1. A Resource Adequacy Standard for the Pacific Northwest Resource Adequacy Technical Committee January 17, 2008 Portland Airport

2. NW Resource Adequacy Standard 2 Outline Objectives for a resource adequacy standard Guidelines for a standard A proposed standard for the Pacific NW For annual (energy) needs For hourly (capacity) needs

3. NW Resource Adequacy Standard 3 5 th Power Plan Action Items ADQ-1: Establish regional and West-wide reporting standards for the assessment of adequacy. ADQ-2: Carry out a process to establish adequacy standard. The Council will establish a Northwest Resource Adequacy Forum. This forum will examine alternative adequacy metrics and standards for the Northwest.

4. NW Resource Adequacy Standard 4 Objectives for a Resource Adequacy Standard Transparent and easy to calculate Linked to a more sophisticated analysis (like a Loss-of-Load-Probability assessment) Provide adequate protection against 1.Unwanted curtailments (physical standard*) and 2.High and/or volatile prices (economic standard*) *A “physical standard” is equated to minimizing average cost and a “economic standard” is equated to minimizing the risk of high-cost years.

5. NW Resource Adequacy Standard 5 Guidelines for a Standard Components: Metric – a unit of measurement Target – acceptable value for the metric Standards for: Capacity – peak hourly demands Energy – average annual demand

6. NW Resource Adequacy Standard 6 Pacific NW Metrics Energy – Annual average load/resource balance in units of average megawatts* Capacity – Surplus sustained-peaking capability in units of percent (sometimes referred to as a planning reserve margin) *One average megawatt is equivalent to 8,760 megawatt-hours.

7. NW Resource Adequacy Standard 7 Pacific NW Targets Energy – Zero, i.e. on average, annual load and resources should be in balance Capacity – Reserve margin target is derived from an LOLP analysis and covers –Operating reserves –Extreme weather events –Other contingencies

8. NW Resource Adequacy Standard 8 PNW Adequacy Standard Targets for a physical adequacy standard are chosen so that the resulting LOLP is 5% for both energy and capacity events Targets for an economic standard would result in a much lower LOLP and would lead to more resources and a higher average system cost

9. NW Resource Adequacy Standard 9 Energy Standard Annual Average Load/Resource Balance Annual Average Load Averaged over all hours of the year Based on normal weather Includes net interregional firm contracts

10. NW Resource Adequacy Standard 10 Energy Standard Annual Average Load/Resource Balance Resources – Annual average, accounting for maintenance and derating for forced outages Firm thermal, wind and other non-hydro resources Uncommitted IPP generation – Full availability in winter and 1000 MW in summer Hydroelectric generation – Critical year average Out-of-region market supply – Derived from LOLP analysis Non-firm hydro – Derived from LOLP analysis Currently, market and non-firm hydro = 1,500 MWa

11. NW Resource Adequacy Standard 11 Energy LOLP vs. SW Supply (for different L/R balance values) Illustrative Only

12. NW Resource Adequacy Standard 12 Energy Planning Adjustment Illustrative Only

13. NW Resource Adequacy Standard 13 Energy Standard Annual Average Load/Resource Balance The annual average generating capability of firm and some non-firm resources should equal the annual average load.

14. NW Resource Adequacy Standard 14 Energy Standard Annual Average Load/Resource Balance R af + R an – L a = 0 Where: R af = Annual firm resources R an = Annual non-firm resources to be relied upon L a = Annual normal weather load

15. NW Resource Adequacy Standard 15 Capacity Standard Surplus Sustained Peaking Capability Peak Duration Load Averaged over the peak duration hours – 6 consecutive hours/day over 3 consecutive weekdays Based on normal weather Includes net interregional firm contracts

16. NW Resource Adequacy Standard 16 Capacity Standard Surplus Sustained Peaking Capability Resources – Averaged over the peak duration Uncommitted IPP generation Winter– all available Summer – 1000 MW Hydroelectric – Critical year for winter and summer Wind – Derived from wind study Out-of-region market supply Winter – 3000 MW Summer – Zero Non-firm hydro – Derived from capacity analysis for both winter and summer

17. NW Resource Adequacy Standard 17 Capacity Standard Non-firm Hydro Determine the amount of non-firm hydro energy used in winter and summer (LOLP analysis) Using the energy/capacity relationship, determine the amount of additional hydro capacity is available based on the non-firm energy used Illustrative example (see next page): Winter non-firm energy = 2000 MWa capacity = 2000 MW Summer non-firm energy = 1000 MWa capacity = 1000 MW

18. NW Resource Adequacy Standard 18 Capacity vs. Energy (6-hour duration) Illustrative Only

19. NW Resource Adequacy Standard 19 Capacity Standard Surplus Sustained Peaking Capability The peak duration generating capability of firm and some non-firm resources should equal the peak duration load plus a surplus* derived from the LOLP analysis. *The surplus can be thought of as providing operating reserves and to cover deviations from normal loads due to adverse temperature and/or resource forced outages.

20. NW Resource Adequacy Standard 20 Capacity Standard Surplus Sustained Peaking Capability (R pf + R pn )/ L p - 1 = RM Where: R pf = Peak duration firm resources R pn = Peak non-firm resources to be relied upon L p = Peak duration normal weather load RM= Peak duration reserve margin derived from an LOLP analysis