1. Capacity Metric & Hydro Capacity Assessment Decisions Mary Johannis PNW Resource Adequacy Technical Committee Meeting June 20, 2007

2. PNW Resource Adequacy Technical Committee 2 Pilot Capacity Adequacy Standard Planning reserve margin (PRM), which is the surplus generating capability over expected peak load during the peak load hours for each month in units of percent, where: Generating capability is defined as the sustained peaking capability from: –All non-hydro resources –Uncontracted in-region Independent Power Producer (IPP) resources: 100 percent in winter 1,000 MW in summer –Hydroelectric capability over sustained peaking period Firm hydro capacity to meet 1 in 2 loads under critical hydro Hydro flexibility: 2,000 megawatts in winter and 1,000 megawatts in summer –Out-of-Region spot market resources: 3,000 MW in winter 0 megawatts in summer –The net of firm imports and exports into and out of the region Expected peak load is defined as the average load over the peak load hours (10 hours per day over 5 days = 50 hours), based on normal temperatures.

3. June 20, 2007PNW Resource Adequacy Technical Committee 3 Suggested Change to Capacity Metric: Revise Sustained Peaking Period Define sustained Peaking Period as 6 Maximum Load hours over 3 or 5 days Reasons for Revised Metric: –Ten highest Consecutive Load Hours can Miss Peaks in the Winter –MWa over ten highest consecutive load hours resembles Energy Available over Heavy Load Hours  this can disguise “Peakiness” of Resources needed to meet Regional Loads –Six hour Metric is more comparable with WECC One hour Metric than the current Ten hour Metric

4. June 20, 2007PNW Resource Adequacy Technical Committee 4 Suggested Change to Capacity Metric: Revise Sustained Peaking Period Consistent with Sustained Capacity & Load Duration Curves –Comparison of Hydro Capacity & Load Duration Curves indicate similar slopes for 6 hour sustained peaking duration for Winter and Summer Months  Sustained Peaking Hydro Capacity sufficient to Cover Load –Steeper Slope for Hydro Capacity Duration Curve Compared to Load Duration Curve in 10 to 12 sustained Peaking Period is of no Consequence because Hydro Flexibility not needed as much during Trough Hours

5. June 20, 2007PNW Resource Adequacy Technical Committee 5

6. June 20, 2007PNW Resource Adequacy Technical Committee 6

7. June 20, 2007PNW Resource Adequacy Technical Committee 7 Hydro Capacity Assessment Decision PILOT CAPACITY ADEQUACY STANDARD: Regional Hydro Capacity is assessed in Two Components: –Firm Hydro Capacity, i.e. Hydro Capacity available under Critical Water Conditions (Traditional Definition) –Hydro Flexibility available to meet 1 in 20 year temperature event, still assessed under Critical Water Conditions (2,000 MW Winter & 1,000 MW Summer estimate of Hydro Flexibility = CONSERVATIVE) SUGGESTED REVISED STANDARD: –Critical Hydro Conditions plus 1 in 20 Temperature Event is too rare of an event to which to plan Hydro –Combination of Water Condition and High Loads should simulate a 1 in 20 year event, or a P5 event, as Nexus to LOLP analysis:

8. June 20, 2007PNW Resource Adequacy Technical Committee 8 Hydro Capacity Assessment Decision FCRPS Example: –Feb 1989 Temperatures and Median Water is most Constrained P5 Event Are Runoff and Temperatures Independent Variables? –Based on limited data points, analysis indicates YES –Comparison of Jan-Jul Runoffs and Cold Snaps with 3-day load center averaging 10.5 °F or less 1950 125.8 MAF 1957 113.1 1965 126.4 1969 121.9 1979 82.1 1984 123.1 1989 92.7

9. June 20, 2007PNW Resource Adequacy Technical Committee 9 Hydro Capacity Assessment Decision Of the 78 years of record that we have for Jan-Jul Runoff at the Dalles, 19 out of 78 are below 85 MAF  24.4% of the years are dry In the cold snap years listed above, 1 out of 7 years, 14.3%, is below 85 MAF Conclusion: Cold snap Temperatures are not necessarily Indicator of a low volume year Temperatures & Runoff Conditions are quasi- independent Variables and can be multiplied together to yield combination probability events

10. June 20, 2007PNW Resource Adequacy Technical Committee 10 Comparison of FCRPS Capacities* FCRPS Installed Hydro Cap= 21,500 MW 1 Hour Sustained Cap= 17,200 MW 10 Hour Over 1 Day Sustained Cap= 16,200 MW Sustainable Operational Cap= 11,200 MW Sustained Peaking Capacities White Book 6 Hour Over 1 Day Sustained Cap= 16,700 MW *Based on historic winter day assuming available generating capacity, stream flows and BiOp requirements

11. June 20, 2007PNW Resource Adequacy Technical Committee 11 Capacity Metric

12. June 20, 2007PNW Resource Adequacy Technical Committee 12 Capacity Metric