Northwest Power Planning Council Retrofit Program “Ramp Rates” and “Maximum Sustainable” Acquisition Levels What are the practical limits?

Northwest Power Planning Councilslide 2 Key Issues What measures are subject to “ramp up”? What measures are subject to “ramp up”? Do resource acquisition costs change when program accelerate or decelerate? Do resource acquisition costs change when program accelerate or decelerate? Are there limits to how fast programs can be accelerated? Are there limits to how fast programs can be accelerated? Are there limits to how fast programs can develop resources and remain sustainable? Are there limits to how fast programs can develop resources and remain sustainable? Is there an economic benefit to accelerating or delaying acquisitions? Is there an economic benefit to accelerating or delaying acquisitions?

Northwest Power Planning Councilslide 3 Is there an economic benefit to accelerating or delaying acquisitions? Developing “low cost”conservation resources early may provide hedge benefits against future market price volatility Developing “low cost”conservation resources early may provide hedge benefits against future market price volatility Developing “low cost” conservation resources early may result in higher present value costs than waiting until “natural replacement” cycle Developing “low cost” conservation resources early may result in higher present value costs than waiting until “natural replacement” cycle Council will test this question in its portfolio analysis. Council will test this question in its portfolio analysis.

Northwest Power Planning Councilslide 4 What measures are subject to “ramp up”? Residential & Commercial Thermal Shell Improvements Residential & Commercial Thermal Shell Improvements –Windows? –Walls/Floors/Ceilings? Residential & Commercial HVAC Residential & Commercial HVAC –Equipment “early replacement”? –Commissioning? Residential, Commercial & Industrial Appliances & Equipment Residential, Commercial & Industrial Appliances & Equipment –Lighting? –Motors? –Major Appliances?

Northwest Power Planning Councilslide 5 Do resource acquisition costs change when program accelerate or decelerate?

Northwest Power Planning Councilslide 6 Changes in Conservation Acquisitions Are Weakly Correlated and Inversely Related to Utility Acquisition Costs

Northwest Power Planning Councilslide 7 Relationship between Ramp Rate and Utility Cost of Conservation Acquisitions Our Conclusion - There is only a weak relationship between ramp rates (up or down) and utility conservation acquisition costs. Our Conclusion - There is only a weak relationship between ramp rates (up or down) and utility conservation acquisition costs. Utility conservation acquisition costs ($/aMW) may lower when ramping up than when ramping down, due to: Utility conservation acquisition costs ($/aMW) may lower when ramping up than when ramping down, due to: –Outstanding contracts –“Lags” in personnel changes –Desire to maintain stable infrastructure Your Wit and Wisdom Your Wit and Wisdom

Northwest Power Planning Councilslide 8 Are there limits to how fast programs can be accelerated?

Northwest Power Planning Councilslide 9 Rate at which conservation acquisitions can be Ramped Up and Ramped Down Our Conclusion - Conservation can be ramped up and down within a range of +/- 15 aMW without materially changing the cost of acquisition Our Conclusion - Conservation can be ramped up and down within a range of +/- 15 aMW without materially changing the cost of acquisition Your Wit and Wisdom Your Wit and Wisdom

Northwest Power Planning Councilslide 10 Are there limits to how fast programs can acquire conservation resources and remain sustainable? Little evidence to date since region has not maintained sustained level of conservation development Little evidence to date since region has not maintained sustained level of conservation development Some (e.g. EWEB) suggest that there may be an upper limit to annual “throughput” based on markets ability to respond Some (e.g. EWEB) suggest that there may be an upper limit to annual “throughput” based on markets ability to respond Your Wit and Wisdom Your Wit and Wisdom