA
Northwest Public Power Association
Tier 2 Power Supply Planning Workshop Agenda
Day 2
Power Supply Direction Topics Thursday, June 4,2009
.......~........!..~.~.~y..~~..9~J~~~.~y.~~.............................................................................................................................................~.!.!::.~.~...~~.~!.!::.~.............~.:.~g~.~..
.......~........!..~.~~..~...~.~~~E..~~.P..P..~y....~.~~~.~..~.~~...~.~?p..~.~~.~...........................................................................~.~.~.ry..!?.~.~.~~.~.............~.:.~.~~.~..
Continue Reliance on BPA - Option A Policy-Makers
C Form 3 Groups 8:30AM
Diversify from BPA - Option B Refine Straw Man
.........................~.~.9.~.r.~.!..~!.!.~.i.~.~.~.~..~~.~ry..........................~~.~.~~.~!...~~.~J?.~~.~.I.!...~r.~.~.~...........................~!...~.~.i.!.!.~!...!:9.~.~.!..~.!::~.~..
Break: Is the Price Right? Any Number, Switcheroo &
That's Too Much Games 10:00AM
.......~........~.r..~.~.p....~.~r.~.~..~.~~...~~.p..~.~~.................................................................................................................~.~~.~J?..~.!::~.~.~.r.~..........1g.:..~.~~.~..
Transformation of 3 Group Straw Man Reports into 1 Stone Bryan Singletary
.......~........~~.~...~.~~.p..~~.~.I..............................................................................................................................................~.~~.~.!?..~.~.~.~.~.~~~.~~.?.~.........~..~.:.~.~~.~..
Break: Is the Price Right? Showcase Showdown &
Showdown Games
11 :45AM
..................~.~.~.~~.J.~.~.~~...~.~~~.~~..~.~.~!~~.~.~.~~...~~.~.~.L............................................................................................................................................~~~~..
Continuation (If Needed) Transformation of 3 Group Straw Bryan Singletary
.......~........~~.~...~!:.!??~.~.J~~?..~...~~?.~.!:..~.~.~...~.~~.p..?.~.~.~................................................................~.~~.~.!?...~.~.~.~.~.~~~.~~.?.~.............~..:~.~.~.~..
..................~.~J.?~.~~.................................................................................................................................................................................................................................~.:.9..~.~.~..
Lunch, along with refreshments at morning breaks, will be provided.
Day 1
3-Jun-09
Att d
o
. f
P
en ee rganlza Ion resen
Bryan SinQletary NWPPA Yes
Kevin Smit EES Consulting Yes
Melanie Jackson Bonneville Power Administration Yes
Shannon Greene Bonneville Power Administration Yes
Ted Beatty Energy Northwest Yes
Tom Krueger Energy Northwest Yes
Bob Kajfasz Staff Yes
Glenn Cutler Staff Yes
Kent Myers Staff Yes
Nathan West Staff Yes
Larry Dunbar Staff Yes
Phil Lusk Staff Yes
Teresa Pierce Staff Yes
Betsy Wharton Councilmember Yes
Cherie Kidd Councilmember Yes
Dan DiGuilio Councilmember Yes
Dean Reed Utility Advisory Committee member Yes
Don Perry Councilmember Yes
Gary Braun Councilmember Yes
Karen Rogers Councilmember Yes
Larry Williams Councilmember Yes
Orville Campbell Utility Advisory Committee member Yes
o
Day 2
4-Jun-09
A d
o
P
tten ee rQanlzatlon resent
Bryan Singletary NWPPA Yes
Kevin Smit EES Consulting No
Melanie Jackson Bonneville Power Administration No
Shannon Greene Bonneville Power Administration No
Ted Beatty Energy Northwest No
Tom Krueger Energy Northwest No
Bob Kajfasz Staff No
Glenn Cutler Staff Yes
Kent Myers Staff Yes
Nathan West Staff Yes
Larry Dunbar Staff Yes
Phil Lusk Staff No
Teresa Pierce Staff No
Betsy Wharton Councilmember Yes
Cherie Kidd Councilmember No
Dan DiGuilio Councilmember Yes
Dean Reed Utility Advisory Committee member Yes
Don Perry Councilmember Yes
Gary Braun Councilmember Yes
Karen Rogers Councilmember Yes
Larry Williams Councilmember Yes
Orville Campbell Utility Advisory Committee member Yes
or \,ORT AN
:\~
c> '" ~(r
~
\.'11....- - ..
~
Tier 2 Power Sulm!YPlannin~ Worksho~
For City Council and Utility Advisory Committee members
June 3 and 4, 2009, 8AM-3PM, Council Chambers, lunch provided
Northwest Public Power Association
This workshop's purpose is to begin consideration of how the
Electric Utility will meet its Tier 2 power supply.
The Utility Advisory Committee and City Council need to determine
a Tier 2 power supply by November 1,2009, which is required by
the Bonneville Power Administration.
Northwest Public Power Association
Tier 2 Power Supply Planning Workshop Agenda
Day 1
Power Supply Consideration Topics Wednesday, June 3, 2009
1 Introductions & Today's Objectives Glenn Cutler 8:00AM
._~._-_.._---------------------------------------------------------------------------------------------------------------------------------------
2 Electric Utility & Tiered Rates - Setting The Stage Bryan Singletary 8:15AM
-.-------------.-----------------------.---------------------------------------------------------------------------------------------------------
3 BPA Tier 2 FY2012-2028 Load Forecast Phil Lusk 9:00AM
-.-----------------------------------------------------------.-----------------------------------------------------------------------------------
. _ _ _ ~ _ _ _ _~~ ~_ !~~_~ _~_ ~~_<?_~_~~! _ ~P_~~~~~_,_ _~c:>_~i_C?~~ _~ _~~~_'!'_i~~~~~~_ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~_~_c:>_~_ ~~~~_':1~ _ _ _ _ _ _ ~: ~ ?_~~_
Break: Is the Price Right? Any Number & Switcheroo
Games 10:00AM
5 BPA Transmission Considerations Melanie Jackson 10:15AM
._-----~-----------------------------------------------------------------------------------------------------------------------------------------
Tom Krueger
. _ _ _ ~ _ _ _ _~_~_~!".!)X _ ~~~_~~~_~~_ ~~~~_~ _~_':I_f?P__Iy' _9p.~!~~~_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _! ~~ _~~~~~y_ _ _ _ _ _ _ _ _ ~ ~_~~_
._________~_~_~~~_(~_~~~_~~~~~~_~_<?_~~~~~~~~_~c:>_<?_~)________________________________________________________________________~_~_<?_':I_
. _. _!_ _ _ _ _-::_~~ _~~~~_':I_I~_i~~ _ ~~~~~_~~~!~~ _~~~~_':1~_i~~ _ ~!~~V_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~i_~_ ~_~ ~~_ _ _ _ _ _ _~ = ~9_ ~~_
Break: Is the Price Right? That's Too Much & Showcase
Showdown Games 1 :45PM
-------------------------------------------------------------------------------------------------------------------------.-----------------------
. _ _ - ~- - - _ _~!~~_~ _~~~~~_ ~~p.p.~V_ ~_<?_':1~!~~_~~_~i_<?_':1~_ _ _ __ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~~~ry _ ~~~~~~ _ _ _ _ _ _ ~ =~9_~~_
. - - - - - - - - -~~)-<?-~ ~_':1_ - - - - - - - - - _ _ - - - - - - - - _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.... _ _ _... _ _.... _ _ _.. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~ = ~9_ ~~_
Lunch, along with refreshments at morning breaks, will be provided.
Northwest Public Power Association
Tier 2 Power Supply Planning Workshop Agenda
Day 2
Power Supply Direction Topics Thursday, June 4, 2009
. _ _ _ ~ _ _ _ _"!"_<?_~~t~ _ ~_~J~~~i_~~~ _ _ _ _ _ _. _ _ _ _. _ _. _ _ _ _ _ _. _ _ _ _. _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ ____ _ _ _ _ _ _ _ _ _ _ ~_I_~~~ _ ~~~!~_~ _ _ _ _ _ _ ~: ~~_~~_
. _ _ _ ~.. _ _"!"_i~~_ ~ _ ~~~~~. ~~p.p.~v_ ~~_~~~. ~.~~ _ ~~~p'~~~_I_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-=-~~ry _ ~~~~~~ _ _ _ _ _ _ ~: ~?_~~_
Continue Reliance on BPA - Option A Policy-Makers
c Form 3 Groups 8:30AM
Diversify from BPA - Option B Refine Straw Man
. _ _ _ _ _ _ _ _ _ _. _ ~~~~~~~ _~i_I~~~~_~! _ ~~~ry _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~~~~ _~?_~_I?~~~ ~,_ _~~~~_':l_ _ _ _ _ _ _ _ _ _ _ _ _ _I?~ _~~~~i_C?!_ ~_i~~! _ ~~~_~_
Break: Is the Price Right? Any Number, Switcheroo &
That's Too Much Games 10:00AM
. _ _. ~ _ _ _ _~~~~p- _ ~~~~~_ ~?_':l_ _~r:p.~~~ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~~~~p- _ ~~_~~~~~ _ _ _ _ _~ ~: ~_ ?~~_
Transformation of 3 Group Straw Man Reports into 1 Stone Bryan Singletary
.. _ _ ~ _ _ _ _~ ~~ _~~~p.C?~_~! _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ ~ ~~~p. _~_~~~ ~i_~~~_i~~ _ _ _ _ _~ ~ :~?_~~_
Break: Is the Price Right? Showcase Showdown &
Showdown Games 11 :45AM
. _ _ _ _ _ _. _ _~_l:I.~~~ _< ~_~~~ .~i_~~i_~_ ~_<?~!~~~~~~_ ~_<?_<?_~) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _~_C?_C?_':l_
Continuation (If Needed) Transformation of 3 Group Straw Bryan Singletary
. _ _ _ ~_ _ _ _ _IY!~~ _~~.P_<?_~~_ ~~!~. ~_ _~_~?_r:'.~ _ ~_~_~_ ~!.<?J?~~~I_ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~~~~p. _~_~~!~~~~~_i~~ _ _ _ _ _ _ _~: ~9.~~_
. _ _ _ _ _ _ _. .~~_<?~ !.~_ _ _ _ _ _ _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _' _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _.. _ _ _ _ _. _ _... _. _ _ _ _ _ _ _. _ _ _.. _ _ _ _ _ _ _ _ _.. _ _ _ _ _ _ _ _ _ _ _.. _ _ _ _ _ _ _ _ _ _ _. _. _ _ _~: ~9_ ~ ~_
Lunch, along with refreshments at morning breaks, will be provided.
. ~;~
I
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Typical Hourly Load for a Month
700
,.......---
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1 28 55 82 109 136 163 190 217 244 271 298 325 352 379 406 433 460 487 514 541 568 595 622 649 676 703 730
Hour
Typical Annual Load Duration Curve
Example of stacking generation
1
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501 1001 1501 2001 2501 3001 3501 4001 4501 5001 5501 6001 6501 7001 7501 8001 :8760
Typical Annual Load Duration Curve
Example of stacking generation
1
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Typical Annual Load Duration Curve
Example of stacking generation
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1 501 1001 1501 2001 2501 3001 3501 4001 4501 5001 5501 600 6501 001 7501 8001
BP A Tier 2 FY2012-2018 Load Forecast
Tier 2 Power Supply Planning Workshop
Gtyof Port Angeles
June 3, 2009
Philip D. Lusk
Power Resources Manager
I Topics
Forecasting Background
Energy Accounting Basics
Future Loads and Resources Forecast
o Projected Tier 1 and Tier 2 Power Requirements
Future Considerations
01
o
......
o
o
: I Energy Accounting Basics
What is a BTU, KWh, MWh and aMW?
o BTU is a British thermal unit; a basic energy unit
The amount of heat required to raise the temperature of
one pound of liquid water by one degree from 600 to
61 oFahrenheit at a constant pressure of one atmosphere
About equal to one large kitchen match
o KWh is a kilowatt-hour; a smaller energy unit used
by electric utilities
About equal to 3413 BTU
If a 100-watt light bulb is on for 10 hours, the energy
used is 1 KWh (100 W x 10 h = 1000 Wh = 1 KWh)
I Energy~Account~g'Basics
What is a BTU, KWh, MWh and aMW?
o MWh is a megawatt-hour; a larger energy unit
used by electric utilities.
If 1000 100-watt light bulbs are on for 10 hours, the
energy used is 1 MWh (1000 x 100 W x 10 h =
1,000,000 Wh = 1 MWh)
o aMW is average megawatt; the average number of
MWh used over a specified time period
If 8760 100-watt light bulbs are on for 10 hours for one
year, the energy used is 1 aMW (8760 x 100 W x 10 h /
8760 h/year = 1 aMW)
1
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I Port Angeles Electric Uti1i~ Background
Principal load centers
o Industrial Transmission (IT) system
Looks forward to working with the City in sourcing power
requirements that may exceed SPA's Tier 1 allocation
o Would be financially responsible for any associated costs
or proceeds
Not considered in the following evaluation
o Distribution system
Everyone else
.:L. 1
r Port~geles El~ctricUtility For;cast
Uses a six-factor polynomial regression for the distribution
system based on the past 36 months
Future growth
o Distribution assumes a 1.250/0 Compound Annual Growth Rate
(CAGR), which is about 200/0 less than the historic 1.52 % CAGR
for the 2001-2008 time period
IE Lower CAGR predicated on continuing recession impacts and energy
use reductions from the City's existing conservation program
Reality check
o Forecast was backcast against the historic loads from January
2007 though March 2009
(I Overall aMW forecast error was 0.660/0
IE Overall kWh forecast error was 0.200/0
50,000
45,000
40,000
35,000
30,000
~ 25,000
C'O
City of Port Angeles Distribution Utility aMW
20 , 000 ....~ ~- ~~~~~~m__~~~~~~~~~_~.~~.. m m~~m~~~~~ ...~m"~"m m~m~m~~m.... .. .....~m m .. ....~
15,000
.................................--................ .. ...-.,.............................................. ............................."...................................... ................................................. ..........._.....~.............. ..........................................,'u.
1 0,000 . ... . ..mmmm....~~~~~......mmm..m ............. ...~ .mm m ...... m~m ........ ..... .. m_m . mmmmmmm.m .... m m.mmm~ .. ....m m ..mm~
5,000
o
y=0.4323x6 -18.758x5 + 306. 12x4 -2273.6x3 + 7920.8x2 -16116x+56297
R2 = 0.9675
1
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I Tier 2 Power Requirements
Will slightly exceed SPA's Tier 1 allocation
during FY2012 - FY2013
Will exceed SPA's Tier 1 allocation by 1.026
aMW in FY2014 .
o 0.922 aMW Distribution
o 0.104 aMw Industrial Transmission
Depending on load growth, City may require
8.028 aMW of Tier 2 power by FY2028
~ 25
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City of Port Angeles Distribution Utility
2011 - 2028 Power Sources
50
45
40
35
30
20
15
10
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<< <<-\: <<-\: <<-\: << << <<-\: << << -\: << <<-4.. << << << -\: << <<-\: << -\:
IOTier 2 II Tier 11
"Tier 2 Gap" Distribution Utility Impacts?
Period
Wholesale Power Wholesale Power
Tier 2 MWh/Year
Cost Increase ($) Cost Increase (0/0)
2014
2018
2022
2026
8,073
24,227
41 ,205
59,048
435,920
1,747,090
3,407,680
5,497,380
0.90/0
. 3.70/0
6.80/0
9.70/0
NOTE: Wholesale power costs currently represent about two-thirds of the total
electric utility operating expenses
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
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City of Port Angeles Projected Tier 2 Wholesale Power Cost Impacts
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I Reduce "Gap" with Two Priorities?
Seek all cost-effective conservation as the
favored resource for meeting future loads
o As needed, look for options to accelerate those
.
energy savings . u U ....
~ Pursue renewable energy & cogeneration
o Preference for resources located within City utility's
service territory
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~
=----= ~B~_ :~~i;~=1~~~~~wlfir;:~;~~'~~~~~5f?if~~~~~i~1::r!~~;~~A~};~fri~~~~~~~~,==~;s~;;i2R:~~~~iF~~,~~~-=-~=~~~
~--=.::::::.-..:::::::::-...:-=--::::::::::.-::::::::.::--=-=..:::;::::::::::=::..::::.:::=--~~~~:.:..:::.::::::.::..:::.::.':==:.,;:::=.:.-":::-:":::'::':-::-:'~""-~:'===::::-':::::::-~::::.::-..::-::..::=:'.::::= :-:::::..,..:....::~.;::-:::.:::..::::::.:::-...:.==-:......:--=_-:::.::::::....:. -:::::::;.-..:::.-::::----::::.::,.--::.:;;:=;:..-.:.-:::::=-..=--=::::...-::::=::.=~,:.::=.=.:::;::::::.::.--=
====='-:-==-==-~:==..::::"_~ =:~.::::=::::=-...---==:::.:::..~:::.::=::::~.,.== ~'=~=::--==::::;~::~7:S:_~=::~~::::'-:':::::--=':'=:--~==::~:=== =.:::~~~=~:::--=~:=:=~====-~
Discussion Overview
· Overview
· Tier 2 Rate Alternatives
· Election Deadlines and Diversification Rights
· Indicative Pricing and Renewable Request for
Information
· Resource Characteristics
· Timeline
· Transition High Water Mark / November 2009
Decision
Pre-Decisional, for Discussion Purposes Only
Slide 2
-~-----~~------~-------~ --~~- - ----~_........~--- --......... -------~~----~ --.........."'-...------- --~.-~...---------_.........~- ~-~......._.........,-_.-~------~---- -~- -_............_----~-------~-~.......~ _......."-~
~------...._........._- ..~............--._~.........---................._~......----------~_&_..------- -~-~-~~-- -~ ~-,,,,~,,-,,,, - -- --~.. - ~~ -- ~---...--"-'~...~~~ - ~-~~ ~~ ... -"'- -~-- ~~~..... - ~~ ---~~~---~----.....---------------..._-
E=;=C~=-=Q- ~=~~}~~~~~-~~~!_!fZl~~i~i;59~~~t~~lS~j~~_===:b-:~=ct'J-=-- --=
Overview
· Each customer has received the forecast Transition-period High Water
Mark. From this information a customer can determine what their
above-High Water Mark load will be for FYs 2012,2013 and 2014.
· BP A is continuing the process of engaging customers on their interest
in the different Tier 2 rate alternatives for FY 2012 and beyond.
· BP A is presenting this information now to help inform customers as
they assess their options for meeting their above-rate-period High
Water Mark load for the first three years of Regional Dialogue contract
implementation.
· By November 1, 2009, customers must elect whether they intend to
have BPA supply all or a portion of their above-High Water Mark
power needs for FY s 2012, 2013 and 2014, and if so, how much and
through what rate alternative. .
Pre-Decisional, for Discussion Purposes Only
Slide 3
--~------------~ ....-..,.--..-..-- -- ------.-- ------- -----------.........------------...,.,...-- -..------------~---.--'-"-----~--...............-- -----------
-------------~------._-~--.......-....-..----~..---------.........--....----.----.._-~---"._--------~---------------.,,--~---------_._----------------------
~--_.........----- _...........,------~~--.-..~----"'-"'~~------~_._-~----""'---~---------
=--=-:=--- -e~=---=--==-=--:::-:;:-:="-;-:::=:;-:;-="::tJ--::---::=--"===:-=-----::::;-..:::::-:-:=:::::-= -::::..:=-=-=::_-:::-==::-::-===-~---=:--::-=-=c::..-:::--=-...::~-==-..:::::::..-::-::==-=
~- __ ~ "~:: ~__~=~- ~;~~~~~:-~;~'~;;;~=~~~~~1~i2~=~~{t~~~~~~~~~c:::co~~~-- ~~~~~==~~=t~~=_~_~~ _=_~-~ ~~_._ e~.:=~==__=_;:;:
High Water Mark Definitions
There are three types of High Water Marks:
· Transition Period High Water Mark (THWM): calculated in FY 2009
using the public customer's forecasted FY 2010 load to establish a
Above-Rate Period" High Water Mark load for all of part of the Transition
Period (FYs 2012, 2013, 2014).
· Contract High Water Mark (CHWM): the amount (expressed in Average
Megawatts) computed for each public customer in accordance with the
Tiered Rate Methodology. The CHWM will be calculated in FY 2011
based on FY 2010 actual loads and sets customers' initial eligibility to
purchase power at Tier 1 rates. The CHWM determination process also
defines the augmentation limit.
· Rate Period High Water Mark (RHWM): set in the RHWM process prior
to the 7(i) process (rate case). The RHWM defines the public customer's
maximum eligibility to purchase at Tier 1 rates for the rate period (limited
by the customer's actual net requirement).
Pre-Decisional, for Discussion Purposes Only
Slide 4
-- ...........----~----------------~ ~
- --------- --------- ----- --
=------====---=~--=-===--=-=-- _.=-=----===-==--===-~=----=--- ~ tsj-
- - - - -- ---- - - -- - - - -- -- ------ - --- - -
- ._ ~-~ =~-- tsj=--~__~I==~- J~ J~ _g..0)- ___ YJl ~ ~ _ _ ~~__~~~:.~~ ..::::L_~=- J JS::: * ~:::._.8 ~ _1-=-. --
----~- ~~ -------
Useful Definitions
· Rate Period: the period of time during which a specific set of rates
established by BP A pursuant to the Tiered Rate Methodology is
intended to remain in effect. The plan is to have a two-year rate
period.
· Rate Case Year: the fiscal year ending prior to the commencement of a
Rate Period. The Rate Case Year immediately follows the Forecast
Year. It is the year in which the 7(i) process for the next rate period is
conducted.
· Forecast Year: the fiscal year ending on full year prior to the
commencement of a rate period. .
· Example:
Rate Period: Fiscal Years 2012 - 2013
Forecast Year: Fiscal Year 2010
Rate Case Year: Fiscal Year 2011
Pre-Decisional, for Discussion Purposes Only
Slide 5
~ ~,~~~~~B~~f~.~~~~~~~~~~~~~J~t~;~~~~~~&1~~~.~~:,~~~ii;~~~~ ~~~~~~~;~I~~~~=~
:. -- -'-:-= - - ~=--=-==:~'=-~~:~~~:.:;-:.;::;:;;.--::::=~===-~~~-::::::::.~=---::.:-==~;;.:;-=-:: --~.~==~~~=;:..--=
City of Port Angeles r-w Projected Load
95.00
Po rt Angeles
."... ,--
90.00
---
i!!!I rn,p. Il!["'~a U III G I.'Zl I!lll E1l i:2lI
~ ----
."...,.
~ 85.00
-
"..,
"0
~ 80.00
x
~s
."
75.00
t!.
- -forecast
A actual
xCY2008
-WeaAdj
Est HWM
.... "'" Est. HWf..l + i fv'IW
70.00
2004
2009
FY
2014
2019
Pre-Decisional, for Discussion Purposes Only
Slide 6
--~------~-~~--~-~--------~..-....-~..........-_....._--~--.....-.-_------_..-...-_.........._.._..~----"'-'...._---.....-.-_----........,............_~-----------~~.............~---
~------ --~---_-......-.-----------.~_----............-_---...............------~---............- --~----~-~ ._---~-~-~----~y.......~-yy~-~----------~------_..........-----------
----~ --~----- -----~-~~---------------~- .~-~-~--~~~.- ----------...... -~--..._~_.._-~ -----,<; ~......._-----~- ----- ~._~----_._---------~~--------
----......_--------'_......_----_._--~-----~----~ ----~-----..----.--- -- -----------. -~------ -. --- -~ . --~~---- -~ _...~ - - ------- -~----'-. ---"*"'---- --_..............~-~-- ----~.._----~--------~----....-_--
=s----==-Q.-~~--.-~- ---::'ffi:----:'SL-==I-.Iii;....;:;:-c:::Iii;=---=~-- -~-~=Q- "~:c::.:W- :::=ffi:--:::~B--="::..:-.- --f!.." h"-:-=G~'''::;M-- "_C:::':I::::'::--"::-~- '::::"':'/-='"=S" --- -~-=:;::B"" '/!;.- _..:::~ -1-e=tsJ-----=
-~- -- - -~ ----- -- -~ -~- ~-~- -~~ -~ ~- ~---~ ~~-_~___ ~___ ~~___ ___ _A__ ___.... ___~ __ __.... __ __ ............., ~_ = ~~.. ... _~ ..__..__ ~___ ~~_ ___ _ ___ __ _ ______
~--- - -- ---~ -~ --- --............ - -- ~---- ..........-- -~~"" __.__~__ ~__~_ . ---"- _~_ A_~ _ __~_ ~.__~ ~_ _ _ ___.-. _ _ __ _____ ___~ ___ ,.......__ __~ ..-~ ~ __............. ~ ----,... ~_
-- -- -,,""--- -- --- -- --- - -- ~-~ - -----...........-~- -~~ .........-- -~- --- - ._-------- - ---- -- ..... -~- --- --- - --~ -~ ----- ~- ~ - -- --- --- --- -- - --
--------~~~-----------~----...........---._---....-_--------.-..-- ~-------~----~---------_.......----'--- ---- -----~~- ------., ~ ~...--~-.-..----..............._--- _---._-~........ ~--------._---'--_.......-..-_------------
~----~~---~~~--.........-..__............__.'_"_~...............___N""'____..._~~......_..._...__ _......~~~___"""""'___~_____...._~ ~"'"-~___________~."""*"_~_N~___________ ~~__~_
----------~----~-------------______________ --h____ ..__~_'"'_________..,= __ .... _ ~_______ _-> ___. ~_...~~__~_____..._'__~..,___~_~~___~__~_______
-~-~-----~---~--_....-~ -----........~~-. -...............---~........ -~ ~,_____~_ ~~..__~~ ___.............~___.._...._ ~~ n_" _ ~~~~__~ ~~__...__~ ____...._.-l..__ _______ _........_ ~__~_____~
--~--------------------...-..-.-.-~-------------~~--- --~-~------- -~--------_.~----~------------~-~-- -..---------~
City of Port Angeles ~ Transition High Water Mark
Fm11't'Q!;t
AdJ I.""d J.I,
:u
1\)R'(usl
l''''''"itk.o AdJ t.:..d J,',
nw M Jj
lOin
20J~
tJ<ilJt2'"
.,
.,
,,088
7, OM
(!
1,1l~
o
(I
1;1
7,2.18
l,{jiflt
I)
(i
o
ThH!l
J44
144
Tf!iMiiion ,~rl;,."ad
\'....100 OIl> 1U'03')m
~Mlt
r(fJ'tfllst
1""loll,..d II,
II
1011'
Rlf:~!t-ur(<,. Sl
lOJn
J'on:i:dsl
Adj l.,~d If,
.~
lOl6
87,51
0.15
87"94
0.58
PI.....rt Angeles
85,29
o
85,29
Trurrdliun
1l\\'M
87,,36
~""",',,,.d ,\"""..llWM f'i'T'l',o'li:d Ah..,.. IJWM 1''''''<0.1<<1
1A).Qd 1~)lJ:id [...Iad Iltud I..,..."td
20ll lllll 20Ll lOLl 2<';1-1
88.39
1.3% """ GrtwI. Pal.
0.7% ....n. .3T...1/I flit.
NOTES
II The.. p-oje<llon. ",fJe" Df'A. LOJd Fo..""i/lBl" J.~" oftk..1 TI1.L<u'lo",,,, 'l"'dl>: 1"0..".... (SlUd}' $4:..
21 The ..I,......J. dc, 001 j .dude lood ndju._n.. ,,,,-,..>>lizO[i,,., de ""ribed i. !be, P,,@io..1 Dinhgue poli.:y
V T;... I S).....m Finn Critical OUlpul.",onvlion. ;ndt>:le: 10((8 DiOp....IAdj; No Foor Milo Hill; 00 "'NP3so,ulo"".1 r..ur.
Thio fisu", "'!'''"" 0'" the "",rag.ol"lheproJl'<li!d TlS.~O [01 H10ll.nd 2013 ",,,,O,,,,,,he CGS "'[ueling"l'd..
4" I\-ojee~d .uglllen",,,,,. d"". net include .nl'ioc new !",blie.ol DOI>RJehl.nd. fJ( thi. ...,1.1.115 nMW b.." AJ",,.;y ","eo ..<u",d rJJcodll,. III)
51 It. "",u"""I:!o' <u""""Tld.c. tile Eu"iogRomul<<! of", CHI'{M nod 128 to. MW' of. ";m....d NI.5L.
(NISt... I'<nd O",iII., 6.16 .MW. fWD. J5 "MW. C"""blz .25 nMW nod ~l.tbeod. SI.M'H 0<. nit. I a",.. &~pri".)
6' It.tlecl. "'110\..1 01 ('..,.ITOIi. R.pb:..menl !l.!."",,,,. co.:i.leo, with It.gjo.oI CiNo@U. Pob<y~
7l If Abo1." HWlooI, h..:! i. Io",lb... I .MW BPA ,,'ill ""..." u.d.r iI.Land Sh.pi.t<l\llg... No .<1;'0 b}' (\'''''''0''' i. "'<1llj",d
Pre-Decisional, for Discussion Purposes Only
Slide 7
~~;;:;~~~~~~:::~~~,~~t;:~~;~?~~;~:~~~~~~~; G~:i:=;:~;;t~l'~{C)i~ :s::~::::;:~:~,~~~;~:6'::~I;;~~~~~~~~;f~:f-i;~~4?'::~~~~t;~}~~~~~.~::~::~i:~~ ~~~.~~{-;~~~~~~i~'t:::,=:t:%~;~~
Tier 2 Rate Alternatives
· BP A will offer the following Tier 2 rate alternatives:
- a Load Growth Rate
- a Short-Term Rate
- a Vintage Rate or set of Vintage rates, as customer
needs and interest warrant, .
· Statement of Intent by November 1st election
deadline
· BP A Tier 2 rate alternatives will be based on the cost of
providing a flat annual block of power
Pre-Decisional, for Discussion Purposes Only
Slide 8
~~------------- -.......--..........,... - ~------~-~~~~-,.._....._~.........._-...............- ~---"'-----------.-.--_"-- _~_~......__________~~__~__-'...N ~----..-_____________............._..............._____~__
----~ ----~--.-..---._- --...----......__.........._-----_...._-~...............------- ,,-- ~...--....... ..-~---.--~,.-----.". - -~_.----"" ----------- -....---....-......... -.--- -"--," --~--~------------------. ------------
------------ --- -~-- --~-------~--- --~-------_...~--..,,_.._- ~- --.-'"----- -------- _..._----~-~----'""-~--------...."-_.--_~_.._~-------
==:::----::-==~=__::7..:-=--_:::::-.::__"=..::::.__c:-..:.=_=_~.:_::=_=_::c.::.-:_..::_:__=. ---.~::::~-- "-:~:-W-' - ---"=- :;::::-.' -==":'. ~ --.":::::::::: ,::c.:;::--:::-.__ -'.-:-=-': .:-=:. C:::='::---'::'::::--=-=':::::'-:::-_-:::.'7"-==-.-:::-==--===--===.::::.
:::::::--=--==e=e-- -~-=~:=-:~:::~''sI=I::=:-..:~ '~15-:::-::::5'-' -_-:-:=~::::-:::- ;;:-:::: =(;I-:::::=ER=-"::-::::-_:::_f!.,.-:'=I3.'::::-:::M-::::=I-=--~:::-'=:I"'::::'S----~':';:-O:ER:-=-/];:::'=="1". ---I=e=f'SJ=
--~ --- ~ ----.... ----......--~_....-.......-----.......------------- ---~ ..--~ -~~ ....- .~~"-- -- ...~-__ _ ~"'_~~____ __,,___ ___h__ ___ _~'::',~.....,.......--........--. ~____........_
---~-- ---- - --- --- - -- ------ -- ----- -- ---...~- ---- - -- -~~ --~-~, - ~---~ ---- - - ~...-""" ~~~-~ "- ---- .........~~ ""-,"<-- -............. -- ~ ~---- ...~--- -"'--- --- ---- ~-- -- - -- --
---..~---------_---..._-----~-~~-_.........~""------"'_....-_..~ ....__.~~~-~ - -- - -~--- ~ --- ,~~- ~"'"~ ,~-- ~ ~~ ,. ~ ~ _ _ ,_ _. w ~ '"~ ~_->._ __"'____.-..,____ _ ~ ~"'__ ~~~_ _ t..~ ..______..-_""""__~~_~~__
--~---~ --~------._----- - --~_.---....,..-~-- _........~--.....,.-~~--~~~....,.~-" -~"""'""~-~~----~-~'"""'......_~~~--<-~--'"...~ -<---~~ -~............._~~-~.._~~
-~ -----~ -...............~-----_..._-_... -~-----"'''-~ ~----------._------.._- ~ '" -~ ~ -..................... ~........." -- - " -... . - ,,-_....~ -- ~~ -~ ~--- .." -~-~-~.. -~---~~ --. --.- -"~ ~- ~-..-...--.-....-~------~--
------.~- -------------~-------- --~~- ~~------ - ..4 _~_~ _~_< ~ _"___,,. ~~ '" _"'_ ~ ~ ..., .._.........____.......,____ __~"" _-<.~_fl~~~ -"__~,~_.........,. ..~<. _______...............,."___-'-__o.-~~_,,.~__""'~ "'n_", 0.- .......___ _~ _ "'............... --'__~_4_____________~ _ _____~_
------~-------------------~-----------~-~__....________~..............__4_.._~ ~____~..,. ~ _ ~"""""-0" __~ ~~~~ ....,_~~_ ~~___ ~_._~_.____~____~____~~___~____________~_______
Tier 2 Rate Alternatives
· BP A Tier 2 rates will be established in applicable 7(i)
processes (Rate Cases) which are set to occur every two
years.
· Applicable cost components that may be included in Tier 2
rate alternatives:
· Resource Acquisition Costs
· BP A overhead costs - overhead costs associated with power
provided at Tier 2 Rates
· Resource Support Services (RSS) - the cost ofRSS products
needed to deliver a flat block of energy
· Other costs: risk-related costs, transmission costs, Balancing
Authority costs for within hour balancing, fuel adjustment
adders, etc.
Pre- Decisional, for Discussion Purposes Only
Slide 9
~-----.-,------ -----------~-~---~- ----~ ----------,,-------,....- ----.....----_._---------~---..;..-.>----------------_....--------------
--~~-----~---...........------_.- ...~-""'--........_~--~--........~_.-._~-..,---------.......,.,,~--~.... --....--~------------------------
-~---------~~-........-----_.~--~~---,-~------~"'-""'-----~--------- --------.....--'~---~-
---==----=---e\--:.---N-- --=tfi=::-=- -= -I:: - - ===--='='=---\C-',7/"::':-:::--= --==-==-=-:c..:-::=--K=jj--::-=-=-====-==:=--==--=----=-=---;--:::::--==-=-=-=
= _:6 _-:c~- ~~_ -_ ~~~_ =~=~~~~~==-~~~~~~~~~~~~=?~~~~~~~:_G~=~~~~~~~~~.~=~~~=::t~:~~- j~~:t~:::;;;TE- :;.R=-=~~--=T~ ~l::-=<:;==-~_ -__~
====-------=======-====--....==-:-===--====:::::::--:.::=::::::-=:::::-:::=:.-:::="::::=-=:::::-=:.:=-;::;:-;:.:--:::-:..... -~~-_-='7"".;""-=";::-:=:::::..;-==:--.:;_~=:;.::::.:....:::::::::=--==::::::.:::::::::==::::.:=:-::::::..""':::'-.:--:::..:::-=:==-:::::::::;.:-=.::::::::::::.:-=.:..:::-.::::::::-:--====--.::::::::_--.::-=-~
Tier 2 Rate Alternative ~ Load Growth Rate
Load Growth Rate
· BPA commits to meet customer's load growth placed on BPA for the
term of the commitment period - although when giving notice to
purchase at the Load Growth rate the customer may establish set
amounts of above-RHWM load to be served by non-federal resources
or other Tier 2 rate alternatives for the contract term.
· Election Opportunities: November 1,2009 for the period FYs 2012
through 2028 and September 30,2011 for the period FYs 2015 through
2028. .
· Customers have a diversification right to limit the amount of power
they purchase at the Load Growth rate in future years with notice and
possible liquidated damages.
· Customers choosing to purchase 1000/0 of its Above -RHWM load
service at the Load Growth Rate may elect the Shared Rate Plan.
Pre-Decisional, for Discussion Purposes Only
Slide 10
-~~~-~_......--._------_............~_........~---~,_---....~----_............---..........._--_---..._-'-........,..........""-~..........- -........._--~--+--~--........._~...........~----.............--~
-------------------..,.,......~---_...~-~-----~-----~.....-............-~- -~-~~ -~-.....,.- ---~~--- .-.,.-- -~- -~-..-~----------......--...-~----~--_-------..._-
-----~----.........~---~----~---~---.--~_...~....,-~~ -.,..,...----'-'-...~~-"'~ ~-~~------ ,..--..........."'-'----~~ -------~-----~~--
------~--~-- ---------...-----------~--- ----~---~__ -_--0.--------------- _~ .__~~_ _~. _ _~--'-- _~___~___~___ _____..-___________________~___~__
-8 ~-~ ~-=~ -'sl- J-~- -E :;~--.-~...-.e. --=W.-=E=-='=IR-::-="::-/1...::.::::::6=M-."::'=':;"=~-='---':;::;-s.::::"=m ~-~. -m--'-e--=f'\J-----------=
---- -~ --- - - - -- -- - ~ ~~--- -- - -~- --* -....~ ----~~ -- ~-- -....--- --- -~ ........-.......- -......... ------- -- - --- -.......- - ------
~=- --- .- - - ---=- - - ~~-=-=:_~=--~=-~~== ~_::~-~~~=~~~-~~~;::. ~~-- ~= :::=-:_~=;-~:- . ~ - -=~- -.--=- ~ ~-- - -
Tier 2, Rate Alternative ~ Shared Rate Plan
Shared Rate Plan
· A load following customer may only elect the Shared Rate
Plan (SRP) if it commits to purchase 100% of it above-
RHWM load service at the Tier 2 Load Growth Rate.
· Each SRP participant will pay the same SRP rate as all
other participants within that pool of the SRP.
· "Melding" of Tier 1 and Tier 2 rates.
· Demand charges are applied on an individual customer
basis.
Pre-Decisional, for Discussion Purposes Only
Slide 11
~~~!.'~mf~~t~!tif~~~t~~Jijl;!~!~;l~~~~~
Tier 2 Rate Alternative r'-J Short-Term Rate
Short-Term Rate
. Shorter purchase commitment with terms of 3 years (FY
2012-14), 5 years (FY 2015-2019),5 years (FY 2020-
2024) and 4 years (FY 2025-2028).
· Pricing based on best market opportunities.
. Service at this rate may be converted to service at a
. Vintage Rate with proper notice and conversion costs.
. Customer has right to reduce purchase amounts with
notice and possible liquidated damages.
. Short- Term is the default rate alternative if a customer
fails to make an election (including an election NOT to
purchase at Tier 2 rates) by the notification deadline.
Pre-Decisional, for Discussion Purposes Only
Slide 12
-~~~..-...--------~---...--~-~-...............~ - ~~--~..........--- ~ -............ -.....--..~ ~..........-~-..........~ -~--............_........... -....----- ~- ..........~-.........._-..........,--~_...----~-_...........~--- ------------.........~~---~-~-~
======:::===..==:==:::::==:::::=::=_-:-.....:=::::::=~ ---=:.~-:::--~--::::--_::::::::::::::=:::...--:::....---:::::::-=.:.~::::.::.:::-:::.*-:.=:----*-::'~..::::::::::::.:::_~---::- -~:.:::':=-=-~::;--::~::....::::::::::-~::::-::::::-.;::::::::....:"'""-::::::::::...~=-~~':'..::::::::::-----=--~-'-~.::::=:=::.~:::::==:.
~-~_~~:B=~-e - ._~:~~ ~ ~~- .o~;=t~~-~~~-:~~~~~;~0-~~~:~~i=-~~~~~~:~~~;~~~=:~~~iiJ~~~~~~~ 1~~~~'~~=--;r~=~F ~a - ~~_ ;
Tier 2 Rate Alternatives ~ Vintage Rate
Vintage Rate
· Term of commitment dependent on term of intended BP A
resource acquisition.
· A Vintage Rate may be available as early as November 2009, or
anytime thereafter based on customer need and interest.
· To ensure that Tier 2 costs do not affect Tier 1 rates, customers
will have to give BPA a binding commitment (with a Statement
of Intent) to take service at this rate before BP A will begin to
finalize the purchase commitment for the resource.
· BP A wants to work with customers to understand their needs
and interests for Vintage Rate alternatives.
Pre-Decisional, for Discussion Purposes Only
Slide 13
;-~~~~~~0i~~f~W~~E~~~~:i~~~~=jfg~~~~~=:-~'9'~-! il ~l~~~~~_~ ~
Start
Load Following
Tier 2 Rate Alternative
Selection
Load Growth Rate
DeciSions Required
.Im1is.!!.
I2Y!lli!l2
11/1/09 for
9/30/11 for
Purchase
~
FY 2012 - 2028
FY 2016 ~ 2028
LG Rates may differ
depending on election date.
N
Option 1
Full
Load Growth Rate
May Modify LG wf
Notice by
1 0/31 of each
Rate Case Year
One-time
Termination
Right by
3f31 of each
Forecast
Year
Tier 2 Rate Selection - Load Following
Yes
Yes
N
N
Yes
Yes
Option 3
Load Growth Rate
w/ other T2 &for
Dedicated
Resources
May Modify LG
wf Notice by
1 Of31 of each
Rate Case Year
Notify BPA at each Notice Deadline that Tier 2 will not
~ be purcha.,ed and whether RSS will be purchased for
Specif1ed Resources
,or'
Short-Term,
Dedicated Resources
& Co....blnatlons
and RSS Elections
These Tier 2andfor Dedicated
Resource amounts and RSS
elections for Specified Resources
are established each Notice
Deadline for the corresponding
Purchase Period
I
I
I
I
I
I
I
I
I
No
Short-Term &RSS Elections
Decisions Required for Short-Term Rate elections &
RSS Product elections for non-Federal Resources
Notice Deadline
11/1/09 for
9/30/11 for
9f30f16 for
9/30/20 for
Purchase Period
FY 2012 - 2014
FY 2016 - 2019
FY 2020 ~ 2024
FY 2026 - 2028
Alternative A
Short-Term
Serves ail Above-
RHWM Load greater
than established "not
to exceed" Dedicated
Resources
Dedicated
Resources
Tier 1
Pre-Decisional, for Discussion Purposes Only
Alternative A
Short-Term
Serves ail Above-
RHWM Load
Tier 1
Alternative B
Dedicated
Resources
Serve all Above-
RHWM Load greater
than established
"not to exceed" T2
Amounts
T2 Short-Term
Revised
May 27.2009 @ 11:35
Slide 14
-~-------~-~-..............-_-~.-.-~----~~~-~-~~------
~-----......._-~~-----------------------------~-~--------~----------~--------------~--
-----~-~~--------~-----_--....._~_...............~-~-"--~------------------------~----
===--===--==---===--===--=-=-~ -====-=--=-:::-==--=-:=--:::.:=:...-===--::::::-=---.::::-:::::::---==-=.-=-=--=--:::==-=
- - - ---- ------ ------ -- - - - ------------- - --- --...-- ~- ~ --- ~ -- ~~ -~- - ~ -~ ----- - ---- - - ---
=-~ -~~==~--- -~~~~_._L~_ G---~~__~=-=____ _~~-=~~__:=~~::!-=_~:=~~~- ::~~~~~ID~~~i~~~~=~ ~:::_~-~~ ::-::I-=?_@:=:~o___-=___
Features and Benefits
All Tier 2 Rate Alternatives
· Above-RHWM load served by one or more of
the Tier 2 Rate Alternatives will be PF-rate
based power
· Tier 2 costs, including risk and RSS is
integrated into each Tier 2 cost pool
· Pooled risk within each Tier 2 cost pool
· Ability to rely on BP A staff and resources to
meet Above-HWM load, minimal utility
overhead required
· BP A meets all or some of utility load growth
· Maximum flexibility
· Resource specific
· Greater control over resource choice and costs
Load Growth (& Shared Rate Plan)
Short Term
Vintage
Pre-Decisional, for Discussion Purposes Only
Slide 15
..-- --..,..-.----- --- -~----....-.--_.- .-. ..._- --' --- -- ~ - --....-- -....,.,---. ....- -.---- -., - ----- -.-.-.. ----- ~._... "----..- ---...---.-.....------- --"----_.~-_......- ......-.-. -- -.--....--- -----
---~-- --- -~-.-----"~----~--- -....----..--.- - ---. _..,.,.,,"'_........ ..... ." --'-- . .,.,..~.._-..,..,.-_._----"'---------- ...--..-......------- ----~---------.__.-- ------..--- ----..-....--
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:=::::::::::::::::::=::.::;:;:.:::::-...::::::=::==~..:::.::::::::-...::.::::.~.:..."...-:::::: =--=_'::--::::::-::"':':::::::'::7":"-::=::':::-_=":'-~--=_- ::::::::-,., --:.--::==::.,""'::.:.:,:.:::.:::::::.:::::::::.:...::::::.::.::::::::;::;:-~-....-:-:::::::--.:-:::=:::::::::=::::..-:::::::::::::-..=:::.....-;::::::-'.=:=:::;::---===---==- ~~....=::::---:-......::...=.--::::::.-:::.-..:::::-~_-:::-::=-==...--==:.-::.
~==-~~-~=--::::-~~=--=:::~_:-====::.::.~~=~:=::...:~--=~::::::...-~==-~-=-=-=---===-~-==-====---==--=---~~~~-~-=-=
Diversification Rights
and
Tier 2 Election Deadlines
· Customers have a diversification right to limit the
amount of power they purchase at the Load
Growth and Short Term rates in future years with
notice and possible liquidated damages.
· Above-HWM Notice Deadlines:
Notice Deadline
November 1,2009
September 30, 2011
September 30, 2016
September 30, 2021
for
for
for
for
Purchase Period
FY 2012 - FY 2014
FY 2015 - FY 2019
FY 2020 - FY 2024
FY 2025 - FY 2028
Pre-Decisional, for Discussion Purposes Only
Slide 16
._-------_......---............--_--~---.~-----------------......._--- -------~--........-.---..........--.._--.
- - -=--8- -(:)---- ~=----:~---=-. ffi-- -'!jL~--- ~-=-3=~~-=~-=-::-'E-=-=-.;;:--,-:::~- --"':::2-(:)-.- -:::-.:::W'-~-.:;..-=ffi-....:-'~:;:rR,.=i:z=- --:::'':-t:s,,--:-:?.cID:::::-.:M-=--.:;;:::::,::-.:i--N---'--'"=--:::-=-S::''' -~fS-7"'-t:s,' -'--=ffi- I ~ .~- --
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-----....--- ~ - -- - -- -- --.-- -- ----- ---- "--- -- -- --~..- ....-.....- ._-- --- --- --- ~- --- -- ---- -- --
- - ------ -- - - --- -------- --- .--- -----.---....--- ---- ----- --...._-- -------- ------. -- ------ -- -
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--------------------~--'-----"---'-------~------'----.
------------------.---.........._._--....---~------ ....-.---...---------.---..---.-------
----------.....~----------.-~...-....-.__.-___...._-----..____________.._-+--...........___......__.._u.._____......___...._. _._.........~____'"_______...............__.....___________.._~.
~----------------~-~---------_._..---.-~'""~-------.... ~-- ---------...--_..~ -----~~--~---~----------- ---~--------------------
Advantages of
BPA Tier 2 and Non-BPA Resources
" -
J Advantages of BP A Tier 2 Rate
\ Alternatives
I
Range of Tier 2 alternatives: Short term, Load.
Growth, Vintage ..
<>
~oli~, ~xperi~n8!~dJ3P~ sta~~ w;~rL)~ng;Jor ypu
all the way frolll. acquisition to qelivery.
In depth marketknowledge andexper;ience
trading.
Excellent credit worthiness, credit support and
risk management.
Long - t~l11:! partner.
No need for additional utility staffing
(reduced overhead costs)
}>ooleqrisL)s(wi~hi~ l'ier~ ppr1;fol~o p.oQls)
Advantages of Non-BPA Sources
Maximum freedom of choice and control
in resource types and terms
Development of Utility-owned resources
No Section 6c or NEP A requirements.
Less "transparency" required.
Opportunities to partner and pool with
other utilities.
Flexibility in marketing surplus
generation
Pre-DeCISIonaL for DIscussion Purposes Only
Slide 17
_ ~ ___ _ ..." _ _______...__ __._~... __~ _".__~....__ ... __." _..- _.. __, ,.,..",.... . ~ _... . .,..,_. ~.. ~~... ,,_ -.. ~ ,_ .. _. "'_ _ , ... ....~ ~_ ,_. . .". . . ~ ..... " _. ,,__... "'.. _~ .~...,... '" ,_. .. ....... ... .. .._...... 'M _ ..."..._... . _._...~ .. "'__.' .~- --'" .. ..,-..._.~....'"-'~' ...... --...
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______..__......__...._.__..~__. ...._.._ '~h_'" _'. .. __ _ ..... _. ... ..._.. ". ~,~ ,_.. ......~... _" _." ...._.... ~.~ ............ ...~ ....~...~..~ _..~.__~_.H............~.__......_..._...._..,.____
=:.::::=:-.-'=~ .g' -':'':;,. ~':'-::-N'.':;"-' ':-; 'v:. " '.'..'.. t ':.. 'L'" . ,'" .' ~.'.. ....::'8 :. .... W'"'''' '.;" ..:."::. .' :. ~ c ,'c. .. .':'.. . .'.. . :'.,' :....... , --::. .:"~ ,'-..:C. -.~ ..,:,.". '':''.. "'''1'';:::-. ~=~c N'::::::: .-:.:::::::::,,;:
~;~~~.i1f~~~i~th~~~;-t~~L.:~~}JZ.~ :~t~:;:~ \l::.:::~::...~.: :.~:~;.:)~,p.:~:\:._..:f:~3i~~~:(;~~;~ ~~y~~ti;~:~]~~f~~.'~~~~~:0:~~TSf=~IIi~t~~\~i~if:~jJi~~~{li~ti;~~~
Indicative Pricing
and
Renewable Request for Information
· BP A is releasing indicative pricing to inform customers of the potential
costs that may be included for different Tier 2 rate alternatives.
.. The prices and resource combinations should not be relied on for
determining what future prices or what combinations will be available
at that time.
· These numbers represent a snapshot of the current market conditions.
· Actual Tier 2 PF-rate alternatives will be set in a 7(i) rate proceeding
prior to each rate period.
· The renewable price estimates are based on information suppliers
provided earlier this year in response to BPA's renewable Request for
Information.
Pre-Decisional, for Discussion Purposes Only
Slide 18
--.......-------.---~~-------~_.---_~----...---_..............._......_'"'--------------------_---.~-~~--~---.._----~- -......................."""'"--~~-~-~-............--------------
--------------------- -~---~---.-.-....*----...- -~~-- ---...-~~-~-...----..........~-~.~.....,..----<<----.>~~....---....--..~ _____ _~~_,,___........... _-......_ w_______......_ ________.....____
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_P--------. ._ ____ ~__ - _~__ - _____ ___ _~~__~ _~~__~_ __ ___~ .__~~ __ ~__ __~ _____ - _~_ _^~_ ..__~~ .__~ __~__ ____ ~_~ ___ - ___ ~~_ _______ ___ ___ =====::::::.==
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= - .'- - -=- .~.=:;~----. ;.-i:.~:::.:.. -=:-_.:~c=:{~::::~~~-==~:f~..::~~:::-~;=;~~&=~y.,::::~::::;;:;:=Z::;;::~=;;;;:.:.-:::;~":..:-~~~~~.:::_::-:...::, .__:- .:::::: -'C. -:.-- __ _ _
Indicative Pricing
and
Renewable Request for Information
· BP A is providing the estimated resource cost as well as the
Fully Loaded Cost.
- The Resource Cost includes only the cost of the resource.
- The Fully Loaded Cost includes estimated adjustments necessary
to convert a resource's output to a flat block of power including
risk, overhead and RSS.
- Estimated carbon costs are included in the vintage least-cost
resource only.
- None of the fully loaded costs include transmission.
- Much uncertainty remains around the fully loaded costs.
Pre-Decisional, for Discussion Purposes Only
Slide 19
~~~1~~~~~~!1~Jl~~I~~~~~~lllt~JiI~fii~Ag:l~~~~~
Summary of Tier 2 Rate Alternatives
Short-Term
(3-5 yrs)
Short-term market purchases (5 years or
less in duration). Purchases driven by
lowest cost market opportunities
Load Growth
A mix of short and long term purchases
(examples could include, Renewables,
CCCT , Waste Energy Gen, Market
Purchases). Resource selection primarily
driven by lowest life cycle cost
(14 or 17 yrs)
Vintage
(up to 17 Yfs)
Based on customer interest. (Wind,
Geothermal, Solar, Waste Energy
Generation, CCCT) Resource selection
driven by targeted resource and lowest
life cycle cost
Pre-Decisional, for Discussion Purposes Only
U nlikel y
Potential that some level of
RECs could be provided
over the course of the
contract.
Yes, for most renewable-
based Vintage Rate
Alternatives.
Slide 20
-~-"-"'-'--~~"'------------- -............ -~ -.-..-- ---...~-_........_-.........._----~~-~ -~---~- ....._......._-......_-~.....--......~-- .._.~--'---_..--._-~~---~-~---- -~~-----~~-
------------.._----._------------------~---- - --- -~--------~--~--.._~~~ ~ ...._-~......~--~----,~~--,.....~---- ----_...........".....,. --~ ~- ~..--------~---_.....~---------------
--~------~-----~------~-~--- --- - -_..._ __r-_~___.._ __.~......... __ __ ~____________....._ ~_____._________ __________________________
----------~-------------~-------------------.--~--__._______._._.__~___k~____~_____________.______~........_____..__~_~_~ .....__~__......_______________________....._____
-13.-e-~-=~-=g- 3I:-I=~---~ --g===--':B-"'='-e--.:::;::.:.:w-.. =E-=-~::::fR=--=-=--==1J.- :..=G==I\71-c=I=I'\J-=I==S.......--~--fR--- 1I:. ::em -I--e-~--
-- ----- -- --- -- - ----~---- ~--~--- -- .......--- _~_ _~___ ---'~_.........~__..o-- ~_~ _.....~~_ __ ______~ __~~____~___ _~__ ~_ ____...~_ ~ ~
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-- --- ----.- -- -- --- -- --- ----- ----__~______ ___ .--0-- __ _ ____---'"-....__...~......... _..... ___~-"''''"-_ ________~ __ _....._ _ ___ __ _____ _ ~_
---~---_._~-~-- ------------------- ~--~-_..- --"-.----~. --......--- .,-~-~~--- .~,...",- ........-_--~--_._--~....------_....------~-----~_.....
~~-=--~~-:::::..~::::::::::::-_-~~-=-~::::::::.~..:.::-:--::;:~".~-:;-~.:::-"--~;:..=:::;::::::-......_~--:::::;:-:-..==~.:.:=-.~-=-=-~~=::::::::::::=:~
--~------------------~--....,.-_-.._-----""-----~.....~-----~--_..... -.....-- -~.._~-.............~--~-~- "'~_............--'---._---..__.._---~--......_--'-~....,,-_.._._...._-------------
-----------------------------------------------------------------------~-
Cost Comparison of Tier 2 Rate Alternatives
Levelized Cost
Estimated as of May 2009
$140
$120
$40
..
~l.. Long-term risk
~
..
.
.
.
.
.
.
]-~
$100
f
!
~
-
~
i
]
$80
$20
$0
III Resource Cost
1m Fully Loaded Cost
$62
$64
Vintage - Wind
Resource (20 yrs)
$52 $82
$54 $117
Pre-Decisional, for Discussion Purposes Only
Slide 21
Load Growth (17 yrs)
Short-Term (3 yrs)
Vintage - Market wlLC
Resource (20 yrs)
$68
$77
Vintage - Least Cost
Resource (15 yrs)
$87
$96
---------- -------_._._-----_._-_._~_._---_._---..-----....----- ---.---.- ---.------------ -_.._-----------------------_..._--~._-_._--
------_--.-_...-------_......_------------._~-----_........---------.
----------------...-----------------------------
=::::::=-=--==~_=_-=,_=_===_=__=_.:.._.:-_==_=.;:::_.;:::;::..=__.:..._:;__....:::;-_-.__:.-.:::..::::__:.=- ===--=--:;;:::-.::-=--=--=-=---=.:::----....;:::;;::--==-~ l"\ ... =-.:
:~- ~~~~=:~~~~~!r~~1~~t~~~~:~#~~~1~~l::r3~~~~~~qrf~~~~;~2~f~~r~~~~~f~T;f~1~~~~~~~~~~~;~~~~~~~~~~~~~
Tier 2 Levelized Indicative Pricing
Estinlated as of May 2009
Tier 2 PF Rate Alternative
Resource Cost Basis
Resource
Cost
Fully
Loaded
Cost*
Load Growth (1 7 yrs)
Internal Forecast
$ 62
$64
Short-Term (3 yrs) Market Quote $ 52 $ 54
Vintage - Wind Resource (20 20-yr Power Purchase
yrs) Agreement $ 82 $ 117
5-yr Market plus 15yr
Vintage - Market wlLC NG Power Purchase
Resource (20 yrs) Agreement $ 68 $ 77
Vintage - Least Cost Resource 15-yrNGPower
(15 yrs) Purchase Agreement $ 87 $ 96
* Fully Loaded Cost does not include the cost of transmission.
Pre- Decisional, for Discussion Purposes Only Slide 22
II
--
- ----=--- - .. - --- -
I3-==::=-Ea J~J::::=~-~\.1=.==I::=-1i= ~__G _~ fJ._c's/!l_ G--=ffi====;~=:-m--=M=I-N--:I~-=S-.,:;~ F:R=tL r~ .I_@_=~=::::
---:::=:.-...
II
Dimensions of Uncertainty
· Fully loaded Vintage wind resource costs include the following
estimated cost adders which are part of the ongoing rate case.
- RSS charges for 2010 of$18.50 which are then inflated for each year.
- Transmission Services Wind Integration fee's of$7.00/MWhr which are
also inflated for each year. Actual rate case outcomes could vary by as
much as +/-30%
- A 4% risk adder for all renewable resources, which may be high
· Construction cost cycles are currently on the down swing. Estimated
prices do not reflect this. .. ... .... ..
· Adders for wind and other Vintage resources are based on what we
estimate the costs to be today, prices will undoubtly change moving
forward.
· The development of additional energy storage systems in the NW such
as pump storage, compressed air etc could significantly reduce the cost
ofRSS and Wind Integration moving forward.
Pre-Decisional, for Discussion Purposes Only
Slide 23
.........-- ~- _._~-- . ~"'_..- --........ -.-. .--_. --,,-....."'- .>.....- - ~~--- --~- . ._-~... ...... - -"'-- ""~ -. ~...... ~-"..,.. --.,. ~ _...+--- .....--..... -........---......... ._-~._--......._.........--_.-- -...........---... --~.- . -- -_., -----.--,.- ,..--'- ---.---- -- ..--...---- ----
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----- -- ~ ------.............-------,-----~-"'"'--...--....... -_._~------~.-~-.-..--......._._~._----_..._...._----------- ------- -------------
-...--.---.----------.--- -.-.. .---...- ---- .....--.._-----.~--- --....-.-.........- "'- ~ -- --- --- ---.. --.. -- ......--..-...... ------.-.-..--...,..,-----...--- --.---._--_._.~---._---
===-e--I'C'\-==N- =N- ==r=.-=-\':I==I=:':I::-_:::-=I:::';:;='::r=-::-==::'~=:D=-=:~A-:::' ::'::w' =.;...::c:-::::o.-:::'r:;=-- ,J\';"--=D-=-'::::=M- =I=N- =1"---5- --'T"'---S ~, 'T"--I-l"'\-N- =
=-_=-_ _ s ::=-~~3~.:_:;~_::_~:~-:'_~ ~1:;:.3t:~:'~:':-:~:~~~~,::"~j~~7~:~~~~~~~~::~~~-==:.:~~~::E2~~:~~:=':~-==:'::~-7;':~~ _~;.=:.:: --;;~-=-::~~~ ~~~. -- ~--;?--=__~.~_~:= --.:: ~~::--: _-'_ - _..::-~::.-=~
:?~::-~.::::::::=-_~.:=:::::.:::=-~:.~~..-~=::'":"":-:.--=~.~:?~ ::::::'?~~::~::.:.~~:;:~~::-:::2:~:::":f:~7':.":::-::~':"'''::;~:~::-:_7:~~~~-=-E:::::'::~:~~~:==:r~,:;.;:::::~=:::-,=~-c~~=:::':;:~~--::::-==~~~-~-=:~3:~==?=
Transition High Water Mark
November 1, 2009 Decision
.
Each customer will cOlnmit by November 2009 in their contract whether its Above-
RHWM load will be served by BP A, a non-federal resource, or a combination of the
two.
The THWM is a proxy for the CHWM and is used for forecasting Above-RHWM
Load for each year of the Transition Period - Fiscal Years 2012,2013 and 2014
BP A will work with customers between now and November 1, 2009 to bring as much
certainty as possible about the types, costs, risks and other characteristics of
resources we expect to secure for each Tier 2 rate alternative.
- Work with Customers to better understand their Above-RHWM needs and interests.
- Scan the market for the best resource opportunities.
- Iterate back with interested custolners regarding what we are seeing as viable resources
that are available to meet customers needs.
- Seek to develop well-defined Vintage Rate Alternative options by November (if interest
warrants).
· Customer input is key to BP A's success in offering Tier 2 rate alternatives that meet
customer needs and interests.
.
.
Pre-Decisional, for Discussion Purposes Only
Slide 24
..- --."-==:':: ;~::;~~~~~'~-~~'.~:.=-~- .-._::--_:=-=~
=S--(l==-N=~=~__~f=_E--E_E:'-=~=fg -=-f;)==Wh_~._.::cR___-==--=::.-=~.::-=:Ill-::..-..::-M::-=I::-.=~=--::I::c'-=S..::-- ill _ ts==~=-~_::::::I=-=-~-N=
============="::====::::=:::::::::===-~:"::::=-:~~~...=:.....~.:-.-::::=."~-::..--=~~";:.....-;:-~..:::::-.::...~..::::=~::::::::..=:.~..='::::..~--:;:~...:.:".::::...-::.:..."::::::::::::..~.::.=.:.::::::-;:::;;-~~:.:.:::::::::--=---::=.:.....~..:...~
=--=-~-==-======--==-=:::::"=~-~-===~~~~7.:::"-~=~=-~~~~~
Tier 2 Timeline
May
· Transition HWM Forecast, Indicative Pricing/Renewable RFI
· Assist customers in preparing for November 1, above-RHWM load elections
· Transition HWM finalized
· June 22rd: Tier 2 Workshop in Rates Hearing ROOITI in Portland (1 - 4 pm)
· Decision Deadline for Tier-2 and/or Non-Federal Resource elections for FY2012, FY
2013 and 2014
June
November 1
2011
· Contract HWM's are Calculated
· FY 2012-2013 Rates Finalized
· Customers decide how to serve load above the RHWM with BP A's Tier-2 Rate
alternatives, non-Federal Resources or a combination for FY2015-2019
· Service Under New Contracts Begin
Summer
September
October 1
Pre-Decisional, for Discussion Purposes Only
Slide 25
.....-.---...-- '--' --." .----......................- --.. ....-~_.. - . ......".. ~..., - -- - '" - --~ . . ....,..~~~-~ ..... -. .~--,- - - -- ....-..~, ~ ..."... -~-" ~_..- "~..-._-'" ..,..-. _... .--... --.... -~. -~ '--" ....--. -.."._---.......~._~--~..~.,--~ ........-----.--
____~_____.__ _~_~_ __..._ .______ ....._.~~ ..._ ~..___,_~~. ,~ _..._, ....... ____. _.__,.._..,..._~...~_ ~ _._~.....~,,_ _~,,_..... _, n_< .....~~ '" __., """.......... __ _" _~_. __'_~"""~__' __..........-........,0-_.__... __ ~M' ..-.-...... .,_.._ .~ ...,..-- .- .....-.- -.-- --~- .--"'.--. -.-- - -. --.- -_._-~_._-
_"'-._______.__.___..__._____ ~~_._",.."..... ~_.._~~W '~"_ ~ _~_.~ _'" ..._~...... .._~._.._~...~~. -..... ---.-- -..,~....-~~. -.... . --.. ~~-~~... ~......._~ .~~~- .. ~....."'.-,.-.~ --..- ~---- -................... .."'.._-_.--...~_....- .--.--...-......-..-.-~,-..~-...---"-......-""-.-.....-..--~--,----.
=---==--==--:--::::::_:-C:::--::::-=""-==_-"=-';:::=';;-=-=--':':=:'::-=:-':=_'-:~ -- ,-- :..::::::: --:--:-;:-.,-- >::"---~ ,- :-~-~:::---:--- .::::c..- -: ;:::':"-:::--, :-;:-:-=::=.= -":--:"M"---'::~I: = -:-:"::0:"-::;;-"_-':-'::::"'-- ~=-:--;;-===---;:::--'-:7::-::;;I-'--::-e---:::::""N':=-:'=':::'=--;::
~ ;c~~_~~~~... _1'J~::~~:~~JE~~~~~::;'J~~:~--~:-:'-~:~~~~i~~~::i;fif{~( ~~-:~:Y.'{r\~;2~~-~~-~~~~t:~~~~~~,~~;:~~--::.~:~?~Y3:!~i-&~~~~~~Ti~~,~~~~~._~=~,~-=;:=::i-==~2g
~=:~-=:::-.::~::~.:=..:: ~=:~-:::~.:==~ ~~:-=:::~---::; :::;::~~:~:::: ,:,,'::~~-:=-'::~:;~~~ .;:..~::. ~.. ~~~:;3:;:'~~ 4:=~~=.:;:-~':';:::.. ~ :.-;:.....:;~:.~::: =: -:-::~-~~-:"2'::"='''::~-';'--::~:;,;;':-:::~:: ;~::":;;:'~::-_::'=. :::::=~;:::~.: ~,,::::'::';Z:=":;;.;~::::.:;'."":: _.. _ ?'';::::::'''?;':::: ~::~ r.~-:C';~:;"'~~:::':,:~:;=:::_~~"::::-E:~'.=:=:~S:::;;::=.'
Key Decision Timeline by Rate Period
October 2009
Customers commit to BP A Tier-2,
a non-Fed resource, or a
combination for FY2012-2014, or
for entire contract term if choosing
Load Growth Tier-2 rate.
September 2011
Customers with load not already committed to the Load
Growth Tier-2 rate or another long-term Vintaged Rate
commit to how they will serve load above their HWM
for FY2015-2019. Customers may also adjust short
term and non-federal elections.
I
I
I
I
I
I
I
I
I
I
~,_._._,-,-,--_._._,_._._---_._-_. .
Commitment by I
11/1/09 I
1 t Initial Commitment: 3- Year p!rChase
I Commitment Through FY2014
I ~ r r
FY09 FYIO t t1:ate P;~d 1 ~Y~4 Rat:~e:Od 2~t6
HWMs Finalized I
Contracts
Signed by
1211/08
-jl
FY08
October 1, 2011
delivery
begins under new
contracts
Second chance to select Load Growth Tier-2 rate
effective 10/1/2014 for remainder of contract
Subsequent Commitment: 3 yr Notice, 5 yr
Commitment for FY2015-19
Rate Period
HWM
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Pre-Decisional, for Discussion Purposes Only
Slide 26
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:: - . --~ ~_- :=-- - _ -=-=_ --:=- - --- -- ===-=_ - . _--:-~- =-_--=-c-___----. ~ -__ - '--- _= - --- ~ - _ -
SPA T'ransmission:
Challenges for Serving Network Load
with New Resource Choices
Melanie Jackson
SPA Transmission Account Executive
June 3, 2009
~
----- ------- ---- -- ._--------~-- _. ..._-~ .-- - --_.....--..._- ---~- -.-. .~---~---- -'---~--" _....-- -_.... .- -..----.. ~-----. ..-- --- --~-_..- ---.._-- --~._---------'-"-----'----'
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Key Business Drivers
· Regional Dialogue Choices
· Resource Mandates and Constraints: Renewable Portfolio Standards
(RPS) and Federal Columbia River Power System (FCRPS) constraints are
changing the way the region plans for and acquires resources. Resource
decisions will impact transmission facility development.
. Transmission Construction and Resource Timelines: Load and resource
forecasts generally provide sufficient time to build transmission facilities but
provide little commitment. For Network (NT) customers, the attestation and
resource designation process provide commitment and need to be timely to
inform transmission construction decisions.
- Resources average 18 months to construct.
- Transmission facilities average 3-5 years to construct.
=--=::=::::----===-..=::=:::=::::-=::::..=:=::::==:-::-==:::...~~..:::=::-.::::::::...-=-~~:::::=::::=::::~~~=--=--=.:::.:.:=--====-::::::::=::::::
i~T-:;~~~~~:~~~!;~!~~;~-~~~~~- 5~~---~~~~- fr1~~~~=-==i~~~-_~~~~~~l~~;J~~~~;;~~~~~;t~~~~~lE:;ti~~~~~
How Does an NT Customer Obtain Firm
Transmission for Non-Federal Resources?
.
Work is currently underway to identify transmission system needs to
facilitate your Non-Federal Resource decisions.
- Regional Dialogue Implementation Team (RDIT), go to
schedules and information.
for meeting
· When modifying an NT service agreement with a new Non-Federal
Resource, customers must designate a new Network Resource (DNR).
- Customers must submit a Transmission Service Request (TSR) via BPA's Open-
Access Sametime Information System (OASIS); and
- Customers must attest that they own the resource, have committed to purchase
generation pursuant to an executed contract, or have committed to purchase
generation contingent upon the availability of transmission service; and
- The Network Resources do not include any resources, or any portion thereof,
that are committed for a sale of one year or more to non-designated third party
load.
y
.--_________________ _~__ __ __." ___ __ __".. __ ~ ___ _____. __~ '__~ ._~.._ . ._ ~_ ~ ___M ______ ____ -__~ --_.....~_.____ -- -~--.... ~ ~--. -- --- ~-----~-~ ---- ---- ... -........--,...-.---~.~--'~---..-- --~,."...--~^'-, ,--
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How Does an NT Customer Obtain Firm
Transmission for Non-Federal Resources?
· For NT Service, SPA plans the transmission system to meet load
growth from a customer's existing Network Resource portfolio to the
customer's Network Load.
· If the new transmission impacts are less than or equal to the existing
transmission impacts on all flowgates, then there is no additional
available transfer capability (A TC) needed and the request can be
granted. If there are net positive impacts on any flowgate, then SPA
must determine whether A TC is available.
· If upgrades are needed on the transmission system to provide for
service to an NT customer's load growth from designated Network
ResoUrces., SPA may finance and roll-in the associated costs of the
upgrade into network rates.
._------~------_._-----------------------------
-------------------------------------------~------
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----------------------------------
---------------------
----------------------------------------~
---------------------------------------~---------------------------
-------------------~------~------------~-_.
Load and Resource Forecasts
· NT Customers are required to provide Transmission Services
with annual updates of Network Load and Network Resource
forecasts (1 O-year forecasts).
- SPA works collaboratively with customers to develop these.
- Resource forecast requirements will use the same information as
what is provided to Power in their Power Sales Contracts.
· Transmission Services will work with NT customers to define
the data requirements and timelines.
· NT customers will also provide the Transmission Provider with
timely notice of material changes to customer's Network Load or
Network Resources.
5
-------------------~---_. ------------------------------- ---
------------------"---------~--------------- -----~----~-~----~--~----- --
-- =6~~e~~~~j~~=~V~=C~~~~~;_=_~==..~~R~-=-~=~W-=::-If~B~::~=::~~:a~~N1;~t~~~3=~$==~jt=~=-~~i~-=r ~==--~==--.- =:
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----------------- ----- ----- - ---
---- ---- ---- ------- -- ------------------------- --- .----- -- - ----- ------~--- -- ----- - --- -- - ------ ------ ------------------------------- - ------- ------------ -----------------------
Marketing Surplus Energy: Undesignation of
Network Resources
· Customers may not commit Designated Network Resources to serve non-
designated third party load.
· Customers may undesignate their Network Resources in order to conduct
third party sales of surplus energy.
- Often referred to as network resource 'termination.'
- May be done on a temporary (< 1 year) or permanent basis.
- May undesignate or terminate portions of a network resource.
- Only applies to resources that have already been designated as network
resources.
To serve third party load, customers must acquire Point-to-Point (PTP)
Transmission Service and go through the normal queuing process.
· To uridesignate a Network Resource, submit an email to
tblresdesk@bpa.gov.
:9'............. .......
6 y;~
.
~~-~~~~~~~~k~A~~~L_i\l~=-",S -or lRoJt J,--"-I=cei\l=-~ "'
Designation of Transmission Services as a
Reservation Agent
.
Transmission Services can act as a Reservation Agent for NT customers who
submit long-term firm requests on an infrequent basis.
- A Reservation Agent is an entity authorized to submit and process
Transmission Service Requests (TSR) on behalf of a customer.
The customer must complete the following steps in order to designate
Transmission Services as its Reservation Agent: .. .
- Contact their Account Executive to request a Long-Term Firm(L TF)
Reservation Agent Agreement.
- Sign a L TF Reservation Agent Agreement with Transmission Services.
- Submit a written notice on official letterhead to OA TI upon execution of a
L TF Reservation Agent Agreement at least five Business Days prior to the
effective date of such deSignation.
Transmission Services will submit up to three TSRs each fiscal year on
behalf of the Customer. Additional TSRs will be processed at
Transmission Service's discretion.
.
.
y...........................................
....
7:~~j
~.~ _~=~~~~~~iL~;;;:~~~~~~~=i~~~'~~~~~=ff~1=~~~~
.==============-:--======--=============-~-=====---:::::::=:::::::::::::=:::::
Network Resource Designation:
Next Steps
· The Regional Dialogue Issue Team Customer meeting:
June 11, 2009, 8:00 am - 12:30 pm
Rates Hearing Room
911 NE 9th Avenue
Portland, OR
Phone Bridge: 503-230-5566, 6254
· Our intent is to provide the following:
Clarify current A TC methodology documents and walk through the NT
TSR process.
- Identify how resource forecasts go into the A TC base case and how
transmission for NT customers is set aside.
Define the forecast and resource designation needs (data requirements,
TSRs, timing, etc.) so NT customers know how to assure that ATC wi
available to meet their load growth for their resource choices.
8
--~-- - ------ ----
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--- - ------------ ------- --
Network Resource Designation:
Next Steps (cont.)
· Network Customers may submit updated resource forecasts and
Designation of Network Resources as part of Network Open Season
2009.
- No Security re~uirement is required if the TSR is for transmission from a
new Network Resource.
Requires an attestation as specified in section 29.2 of the OA TT.- _H__
· A draft NT Business Practice is currently underway. The BP will
include:
- Load and Resource Forecasts
- Designation of Network Resources
- Undesignation of Network Resources
- New Network Load
- Reservation Priority for NT requests
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PUD-6 MW O&M Agreement
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Development
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Development
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Under Evaluati.on & Future Offers
. City of Port Angeles Landfill & Biomass
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a Build America Bonds (BABs)
. Provide Refund for 350/0 of Interest Paid to Bondholder
· Must be Sold Prior to Jan 1, 2011
a Clean Renewable Energy Bonds (CREBs) Rulemaking Issued
· $2.48 Available
· Buyer Receives 700/0 Interest Credit (Taxable)
· Applications Due 8/4/09
· Allow 3-years to Sell, Another 3-years to Spend
· Allocation Process
· 1/3 Available to Load Serving Public Power Utilities - Prorata
· 1/3 Available.. to Government Agencies -Smallest to Largest
· 1/3 Available to Co-operatives - Smallest to Largest
a WA State Local Option Capital Asset Lending (LOCAL)
Landfill Gas
a REPI Available Through 2013
· -$21/MWh in 2009
-Recent Funding Level Inadequate - Reduced Payments
· Could be Used in Concert With CREBs for Portion Financed
by Municipal Bonds or BABs
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a Capital Cost Estimated at $1.1 Million
(~$2,200/kW)
a O&M Estimated at $180,000/year
a Levelized Busbar Cost: $80-$100/MWh
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a Located in Port Angeles on City Property
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a Decision Point: Move to Next Development
Phase or Continue Monitoring
III Time is Limited; Gas Supply is Declining
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Agreement with EN
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· Potential Project Description
a Existing PAHBoiler has Available Spare
Steam Capacity
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Turbine Generator to Boiler
a Extraction Steam Used to Operate Kilns
aTypical Operations Would Produce ~1 aMW
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a Technology Risk (Equipment Additions)
a Fuel Risk (Cost and Availability of Fuel)
a Cost Risk (Timing and Construction)
a Operations Risk (Privately Controlled)
Wood Biomass
)( Benefits
a Green,RPS Qualifying Baseload Resource
a Sell RECs to Reduce Cost
a Existing Boiler in Place
a Can be a Cost Effective Resource When Compared
to Other Renewables
a Interconnection with Port Angeles Grid
a Good Incentives for Private Investment
a Diversifies and Strengthen Mill Operations
Wood Biomass
)( Next Steps
a Decision Point: Move to Next Development
Phase?
a EN Development Services Agreement
a City of Port Angeles and EN Negotiate Power
Purchase with Port Angeles Hardwoods
a Fast Decision Cycle
.. Construction Must Commence by 2010 To
Qualify for 30% Federal Grant
Gty of Port Angeles Electric Utility
CDnservation Potential Study
June 3, 2009
Presented By:
Kevin Smit, EES Consulting
Telephone (425) 889-2700 Facsimile (425) 889-2725
sm it@eesconsulting.com
Consulting
---- ----------~- ._-----~ - ------------- ----- ----- ------- - --_.~- ----~_._---- -------- .----- ----- -------~ ~------------~- ----------- -----.
I Presentation Overview
II Introduction
II Conservation History
II Conservation potential assessment
methodology
Ii Service Territory
II Potential Results
II Action Plan
Acknowledgements:
Philip Lusk - City of Port Angeles
Amber Nyquist - EES Consulting
2
I Introduction
II Why Conservation?
D Tier II rates from Bonneville are coming
o Low-cost resource
o The Recovery Act (2009) and increased awareness of
global climate change
II How does a potential study help?
D Estimates the amount of conservation available
o Illustrates timing of resource attainment
o Estimates resource costs
o Identifies areas to focus program efforts
3
Conservation History 2001- 2008
Commercial
4%
New
Construction
1%
Residential
Breakdown
Water Heating
2%
4
I Conservation History
III Strong Residential Program
o Lighting
o Weatherization
o HV AC
o Showerheads
City of Port Angeles Conservation Rate Credit Program
-$255,300/Year Total Savings
. Recent CRC Funding
o $255,OOO/year
. Commercial III Industrial .. Residential
5
I Potential Estimation Methodology
~
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E E S C Conservation ' " " '
P orential AssesSInent 1\'10 del
~
6
I Port Angeles Service Territory
II Residential
DOver 8700 residential
customers
o Approximately % of the
homes are single family
o Many buildings are both
older (pre-1992) and
heated with electricity
(880/0)
Manufactured
Homes
3%
7
I Port Angeles Service Territory
II Commercial
o Approximately 20 million square
feet of commercial floor space
may be available for lighting
upgrades
o Commercial floor space is
dominated by retail and office
o Modest commercial building
growth projected (1 % annually)
&I Industrial
o Historically consumed about
600/0 of City's retail sales over
past 3 years
o Potential estimation outside
scope of CPS
Share of Commercial Floor
Space by Building Type
...., >f.....
Hospitality
2.4%
Warehouse
0.5%
Grocery
0.4%
8
Initial Measure Categories
Residential and Commercial Measure Categories
Residential Measures
Domestic Water Heater Upgrades
Energy Star Appliances
Lighting (CFLs)
Weatherization
Energy Star New Homes
Duct Sealing
Heat Pump Upgrades
Efficient Shower Heads
Window and Central AC Upgrades
Refrigerator & Freezer Decommissioning
Gravity Film Heat Exchanger
Customer-Side Solar PV
Heat Pump Water Heaters
Solar Water Heaters
Commercial Measures
Retrofit Lighting
Commercial/MF Clothes Washer
Weatherization
Variable Speed Chiller
EE Reach-in Refrigerator
EE Reach-in Freezer
Exit Sign Replacement
HV AC System Upgrades
Spray Head Replacement
HV AC Controls Optimization
Integrated Building Design
Grocery Program
Municipal Sewage Treatment
LED Traffic Signals
Street Lighting
9
---------~-----------~----------------~~._---~-----~-------~ ---- ----- --~~---- -~-
~--------- ------- --~----- -------
I Avoided Cost
10
.
.
.
en
+-'
:J
en
(])
c:::
I E~~~~~~cTp~~~~ti;i~'summary
- - ~-'-- ----------_--..---".--....__._,...-_.--_._....__..,..---_.,-~--_.-._-'---- .----- ----
Achievable Conservation Potential (aMW)
Residential
0.14
1.4
2.8
Total
0.3
.... ___~_ .._..~ ____.,~......___.___~". ....___...___ _._..... _;....._. _"'_"_'_.' '.___.'" _......__....".__.__.'.._.~._....... _.__...____.._r.__~_ _..._.___________.____... --_. -....--...-.---. -,-- -~,.-.
0.34
3.4
6.87
0.25
0.2
0.15
S
~0.1
0.05
o .
Residential Commercial
III Technic<ll . Economic Achievable
~~-'"'_.iSmW.~...~~~~..-.~-_-.f-"'.-'ol.
12
Conservation Supply Curve
(Residential and Commercial Only?
8
7
6
5
~ 4
~
1'0
3
2
1
0
<10 <20 <30
~,~".,....~"...._.~
<40 <50 <60 <70 <80 <90 <100 ~100
Levelized Cost $2009/MWh
-+-Total - Lost Opportunity -- Retrofit/Discretionary
13
~--- - ~+--- -- - -- -----------------------
- ------ -- ------------------- --- - - --
I Residential Savings - 0.14 aMW/year
II Heat pump upgrades and conversions
o Potential still exists in these areas although much has already been done
III Lighting
o CFLs can provide significant savings at low costs for the utility and at no cost after
2014 when standard incandescent bulbs are phased out
o New lighting technologies may provide additional EnergyStar New
savings in the future Appliances Home
8% 1%
III Weatherization and Duct Sealing
Water Heat
o A good deal has been achieved but 10%
still some out there
II Water Heating
- ..
II Appliances and Refrigeration
o Includes refrigerator/freezer
decommissioning
Refrige ration
6%
Heat Pumps
28%
Weatherization
and Duct Sealing
14%
14
I Commercial Savings - 0.2 aMW/Year
III Lighting
o Low levelized costs and lots of it
II Weatherization and HV AC
II Emerging Technologies and Code Changes
o Not much can be achieved by utility
o Exclusion reduces annual potential
to 0.19 aMW
II Equipment
o Grocery store programs -refrigeration
II Infrastructure
o Municipal waste water efficiency improvements
o Street and roadway lighting
HVAC
20%
Emerging
Technologies &
Code Changes
6%
Infrastructure
3%
Weatherization J
16%
15
----~------------- ------
I Scenarios
II Business as Usual
o 0.15 aMW/year based on historic achievement
II Base Level
o 0.34 aMW per year
II Accelerated Base Level
o Achieves 800/0 of 20 year potential in first 10 years
16
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I Estimated Costs
~"'__... ,_....,.<' ""W ._. _~,.." ',,^,"_' " ..d_' .._..,.... '_.".,,_,,_., .,,_,.' ,. N" ... _" ...""",, .,M_~_.~..~~,'~_.._~ .._",._.~. __,h_,__.~_"'''~,_L.,.., "~H_.^,'_",~.,,___"..'H~,.'~_'__M"_~_ __,,_",_.__~~~,.,.._...~,_..A_'~"'_""".~_'.'_'~'~__'''~~'____M_"_~' ,,-~-""'~..~ ~.._.,~.~- _.,~,__'_'-'.. ~._"",...~-'.~ - ........_"- . ..... ~. ,- .
Total Costs of Conservation 2009-2028
Weighted Average
Levelized Cost
$1,0005 perYear $516 $1,147 $1,624/$692
. J~QJ~L(~J_ !.9Q~Q~l_.._ _.__.... __,___,___..____...__._l~~!~.?~___.______._.______._ $? 2 ~~~3___.___..__._.._._$_?~!_~4~.__._.... ,
$30
$30
$30
III Administration Costs are 200/0 of measure incremental
capital costs
. Utility incentives are assumed to be 1000/0 of measure
incremental cost (Le., this is the TRC cost of the
conservation)
18
5- Year Estimated Costs/Budgets
........... ----... -.~._- .-...._'."-,..-~ -,-....-.-.- ~--- ._~------_...,.--....~-.- ~----..--.,_._~ -~. ..... ._..~-~- .'-" -_..-. ~_. -,._....~,_. ........~..,. .~"-.~ .... -'-'.---,""~-""-""--"" ........ .........'. ~-....~._.. .. .... -- ,~._...- ,"'_".~..._ _, ._ ,~_._ ........_~.o.-.___ _w._ ._........
5-Year Costs of Conservation (2009-2013)
500/0 Measure Cost ($/yr)
" 00070 Meas'ureqyp~t($IY'fr
$310,000
"'\' '$$16,00,0:,
'Base' '
$688,000
.... . - "..' '0'"
"'$dt410doq,
, '.. , '" ,
'Accelerated,
Base ,q
$809,000
, $1 ,349,000
Annual Potential (aMW) 0.15
'i:$~ye~r::f1Qje'otiaF(~M~.F:'!i1P;;Tii!':":.'i::".;',.;":',',;':, "O;;'7tl ,:
0.32
.. .. ..
:1 j61
0.32 - 0.45
1.94
<----. ~.___.____...__.v__~__,~ -----.~.-~-..'~.-~--.-____,.__ ~_._._~. .__ ~ _..".. ._.~_ .._....._.,._..<_.......__..__... __._ _____ ._...._ __.._ '__._.___ _"'._'- '_._'_'~. __w_ ,_".... _'~_'_'~.___ ~____..~_______ ....______
--~"""~....~_.""""~~.........,,,-~~,~
19
~------~- -~ ----------- ---------------- - ----
I Action Plan
II Decide what level of conservation to pursue
o Stay the course or increase?
o The base potential estimate is a 3x increase over current levels
II Commit the resources to achieve the goals
o A three or four-fold increase in budgets may be needed to achieve the
conservation levels
o Staffing, marketing/promotion, vendors
III Design and plan new or revised programs
o SetJ?r~gram goals and targets
o Identify and engage all parties (e.g., contractors/vendors)
II Establish measurement and verification protocols to make sure you
are getting the resource
20
I Action Plan - Near Term (5 years)
III #1 - Build a commercial building program
o Develop a commercial conservation plan
o But continue to also maintain a strong residential program
II # 2 - Develop a robust commercial lighting program
o Commercial lighting is the most significant potential category (814,000 kWh
annually)
o Consider direct install, simple rebates, contractor network
o Target retail and office sectors
II # 3 - Investigate small commercial weatherization
o Large portion of electric heat
II #4 - Residential heat pump
o Continue and increase this program
III #5 - Residential lighting
o Standard incandescents are being phased out
o Ramp up program for specialty CFLs
o Look for L.E.D measures
21
-------------~----~-- ~-
I Action Plan - Additional Programs
II Commercial
o Equipment - Grocer program participation; c-store refrigeration systems
o HVAC - heat pumps and rooftop systems; watch for upcoming SPA
programs
o Infrastructure - wastewater treatment, traffic lighting, street lighting
o Non-standard or custom programs - fans, pumps, air compressors
II Residential
o Ductless heat pumps - may be good opportunity
o Energy Star refrigerator and refrigerator decommissioning programs
o Continue E-Star appliance programs and efficient water heater tanks
22
Other Considerations
. 6th Power Plan
o Code changes in consumer electronics (televisions etc) may
provide additional resources to the utility in the future at no
additional cost
o Ductless heat pumps in homes with baseboard heat
o Heat pump water heaters are projected to provide significant
savings potential once commercially available
o Top commercial program savings are in lighting, grocery, HVAC
o New measures including energy project management in industrial
sector may provide significant savings in the future
23
---------~----- ------~--- ---
--------------------------
-- ----~- -- -~-- -----------------------
I Other Considerations
. Conservation - Rate Design and Cost of Service
o Need to ensure adequate funding to secure the energy efficiency
"resource"
o In accordance with the Energy Independence and Security Act of
2007:
II Incentives based on EE goals and achievements
II Include impact of EE as a goal of rate design
II Rate designs that encourage EE
24
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40/0
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
The Utility Advisory Committee and City Council need to determine
a Tier 2 power supply by November 1, 2009, which is required by
the Bonneville Power Administration.
Page 1 6/4/2009 Draft
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
1. Straw Man Proposal Purpose. This is a draft business proposal designed to
generate a large number of ideas for the solution of our initial Tier 2 power supply
problem. The proposal is intended to generate discussion of its advantages and
disadvantages and to provoke the creation of a new and better proposal. The proposal
is intended to jump start discussions, is not expected to be the last word, and may be
"knocked down" by something more substantial. As part of today's workshop, the
"Straw Man" proposal is to be refined into a "Stone Man" proposal by group consensus.
The "Stone Man" proposal will evolve into an "Iron Man" proposal no later than
November 1,2009.
2. Tier 2 Power Supplv Problem Statement. On November 18, 2008, City Council
approved a Power Sales Agreement with the Bonneville Power Administration (BPA).
The new Power Sales Agreement will commence on October 1, 2011 and conclude on
September 30,2028. The primary change in the new Power Sales Agreement is a shift
from average embedded melded rates to a Tiered Rate Methodology (TRM). TRM is
composed of a two-level pricing construct in which Tier 1 supply is limited to the output
of the federal based system, and the rates for which are based on the cost of those
resources. Tier 1 will serve the City's current load. Tier 2 serves load in excess of that
served by Tier 1 at a rate (or rates) based on the cost of new resources
At the time of execution of the new agreement it was anticipated that about 97% of the
City's power supply would initially be provided by BPA under the Tier 1 rate. It was
understood that Tier 1 costs would be similar to average embedded costs at that time.
We expected the remaining 3% of the City's power supply needs could be provided by
BPA under a Tier 2 rate alternative.
Based on the most recent BPA load forecast and transition period high water marks, the
City's Tier 2 power supply needs will begin in October of 2011 in the amount of 0.145
aMW or 0.2% , increasing to 0.569 aMW in October of 2012, and 1.026 aMW or 1.2% of
the City's power supply in October of 2013. Tier 2 loads below 1.0 AMW will be
covered under load shaping charges. Note the significant difference between what was
anticipated upon execution of the new Power Sales Agreement and the recent BPA load
forecast. The City's Tier 2 exposure was delayed two years and is about one-third of
the initially anticipated amount.
Anticipating historical customer growth rates, it is anticipated that within twenty years
8% of the City's power supply may fall under the Tier 2 power supply with an projected
wholesale power supply' cost increase of 11 %. A Tier 2 commitment to BPA must be
provided by November 1, 2009, which would cover the 3-year period from October 2011
through September of 2014 or a longer term depending on the rate alternative selected.
Power supply sources other than BPA can be used to serve all or part of the City's Tier
2 loads.
Page 2 6/4/2009 Draft
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
Similar considerations need to be made in the future with the next decision due prior to
September 30, 2011 for the 5-year period of October 2014 through September 2019.
3. [Tier 2 Power Supply Options. There are three general options available to the
City to; satisfy its Tier 2 power supply including: 1) continued reliance on SPA; 2)
diversify all Tier 2 load to non-SPA supply; and 3) do a portion of Tier 2 with SPA and
the remainder with non-SPA power supply. The options are recommended to be
separately applied to the City's distribution customers (e.g., residential and commercial
rate classes) and the industrial transmission rate class. Although the SPA Power Sales
Agreement does not require the City to allocate Tier 1 or 2 power supply to its
residential, commercial, and industrial transmission rate classes, allocations are
considered in the following options and alternatives.
3.A. Continue Reliance on SPA for Part or All of Tier 2 Power Supply. This
option can include the Short-Term, Load Growth, and Vintage rate alternatives.
If the Short-Term rate alternative is selected, a future decision will need to be
made prior to September 30, 2011 to diversify or continue with that selection or
the Load Growth or Vintage rate alternative.
The main advantage of this alternative is that it's simple and SPA would have
more capability than the City to obtain favorable pricing. This alternative limits
the City's risk to the rates that SPA sets every two years. The key disadvantage
is that similar to the approximately $20 million expense for today's purchased
power, the future Tier 2 wholesale power purchases will flow out of Port Angeles
providing no local economic benefits.
The estimated net present value of this option based on SPA indicative pricing
and a market forecast for the contract term is $30.8 million, which need to be
allocated to distribution customers and the industrial transmission rate class.
The initial Tiered Rates will not be set by SPA until some time in 2011. Another
disadvantage is that there would be minimal, if any, wholesale rate signal for
conservation since the majority of costs would be take/don't take but pay.
However, a load shaping credit may be available, which SPA will be set every
two years, that could provide a conservation rate signal. After each two year rate
period conservation could reduce Tier 2 needs.
The Tier 2 rate alternatives could be the same, different or a combination for the
City's distribution customers (e.g., residential and commercial rate classes) and
industrial transmission rate class. For example, the City could select 0.622 aMW
for Short-Term and 0.300 aMW for Load Growth for distribution customers and
0.104 aMW for Short Term for the Industrial Transmission rate class.
3.S. Diversify from SPA. This option can include a combination of any SPA
rate alternative (1-3 below) with any other alternative (4-8 below). For example,
Page 3 6/4/2009 Draft
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
the City can select the Short-Term Tier 2 rate alternative for part of its Tier 2
needs and additional conservation within the City for the balance of its Tier 2
needs. All loads above Tier 1 in excess of 1 ;0 aMW must be either served by a
non-federal resource, a Tier 2 rate alternative, or a combination of both.
i
I
There are several alternatives that should be carefully considered as part of
decision-making. A brief summary of each alternative and its advantages and
disadvantages is provided below. The alternatives are not mutually exclusive,
combining alternatives to form a resource portfolio are possible.
3.B.1. BPA Short-Term Tier 2 Rate Alternative. This rate alternative mayor may
not provide the least cost approach in the long-run and will depend on the
market. Selection of this alternative could provide the City until October of 2014
to develop its initial 0.922 aMW Tier 2 resources for the distribution system. The
main advantage of this BPA alternative is that it provides the most flexibility of all
BPA Tier 2 rate alternatives and additional time.
3.8.2. BPA Load Growth Tier 2 Rate Alternative. Depending on market
conditions at the time of selection, which will include BPA resetting the rate every
two years in a rate case proceeding, this rate alternative may provide the least
cost approach in the long run. If the Short-Term rate alternative is initially
selected the City could decide to select the Load Growth alternative as part of its
September 30, 2011 decision. If this alternative is initially selected for some or
all of the City's Tier 2 needs, the City can elect to use other options at a later
date but cannot remove load actually served by BPA under this option through
the term of the Power Sales Agreement ending in year 2028. With proper notice
the City could exercise a one-time termination of future new purchases under this
alternative. Liquidated damages may apply.
3.B.3. BPA Vintaqe Tier 2 Rate Alternatives. This wind based resource
alternative should only be considered if the City was required by Federal or State
law to develop a renewable resource portfolio. The Vintage alternatives (market
with least cost resource and least cost resource) are not going to be initially
available. Selection of the Short-Term rate alternative would preserve future
consideration of Vintage rate alternatives.
3.B.4. Additional Conservation. Perhaps the most flexible, least risk, and lowest
cost power resource is pursuit of additional conservation. The Conservation
Potential Study indicates there are significant conservation "negawatts" available
that have the same effect as traditional generation resources. This alternative by
itself could provide the initial 0.922 aMW Tier 2 resources for the distribution
system. Conservation by itself may not be able to satisfy all of the City's Tier 2
power supply needs during the term of the new Power Sales Agreement.
Page 4 6/4/2009 Draft
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
3.B.5. EnerQY Northwest Purchase Power AQreements. The advantage of this
alternative is risk sharing and development, operation and maintenance of large
commercial facilities by an experienced provider. Possible disadvantages could
be transmission, no local economic multiplier benefits, and reliance on a single
generation source.
3.8.6. EnerQY Northwest Landfill Gas Generation. The key advantage of this
alternative is City ownership and control of a resource within the City that
provides local economic benefits. The City could partner with Energy Northwest
to develop, operate and maintain this facility, which would provide renewable
energy credits. The main disadvantages are that gas production declines over
time, the cost of integrating the resource into the BPA supply, and the City would
have capital and operating risk similar to its Morse Creek hydro project.
3.B.7. Biomass COQeneration. The advantage of this alternative may be non-
City investment in a project that could provide local economic benefits. The main
disadvantages of cogeneration is a primary focus by the customer to serve
production load versus utility load, and capital, operating and fuel risks. The City
could partner with Energy Northwest to further consider a project.
3.B.8. Market Purchases. Compared to the Short-Term and Load Growth rate
alternatives, the main disadvantage of this alternative is that the City's Tier 2
needs by itself have little market influence; Bonneville's rate alternatives would
likely provide better pricing.
4. Straw Man Proposal.
Staff recommends that the City diversify
its Tier 2 power supply from the BPA. The
proposal would require several City.
actions between now and September 30,
2014. As part of the recommendation,
staff believes that time is needed to
develop a "no regrets" resource portfolio,
hence a continuing need for Tier 2 Short-
Term power supply from the BPA.
Several strategic goals should be
considered for the Electric Utility to
maximize local benefits and minimize
risks of the Tier 2 power supply. The
goals take the form of a resource portfolio
including:
High
High Benefit
Low Risk
"No Regrets"
High Benefit
High Risk
"A Big Bet"
....
;0::
CD
l:
CD
m
Low Benefit
Low Risk
"Bad Outcome"
Low Benefit
High Risk
"Worst Outcome"
Low
High
Risk
Page 5 6/4/2009 Draft
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
4.A. Selection of the BPA Short-Term Tier 2 rate alternative for the distribution
system and industrial transmission rate class. This will continue to satisfy the
City's overall Tier 2 power supply through September of 2014.
4.B. Proceeding with expanded residential, commercial, and City facility
conservation programs consistent with the Conservation Potential Study
"Base" recommendation (0.32 aMW per year) to satisfy remaining Tier 2
power supply needs for the distribution system through 2014. Staff would
include an expanded conservation program, which would double City efforts
in the 2010 proposed budget, which would be maintained through 2014 at the
same level. Staff also recommends that the City facilitate any industrial
transmission rate class initiated conservation programs that qualify for BPA
program funding.
4.C. Continue to have a wholesale rate structure for the industrial transmission
rate class that's similar to today. Proceed with negotiation of a power sales
agreement (or an agreement in principle) for the industrial rate class prior to
November 1,2009. The agreement should include the Tier 2 rate alternative
selection and other items such as load forecasting, take or don't take but pay,
risk mitigation, and conservation responsibility and opportunities.
Similar to the November 1, 2009 deadline, the City must make another Tier 2
power supply decision by September 30, 2011 for the period of October 2014 -
September 2019. Staff recommends that a power supply workshop be held in
early 2011 to reassess its Tier 2 power supply needs. The initial Tier 1 & 2 rates
and Resource Support Services should be known at that time, which could be a
guidepost for a future strategy. At that time we should reassess:
4.0. The costs, risks, and benefits of avoiding BPA Tier 2 rate alternatives for the
period of October 2014 and beyond for its distribution customers. The
decision for the industrial rate class should be based on their election.
4.E. To revisit the opportunity of a City owned Landfill Gas Generation project.
4.F. To revisit biomass cogeneration opportunities within Port Angeles through a
purchase power agreement as needed to satisfy the City's Tier 2 power
supply needs.
Staff believes the following items are crucial to the success of diversifying its Tier
2 power supply from BPA:
4.G. Acknowledge that the City is becoming responsible for its Tier 2 power supply
and that power supply should be "long" versus "short". The Washington State
renewable portfolio standard does not apply to the City and that the City
would continue to voluntarily support conservation in the absence of any
current State or federal mandate. The Western Climate Initiative does not
include any mandates at this time, but the State is developing mandatory
greenhouse gas reporting requirements that may be applicable in the future.
Page 6 6/4/2009 Draft
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
4.H. That future City sponsored conservation programs should be rT)aintained at a
consistent and predictable level.
4.1. That renewable energy credits assigned to the City's Tier 1 power purchases
should be used to offset the City's cost of developing Tier 2 power supply.
The preliminary Tier 1 Renewable Energy Credit (REC) estimate is about 2.5
aMW: which has a current annual market value in the range of $5 to $10 per
REC, and may provide from $100,000 to $200,000 per year.
4.J. That consulting services will be included in the 2010 proposed budget for
designing new retail rates based on wholesale tiered rates anticipating
changes will be needed in 2011. Customer communications about retail rate
design changes will need to begin in 2010.
4.K. Technology needs will be included in the 2010 proposed budget such as
Advanced Metering Infrastructure (AMI), Supervisory Control and Data
Acquisition (SCADA) upgrades, conservation voltage reduction, peak demand
management. SPA programs for Smart Grid and Demand Response will
need to be integrated.
4.L. There are other local power resources that may be commercially feasible in
the future such as solid waste conversion, hydrokinetic (wave/tidal/in-stream,
off-shore wind), community solar, and incremental generation at Morse Creek
Hydro. Upon commercial feasibility, the City should provide a preference for
local power resources that are either below or similar to the avoided cost of
other non-local resources.
4.M. There may be legislative issues that the City may want to consider such as
Washington State House Sill 1811 , which could have increased the benefits
of the City's Morse Creek hydro project.
5. Staff Guidance. Staff requests that it receives guidance and direction today on
the Straw Man proposal. If there is any additional research or consideration that needs
to be completed, staff could return to the Utility Advisory Committee in July through
September as an "Iron Man" proposal is developed. Staff will return to the Utility
Advisory Committee no later than October 13, 2009 requesting their recommendation to
City Council. Staff will request City Council consideration no later than the October 20,
2009 to ensure compliance with the November 1, 2009 Tier 2 notice deadline.
Page 76/4/2009 Draft
.ollllIl
Tier 2 Power Supply Straw Man Proposal
City of Port Angeles Electric Utility
6. Tier 2 Power Supplv Assessment. An assessment of the potential benefits and
risks for each alternative presented in the previous section should be carefully
considered as part of decision-making. A summary table is presented below.
Energy Northwest Alternatives
Purchase
Benefits and Short- Load Power Landfill Gas Biomass Market
Risks Term Growth Vintage Agreement Generation Cogeneration Purchase Conservation
Flexibility: ,:
(notice, lead High : Low : Medium High
_t!rn~1_~!9;} _ _ _ _ _ _ _ _ _ -.L _ _ _ _ _ _ _ _ _ ~ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ .j. _ _ _ _ _ _ _ _ _ _ _ _ _ _ ~ _ _ _ _ _ _ _ _ ~ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __
Renewable :: ::
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energy :: : Apply :
credits :: ::
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External APPlY:.: Apply : i 1
market risk
Climate
Change
RPS
Standard
BPA rate
increases
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constraints
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control
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small size
City capital
risk
City
operating risk
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Apply
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, ,
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-Cocai - - - - - - - - - - - - - - - -r - - - - - - - - - f - - - - - - - - - - - - - - - - - - - - - - -~- - - - - - - - - - - - - - - r - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - --
economic :: : Apply : Apply Apply
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_~~.r!~fi_t_ _ _ _ _ _ _ _ _ _ _ _ _ _ _:_ _ _ _ _ _ _ _ _ _ .1. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _:. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _.. _ _ _ _ _ _ _ _ _. _ _ _ _ _ _ _ _ _ _ _ __
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Page 8 6/4/2009 Draft