1. Northwest Power and Conservation Council Effects of Alternative Scenarios on Sixth Power Plan Northwest Power and Conservation Council Whitefish, MT June 2009

2. Northwest Power and Conservation Council 2 Scenarios Base case Low Conservation High Conservation Carbon Policy Explorations –Suspend Carbon Policy –No RPS –$100/ton Carbon Cost –$20/ton Carbon Cost –Close Existing Coal Plants –Dam Removal Plug-In Electric Hybrid Vehicles (Remaining) Climate Change (Remaining)

3. Northwest Power and Conservation Council 3 Base Case Assumptions Forecasts of demand and fuel prices RPS renewables are acquired Carbon costs range from $0 to $100, grow over the planning period and reach average of $50 per ton by 2030 Discretionary conservation limited to 160 average megawatts per year, phased in to 85% penetration maximum

4. Northwest Power and Conservation Council 4 Limitations of Carbon Price Analysis Carbon pricing policy is modeled as a tax on carbon emissions from generation –The costs do not consider how the revenues might come back to utilities or citizens Current cap and trade proposals would have different effects –Granting free carbon allowances to emitters will reduce the cost impact to utilities Any actual costs of emissions themselves are not captured in the analysis, i.e. the benefits of the reductions are not counted

5. Northwest Power and Conservation Council 5 Translating Costs to Rates and Bills Costs minimized in the Power Plan are not consumer rates or bills Not all costs are included, only future costs that are affected by the plan –Planning costs exclude existing capital costs of power plants and T&D infrastructure Not all conservation costs are paid by utilities, plan counts all of them

6. Northwest Power and Conservation Council 6 Low Conservation Case Purpose –To test the effect of acquiring conservation more slowly than the base case Assumptions –Acquisition of discretionary conservation limited to 100 MWa per year, instead of 160 MWa in the base case –Lost-opportunity conservation developed more slowly

7. Northwest Power and Conservation Council 7 Effects of Low Conservation Case BaseLow Conservation NPV Cost105.6114.3 NPV Risk155.5173.9 CO2 (Gen)40.144.5 CO2 (Use)26.833.9 Conservation5,8274,566 Wind (above RPS)1200 (Dec-15); 3000300 (Dec-15); 3600 Geothermal52 (Dec-17); 16952 (Dec-17); 208 Natural Gas CCCT378 (Dec-17); 3781512 (Dec-17); 2268 Natural Gas SCCT162 (Dec-15); 324162 (Dec-15); 162

8. Northwest Power and Conservation Council 8 Findings: Low Conservation Case Cost of the power system increases by 8% Carbon emissions increase by 11 to 26% depending on accounting Slightly increased reliance on renewable generation, and more natural gas CCCTs Conservation is reduced by over 20% compared to the base case

9. Northwest Power and Conservation Council 9 High Conservation Case Purpose –To test the effect of accelerated conservation acquisition Assumptions –Limit on acquisition of discretionary conservation increased to 220 MWa per year, instead of 160 MWa in the base case –Same increase in ramp as the reduction in the low conservation case, (i.e. 60 MWa)

10. Northwest Power and Conservation Council 10 Effects of High Discretionary Conservation Case BaseHigh Conservation NPV Cost105.6103.8 NPV Risk155.5152.1 CO2 (Gen)40.139.7 CO2 (Use)26.826.5 Conservation5,8275,849 Wind (above RPS)1200 (Dec-15); 30001800 (Dec-15); 2100 Geothermal52 (Dec-17); 16952 (Dec-15); 195 Natural Gas CCCT378 (Dec-17); 378 Natural Gas SCCT162 (Dec-15); 324162 (Dec-15); 162

11. Northwest Power and Conservation Council 11 Findings: High Conservation Case Relatively little effect on cost or carbon emissions (available discretionary conservation is just achieved sooner) Slightly increased reliance on renewable generation Fewer natural gas SCCTs optioned

12. Northwest Power and Conservation Council 12 No-Carbon-Policy Case Purpose –To provide a basis for answering questions about the cost of reducing carbon emissions Assumptions –No renewable portfolio standards –No renewable energy credits –No exposure to future carbon cost uncertainty

13. Northwest Power and Conservation Council 13 Effects of Suspended Carbon Policy BaseNo Policy NPV Cost105.656.5 NPV Risk155.584.8 CO2 (Gen)40.165.1 CO2 (Use)26.852.8 Conservation5,8275,432 Wind (above RPS)1200 (Dec-15); 30000 Geothermal52 (Dec-17); 16952 (Dec-17); 52 Natural Gas CCCT378 (Dec-17); 3781512 (Dec-19); 1890 Natural Gas SCCT162 (Dec-15); 324648 (Dec-23); 648

14. Northwest Power and Conservation Council 14 Findings: Suspend Carbon Policy Case NPV cost of the power system reduced by almost half (47%) –Rates reduced by 12% to 25% Carbon emissions grow to 14% above 2005 level Little reliance on renewable generation, greater development of natural gas Conservation is only reduced by 7% from base case

15. Northwest Power and Conservation Council 15 $100 a Ton Carbon Cost Purpose –To consider how the resource strategy might be change if a high carbon cost future were assured rather than just a liklihood Assumptions –A known $100 per ton carbon cost instead of uncertain costs between $0 and $100 –RPS goals assumed to be met –RECs are retained by utilities, i.e. wind costs are not reduced by REC value

16. Northwest Power and Conservation Council 16 $100 CO 2 Cost Case * Base$100 CO 2 Cost NPV Cost105.6152.7 NPV Risk155.5193.2 CO2 (Gen)40.129.6 CO2 (Use)26.820.0 Conservation5,8275,847 Wind (above RPS)1200 (Dec-15); 30001500 (Dec-13); 3000 Geothermal52 (Dec-17); 169840 (Dec-15); 840 Natural Gas CCCT378 (Dec-17); 3781512 (Dec-17); 2268 Natural Gas SCCT162 (Dec-15); 324None * Run on a previous base case

17. Northwest Power and Conservation Council 17 Findings: $100 Per Ton CO2 Cost * Power system cost increased by 45% Carbon emissions reduced by 25% from the base case Small effects on conservation or renewable generation Six times more natural gas CCCTs optioned, no SCCTs optioned Base load coal being displaced

18. Northwest Power and Conservation Council 18 No Renewable Portfolio Standards Purpose –To assess the role of RPS policies relative to carbon pricing strategies Assumptions –RPS requirements eliminated –Wind credited with REC value –Region still faces base case carbon price uncertainty

19. Northwest Power and Conservation Council 19 No RPS Case BaseNo RPS Case NPV Cost105.6101.4 NPV Risk155.5153.8 CO2 (Gen)40.143.7 CO2 (Use)26.830.3 Conservation5,8275,935 Wind (above RPS)1200 (Dec-15); 3000700 (Dec-13); 4800 * Geothermal52 (Dec-17); 16913 (Dec-13); 208 Natural Gas CCCT378 (Dec-17); 378378 (Dec-15); 378 Natural Gas SCCT162 (Dec-15); 324162 (Dec-13); 648 * Includes all wind because of no RPS assumption

20. Northwest Power and Conservation Council 20 Findings: No RPS Case Small reduction in cost Small increase in carbon emissions Slightly increased conservation Renewable generation is difficult to compare, but appears that about the same amount of wind is developed Natural gas resources are optioned a little earlier, with slightly more SCCTs

21. Northwest Power and Conservation Council 21 Retire Coal Plants Early Purpose –To compare the cost and effectiveness of a coal retirement strategy to carbon pricing risk of the base case Assumptions –Existing coal plants are phased out beginning in 2012 through 2020 –RPS and carbon cost uncertainty remain in place

22. Northwest Power and Conservation Council 22 Retire Coal Plants Early Case BaseRetire Coal NPV Cost105.6143.8 NPV Risk155.5201.9 CO2 (Gen)40.118.4 CO2 (Use)26.812.1 Conservation5,8275,710 Wind (above RPS)1200 (Dec-15); 30002000 (Dec-13); 4000 Geothermal52 (Dec-17); 169840 (Dec-13); 840 Natural Gas CCCT378 (Dec-17); 3784536 (Dec-17); 6804 Natural Gas SCCT162 (Dec-15); 324None * Numbers based on immediate closure assumption and old base case

23. Northwest Power and Conservation Council 23 Findings: Retire Coal Plants Early Comparison is difficult until new case finishes Significant and more certain carbon emission reductions Higher cost to replace coal plants Large increase in CCCTs to replace coal generation

24. Northwest Power and Conservation Council 24 Dam Removal Case Purpose –To test the value of preserving existing carbon free electricity resources Assumptions –Lower Snake River dams are removed in about 10 years –Model determines how to meet energy and capacity needs

25. Northwest Power and Conservation Council 25 Dam Removal Case BaseDam Removal NPV Cost105.6112.5 NPV Risk155.5168.5 CO2 (Gen)40.143.6 CO2 (Use)26.833.1 Conservation5,8275,923 Wind (above RPS)1200 (Dec-15); 3000900 (Dec-15); 3000 Geothermal52 (Dec-17); 16952 (Dec-15); 208 Natural Gas CCCT378 (Dec-17); 378378 (Dec-13); 1134 Natural Gas SCCT162 (Dec-15); 324

26. Northwest Power and Conservation Council 26 Findings: Dam Removal Case Cost of power system increases 7% Three times as many natural gas CCCTs are optioned Small increase in carbon emissions Little effect on conservation or renewable generation

27. Northwest Power and Conservation Council 27 Sensitivity of the Base Case to Varying Carbon Costs Purpose: –To test the sensitivity of the base case resource plan to changing carbon costs (without uncertainties in all variables) Assumptions: –Operate the RPM without uncertainty to test power system response to changing carbon costs

28. Northwest Power and Conservation Council 28 Effect of Carbon Price on Emissions

29. Northwest Power and Conservation Council 29 Findings on Carbon Emissions Base case reduces carbon emissions below 1990 levels by 2030 Without carbon policy, emissions would continue to grow, although more slowly RPS is consistent with least risk plan in the face of carbon cost uncertainty High ($100) carbon cost would reduce emissions to 2/3 of 1990 levels by 2030

30. Northwest Power and Conservation Council 30 Findings on Carbon Emissions – Continued Retiring the existing regional coal plants would reduce carbon emissions to 40% of 1990 levels by 2030, at lower cost to the power system than carbon penalties (although penalties would include some compensating revenues to the region) Removing 1,200 MWa of hydropower capability would increase both cost and carbon emissions

31. Northwest Power and Conservation Council 31 Findings on Conservation Lower conservation acquisition would increase both cost and carbon emissions Faster conservation acquisition would have relatively little effect on total conservation –Less conservation available at high cost end of the potential –Discretionary conservation is achieved more quickly, but total is still limited

32. Northwest Power and Conservation Council 32 Additional Cases to Add Impacts of potential climate change Effects of Plug-in hybrid vehicles Lower known CO2 costs ($20) Revisions to –$100 carbon price –Coal plant retirement

33. Northwest Power and Conservation Council 33