1. Powered by the Loads and Resource Information System (LaRIS) 1 2004 Pacific Northwest Loads and Resources Operational Peaking Adjustment Council Briefing November 2, 2005 Regional Coordination Group Loads and Resources Information System (LaRIS)

2. Powered by the Loads and Resource Information System (LaRIS) 2 2004 White Book Revised Federal System Hydro Operational Peaking Adjustment Background Background The Federal system instantaneous hydro capacity is estimated to be over 21,000 MW. However, this estimate overstates the amount of Federal hydro capacity actually available to meet firm load obligations, month after month, year after year due to the following: Federal hydro projects have more generating units than hydro fuel available to operate all the units on a continuous basis and Limited amount of water and water storage in the Columbia River basin An adjustment to the Federal system instantaneous hydro capacity estimates must be made to accommodate for: Actually availability of Federal system hydro project units Availability of water to operate the hydro project units and Reductions for forced outage reserves, spinning reserves, and hydro maintenance Due to electricity industry deregulation, changes in electricity marketing methods, and changes in the Biological Opinion hydro requirements, BPA reevaluated its old 50-hour sustained peaking reduction methodology. BPA revised this methodology using the HOSS model and new hourly data to produce its operational peaking adjustment

3. Powered by the Loads and Resource Information System (LaRIS) 3 2004 White Book Revised Federal System Hydro Operational Peaking Adjustment Old Sustained Peaking Method and Logic Old 50-Hour Sustained Peaking Adjustment prior to the 2004 White Book simulated the Federal system meeting a 50-hours per week capacity sale BPA reduced the Federal system hydro instantaneous capacity using the 50-hour sustained peaking adjustment formulated in the early 1990s Reduction incorporated an Hourly Model that was replaced by the HOSS model in 1999 Due to technology constraints, the Hourly Model incorporated hourly data approximations and was able to simulate only 2 seasons for 50 water conditions: Winter (December through March) and The rest of the months (April through November)

4. Powered by the Loads and Resource Information System (LaRIS) 4 2004 White Book Revised Federal System Hydro Operational Peaking Adjustment Old Sustained Peaking Method and Logic (continued) The old process to estimate the sustained peaking adjustment was as follows: The Hourly Model was operated to meet typical Federal system loads under 50 water conditions The maximum Federal sustained capability was found for each water condition in the following iterative process: Federal loads were increased to simulate a 50-hours per week capacity sale with 24-hour returns. If the Hourly Model met new load shape while meeting existing hydro requirements, the capacity sale would be increased and the Hourly Model rerun When the Hourly Model reached the point of violating hydro requirements, the Federal system hydro capacity for the prior study case, was considered the maximum Federal system sustained capacity Curves were developed that related the Federal system hydro energy to the sustained Federal system hydro capacity The difference between the instantaneous Federal system hydro capacity and the sustained Federal system hydro capacity was the sustained peaking reduction The sustained peaking reduction was adjusted for hydro maintenance, forced outage reserves, and spinning reserves

5. Powered by the Loads and Resource Information System (LaRIS) 5 2004 White Book Revised Federal System Hydro Operational Peaking Adjustment Operational Peaking Adjustment The new operational peaking adjustment was developed to capture the ability of the Federal hydro system to meet normal peak loads in today’s current electricity market Method incorporated BPA’s HOSS model to simulate monthly, the hourly Federal system operations to meet Federal system obligations for each of the 50 water conditions HOSS used the latest hydro requirements from the 2004 NOAA Fisheries Biological Opinion and the U.S. Fish and Wildlife Service’s 2000 Biological Opinion HOSS maximized Federal system hydro generation by selling surplus energy in better than average water conditions and purchased energy to meet peak load demands in low water conditions The HOSS model produced an hourly matrix of Federal system hydro generation by month and by water conditions

6. Powered by the Loads and Resource Information System (LaRIS) 6 2004 White Book Revised Federal System Hydro Operational Peaking Adjustment Operational Peaking Adjustment (continued) This new method estimates the Federal hydro system monthly maximum operational capacity that is available to meet the 1-hour expected peak load for each of the 50 water conditions. The process used to estimate the operational peaking adjustment is as follows: The HOSS model was operated monthly to meet typical Federal system hourly loads under the 50 water conditions HOSS stressed Federal system HLH loads by maximizing Federal system hydro generation to sell surplus energy in better than average water conditions. When needed, HOSS purchased energy to meet peak load demands in low water conditions The maximum monthly Federal operational peaking capability was found for each water condition that represents the following: The Federal system hydro maximum 1-hour peak generation needed to meet normal peak loads Monthly relationships between the Federal system hydro energy and the Federal system hydro maximum 1-hour generation were developed by month and by water condition The operational peaking adjustment is adjusted for hydro maintenance, spinning reserves, and Forced outage reserves to avoid double counting

7. Powered by the Loads and Resource Information System (LaRIS) 7 2004 White Book Federal System Hourly Capacity Resource Stack For a Typical January Day 1937 Critical Water Conditions MW Columbia Generating Station Federal Hydro Generation. Federal Surplus Sales Net Federal Sales Obligations Hours

8. Powered by the Loads and Resource Information System (LaRIS) 8 2004 White Book Federal System Operational Peaking Adjustment Hourly Federal System Hydro for a Typical January Day 1937 Critical Water Conditions MW Maximum Hourly Monthly Generation 10,250 MW Total Operational Peaking Adjustment 10,950 Megawatts Takes Into Account Available water for hydro Hydro maintenance Forced Outage Reserves Spinning Reserves Instantaneous Federal System Hydro Capacity Regulated plus Independent Hydro Hours

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10. 10 2004 White Book Federal System Operational Peaking Capacity Comparison 2004 White Book and 2003 White Book Studies 1937 Critical Water Conditions MW 2004 White Book New Operational Peaking Capacity Monthly 1-Hour Maximum under 1937 WY 2003 White Book Old Sustained Peaking Methodology. Instantaneous Federal System Hydro Capacity Regulated plus Independent Hydro 2004 White Book Hydro Energy (aMW)

11. Powered by the Loads and Resource Information System (LaRIS) 11 2004 White Book Revised Federal System Hydro Operational Peaking Adjustment Conclusion Instantaneous capability of the Federal hydro projects overstates the amount of Federal hydro capacity actually available to meet firm load obligations, month after month, year after year. The revised operational peaking adjustment for calculating firm capacity for the Federal system provides a better measure of the Federal system and PNW resource peaking capability for BPA planning purposes by approximating monthly HOSS Federal system capacity maximums to BPA’s long-range studies for normal weather peaking Due to this change, Federal and regional capacity surplus/deficit values in the 2004 White Book are not comparable with prior studies Hourly data used in this analysis can also provide different levels of sustained Federal system hydro capacity-such as 30 or 50 hours per week. This is sustained for the month and is associated with current electricity marketing practices and could potentially be used for future reliability analysis