Discussion ofDiscussion ofResource PlansResource Plans
Michael Schilmoellerfor the
Council Power CommitteeTuesday, June 9, 2009
2
OverviewOverview Comparison of least risk and least cost
plans Similarities Differences in
Wholesale power market exposure Power cost and rate volatility
Interpreting the resource strategy Resource build out Decision milestones
Choosing a plan
3
Filtering Out PlansFiltering Out Plans
Efficient Frontier Finding the best plans Discovering the successful and less
unsuccessful strategies Looking at the distributions of
cost associated with plans on the efficient frontier
4
Efficient FrontierEfficient Frontier
Source: Analysis of Optimization Run_L811 090510 2101.xls
155000
155500
156000
156500
157000
157500
158000
104000 104500 105000 105500 106000
Cost (NPV $2006 M)
Ris
k (
NP
V $
20
06
M)
Feasibility Space
Efficient Frontier
A
D
5
Examining Annual Examining Annual DifferencesDifferences
Market Exposure Cost and rate variation Changes within a particular future
6
Comparison of Average Comparison of Average Exports for the Least-Risk Exports for the Least-Risk
and Least-Cost Plansand Least-Cost Plans
0.0
100.0
200.0
300.0
400.0
500.0
600.0
Sep
-09
Sep
-10
Sep
-11
Sep
-12
Sep
-13
Sep
-14
Sep
-15
Sep
-16
Sep
-17
Sep
-18
Sep
-19
Sep
-20
Sep
-21
Sep
-22
Sep
-23
Sep
-24
Sep
-25
Sep
-26
Sep
-27
Sep
-28
Hydro Quater (ending Aug)
Exp
ort
s ($
M 2
006
per
Qtr
)
Least-Risk Plan Least-Cost Plan
Source: Comp.xls, worksheet “DATA (2) LR”
7
Exposure to Market Exposure to Market ImportsImports
0
20
40
60
80
100
120
-3700.0
-3500.0
-3300.0
-3100.0
-2900.0
-2700.0
-2500.0
-2300.0
-2100.0
-1900.0
-1700.0
-1500.0
-1300.0
-1100.0
-900.0
-700.0
-500.0
-300.0
-100.0
100.0
300.0
500.0
700.0
900.0
1100.0
1300.0
1500.0
1700.0
1900.0
2100.0
2300.0
2500.0
Cost of Imports ($M/Qtr)
Coun
t
Source: Comp.xls, workbook “Comp 02.xls”, worksheet
Average
8
Likelihood the Least-Risk Likelihood the Least-Risk PlanPlan
Would Reduce Market Would Reduce Market Exposure By At Least $300 M Exposure By At Least $300 M
In A Hydro QuarterIn A Hydro Quarter
Source: Comp.xls, worksheet “LR-LC qtr future”
0%
1%
2%
3%
4%
5%
6%
7%S
ep
-09
Se
p-1
1
Se
p-1
3
Se
p-1
5
Se
p-1
7
Se
p-1
9
Se
p-2
1
Se
p-2
3
Se
p-2
5
Se
p-2
7
Hydro Quarter (ending Aug)
Pe
rce
nt
of
Fu
ture
s
9
Likelihood of Likelihood of ImprovementsImprovements
Likelihood that LR Plan saves money over LC Plan
0%
10%
20%
30%
40%
50%
60%
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
Sep-19
Sep-20
Sep-21
Sep-22
Sep-23
Sep-24
Sep-25
Sep-26
Sep-27
Sep-28
Like
lihoo
d
10
Expected AdvantageExpected Advantageof Least Risk over Least Costof Least Risk over Least Cost
Market Purchase ExpenseMarket Purchase Expense
0
50
100
150
200
250
30020
10
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
Mar
ket P
urch
ase
Savi
ngs
($M
200
6 pe
r yea
r)
11
Likelihood of Annual Rate Likelihood of Annual Rate IncreasesIncreases
0
100
200
300
400
500
600
700
-43
%
-39
%
-35
%
-31
%
-27
%
-23
%
-19
%
-15
%
-11
%
-7%
-3%
1%
5%
9%
13
%
17
%
21
%
25
%
29
%
33
%
37
%
41
%
Annual Rate Increase or Decrease
Re
lati
ve
Lik
elih
oo
d
Least Cst
Least Risk
12
Difference in Likelihood ofDifference in Likelihood ofAnnual Rate IncreasesAnnual Rate Increases
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
-43%
-38%
-33%
-28%
-23%
-18%
-13% -8
%-3
% 2% 7% 12%
17%
22%
27%
32%
37%
42%
Dif
fere
nce
in
Rel
ativ
e L
ikel
iho
od
13
Changes in System CostChanges in System CostFuture 1
-200
0
200
400
600
800
1000
1200
1400
Sep
-09
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
Sep
-23
Sep
-25
Sep
-27
$M
20
06
pe
r Q
ua
rte
r
Least Risk
Least Cost
14
Changes in System CostChanges in System CostFuture 67
-500
0
500
1000
1500
2000
2500
3000
3500S
ep-0
9
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
Sep
-23
Sep
-25
Sep
-27
$M 2
006
per
Qu
arte
r
Least Risk
Least Cost
15
OverviewOverview Comparison of least risk and least cost
plans Similarities Differences in
Wholesale power market exposure Power cost and rate volatility
Interpreting the resource strategy Resource build out Decision milestones
Choosing a plan
16
Plan DPlan D
Source: Schedules for plan resources 090519.xls
Plan D Discretionary demand response: none50 Lost opportunity conservation cost-effectiveness threshold, premium over market ($2006/MWh)
3253 Lost opportunity conservation by end of study (MWa)*10 Discretionary conservation cost-effectiveness threshold, premium over market ($2006/MWh)
2573 Discretionary conservation by end of study (MWa) assuming 160MWa/year limit5827 Total conservation (MWa)
Cumulative MW, by earliest date to begin constructionDec-10 Dec-13 Dec-15 Dec-17 Dec-19 Dec-23 Dec-25
CCCT 0 0 0 415 830 830 830SCCT 0 0 170 170 170 170 170
Geothermal 0 0 0 52 104 156 169and the larger of
Wind 0 0 1200 1200 3000 3000 3000RPS* req 0 317 1182 1968 2825 3959 4229
17
RPS DevelopmentRPS Development
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
MW
a R
PS
Wind Energy Other Energy Leastg Risk Plan Wind
18
Build Out of ResourcesBuild Out of ResourcesWindWind
Wind (no RECs) On-Line MW Capability
0100200300400500600700800900
1,000S
ep
-09
Se
p-1
1
Se
p-1
3
Se
p-1
5
Se
p-1
7
Se
p-1
9
Se
p-2
1
Se
p-2
3
Se
p-2
5
Se
p-2
7
MW
a
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
average
Source: workbook “L811 LR plan buildout 080604.xls”
19
Build Out of ResourcesBuild Out of ResourcesGeothermalGeothermal
Source: workbook “L811 LR plan buildout 080604.xls”
Geothermal On-Line MW Capability
0
20
40
60
80
100
120
140
160S
ep-0
9
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
Sep
-23
Sep
-25
Sep
-27
MW
a
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
average
20
Build Out of ResourcesBuild Out of Resources Combined-Cycle Combustion Turbine Combined-Cycle Combustion Turbine
Source: workbook “L811 LR plan buildout 080604.xls”
CCCT On-Line MW Capability
0.050.0
100.0150.0200.0
250.0300.0
350.0400.0
Se
p-0
9
Se
p-1
1
Se
p-1
3
Se
p-1
5
Se
p-1
7
Se
p-1
9
Se
p-2
1
Se
p-2
3
Se
p-2
5
Se
p-2
7
MW
a
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
average
21
Build Out of ResourcesBuild Out of ResourcesSimple-Cycle Combustion TurbineSimple-Cycle Combustion Turbine
Source: workbook “L811 LR plan buildout 080604.xls”
SCCT On-Line MW Capability
0.0020.0040.0060.0080.00
100.00120.00140.00160.00180.00
Sep
-09
Sep
-11
Sep
-13
Sep
-15
Sep
-17
Sep
-19
Sep
-21
Sep
-23
Sep
-25
Sep
-27
MW
a
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
average
22
Schedule of DecisionSchedule of DecisionLeast-Risk PlanLeast-Risk Plan
23
The ChoiceThe Choice A plan with more resources reduces
dependence on the power market and increases power price and rate stability
A plan with resources provides guidance to the region regarding the resources that promote an efficient and reliable system
Very little difference exists between least-cost and least-risk plans in the five-year Action Plan time period.
The least-risk plan preserves decision milestones
EndEnd
25
Plan APlan A
Source: Schedules for plan resources 090519.xls
Plan A Discretionary demand response: none10 Lost opportunity conservation cost-effectiveness threshold, premium over market ($2006/MWh)
2941 Lost opportunity conservation by end of study (MWa)*10 Discretionary conservation cost-effectiveness threshold, premium over market ($2006/MWh)
2585 Discretionary conservation by end of study (MWa) assuming 160MWa/year limit5527 Total conservation (MWa)
Cumulative MW, by earliest date to begin constructionDec-10 Dec-13 Dec-15 Dec-17 Dec-19 Dec-23 Dec-25
CCCT 0 0 0 0 0 0 0SCCT 0 0 0 0 0 0 0
Geothermal 0 0 0 0 0 0 0and the larger of
Wind 0 0 0 0 0 0 0RPS* req 0 321 1193 2007 3061 4930 5363
26
Difference in Cost Difference in Cost DistributionsDistributions
1 of 31 of 3
0
5
10
15
20
25
30
35
5203
6
6291
1
7378
6
8466
1
9553
6
1064
11
1172
86
1281
61
1390
36
1499
11
1607
86
1716
61
1825
36
1934
11
2042
86
2151
60
2260
35
NPV $2006 M
Co
un
t
Least Risk
Least cost
Source: LR&LC_distributions.xls, worksheet “LR and LC”
27
Difference in Cost Difference in Cost DistributionsDistributions
2 of 32 of 3
0
2
4
6
8
10
12
14
16
1390
36
1462
86
1535
36
1607
86
1680
36
1752
86
1825
36
1897
86
1970
36
2042
86
2115
35
2187
85
2260
35
2332
85
NPV $2006 M
Co
un
t
Least Risk
Least cost
Source: LR&LC_distributions.xls, worksheet “LR and LC”
28
Difference in Cost Difference in Cost DistributionsDistributions
3 of 33 of 3
Source: LR&LC_distributions.xls, worksheet “LR less LC”
Least Risk less Least Cost by FutureSorted by the NPV Study Cost Difference
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
1 44 87 130173216259302345388431474517560603646689732
M $
2006
Dif
fere
nce
in
co
st
0
50000
100000
150000
200000
250000
M $
2006
lea
st-c
ost
pla
n c
ost
Diff LR-LC corresponding LC plan cost Linear (corresponding LC plan cost)