2. Northwest Power and Conservation Council “How Far That Little Candle Throws His Beams! So shines a good deed in a weary world.” * The Role of High-Performance Lighting in the Council’s Draft Regional Power Plan Charlie Grist December 8, 2004 *William Shakespeare, The Merchant of Venice

3. Northwest Power and Conservation Council slide 2

4. Northwest Power and Conservation Council slide 3 Overview What is the Council? What is the Council? What’s in the draft 5 th power plan? What’s in the draft 5 th power plan? Lighting conservation in the plan Lighting conservation in the plan –Measures, savings, costs & targets How to make it happen How to make it happen

5. Northwest Power and Conservation Council slide 4 The Pacific Northwest Region

6. Northwest Power and Conservation Council slide 5 The Answer is: $9 Billion a) What did State of Washington spend in 2002 on public education? b) What did Americans spend in 2003 on tickets to movies in theaters? c) What did PNW citizens spend in 2002 on electricity? d) All of the above

7. Northwest Power and Conservation Council Draft Fifth Pacific Northwest Electric Power and Conservation Plan

8. Northwest Power and Conservation Council slide 7 !!!!!!! Warning !!!!!! Comment period on the draft is closed Comment period on the draft is closed Draft Plan is under revision as we speak Draft Plan is under revision as we speak Exparte rules prohibit me from taking any criticism Exparte rules prohibit me from taking any criticism

9. Northwest Power and Conservation Council slide 8 The draft plan in summary Aggressive development of conservation Aggressive development of conservation Confirm and develop demand response resource Confirm and develop demand response resource Moderate near-term commercial scale development of wind to confirm costs, availability Moderate near-term commercial scale development of wind to confirm costs, availability Be prepared to begin construction of Be prepared to begin construction of –Coal-fired generation by 2010; –Significant wind shortly thereafter; –Gas-fired generation late in planning period Address key policy issues Address key policy issues –Adequacy standards Transmission BPA future role

10. Northwest Power and Conservation Council slide 9 Goal of this plan… Help assure an adequate, efficient, economical and reliable power system Help assure an adequate, efficient, economical and reliable power system By identifying a robust, flexible plan for managing power system costs and risks in the face of future uncertainty By identifying a robust, flexible plan for managing power system costs and risks in the face of future uncertainty

11. Northwest Power and Conservation Council slide 10 Where are we now, surplus or deficit? Currently a regional surplus BUT Currently a regional surplus BUT –Most surplus owned by Independent Power Producers (IPPs), not regional utilities –Many NW utilities energy short IPP generation  Available to region but at market price, subject to market risk Surplus/Deficit (aMW) Load Forecast

12. Northwest Power and Conservation Council slide 11 Developing the plan Identify and characterize Resources Identify and characterize Resources Identify and quantify key Uncertainties Identify and quantify key Uncertainties * Loads * Hydro conditions * Fuel prices *Penalties on CO2 emissions * Forced outages * Market price of electricity Evaluate cost of operating and expanding power system for 1000+ Plans over 750 Futures Evaluate cost of operating and expanding power system for 1000+ Plans over 750 Futures Plans – amounts and types of resources and when to be prepared to start construction Futures – scenarios that combine the key uncertainties over the 20 year planning period Seek out plans that minimize average costs for given level of Risk (expensive outcomes) Seek out plans that minimize average costs for given level of Risk (expensive outcomes)

13. Northwest Power and Conservation Council slide 12 The choice of a plan Cost and risk measures necessary but not sufficient to choose a plan Cost and risk measures necessary but not sufficient to choose a plan Other factors are considered, e.g., Other factors are considered, e.g., –Non power system costs and non-monetary effects associated with high cost outcomes not captured in cost/risk measures –Retail rates and rate stability –Level of dependence on imports/power supply adequacy Council’s recommendation – the lowest risk, least cost-plan Council’s recommendation – the lowest risk, least cost-plan

14. Northwest Power and Conservation Council slide 13 Recommended plan Development schedule will differ for different futures ( www.nwcouncil.org/dropbox/Olivia and Portfolio Model/L24X-376-P1.zip )

15. Northwest Power and Conservation Council slide 14 The Action Plan – what needs to happen over next 5 years Develop resources now that can reduce cost and risk to the region Develop resources now that can reduce cost and risk to the region – 700 average megawatts of conservation, 2005 – 2009 – 500 megawatts of demand response, 2005 – 2009 –Secure cost-effective lost opportunity cogeneration and renewable energy projects

16. Northwest Power and Conservation Council slide 15 700 aMW conservation over 5- years? – a challenge but doable We’ve done that much at times in past We’ve done that much at times in past –Less than average annual achievement from all sources 1991-02 –Greater experience and improved acquisition tools – codes and standards processes, Alliance, –Many major utilities have conservation targets at or near this level Mostly taps new sources of improved efficiency Mostly taps new sources of improved efficiency –Nearly two-thirds is new measures or new applications –40% is lost-opportunities that are not available yet –Getting it all means making PNW 10% more efficient over 20 years There is a rate impact but There is a rate impact but –About 2/3 of cost of meeting target is already in current rates –Additional cost less than 1% of regional utility revenue requirements

17. Northwest Power and Conservation Council slide 16 And, doing less conservation is more costly and more risky Base – 700 aMW 5- yrs, 2540 20-yrs Reduced – 500 aMW 5-yrs, 2480 20-yrs Minimium – 250 aMW 5-yrs, 1450 20- yrs Less conservation Greater cost & risk

18. Northwest Power and Conservation Council slide 17 Action Plan (2) Be prepared to construct additional resources when needed Be prepared to construct additional resources when needed –Resolve uncertainties regarding large-scale wind development Confirm the availability and cost of promising new resource alternatives Confirm the availability and cost of promising new resource alternatives Establish a policy framework to ensure an adequate and reliable power system Establish a policy framework to ensure an adequate and reliable power system Monitor key indicators a plan implementation, or need for revision Monitor key indicators a plan implementation, or need for revision

19. Northwest Power and Conservation Council slide 18 Part 2 Conservation in the Draft Power Plan Assess conservation potential Assess conservation potential Amount available, timing and cost Amount available, timing and cost Over 150 measures, thousands of permutations Over 150 measures, thousands of permutations

20. Northwest Power and Conservation Council slide 19 Conservation 2500 aMW Over last 22 years Over 2500 aMW potential at < $.05/kWh

21. Northwest Power and Conservation Council slide 20 What’s left to do? How Big is the Region’s Conservation Resource? Remaining Potential Equivalent to Regional Accomplishments 1980 - 2001 Remaining Potential Equivalent to Regional Accomplishments 1980 - 2001 Could meet half of the region’s annual load growth under “medium” forecast Could meet half of the region’s annual load growth under “medium” forecast Total conservation identified 4600 aMW Total conservation identified 4600 aMW Cost effective & achievable potential 2800 aMW Cost effective & achievable potential 2800 aMW –Medium 2025 loads & today’s avoided cost forecast –Estimate 85% success rate

22. Northwest Power and Conservation Council slide 21 Conservation Supply Curve Achievable by 2025

23. Northwest Power and Conservation Council slide 22

24. Cost & Achievable Potential by Sector & End Use 2025 Medium Forecast Loads & Prices Average Cost 2.4 cents per kWh (Levelized)

25. Northwest Power and Conservation Council slide 24 Sources of Savings by Sector

26. Northwest Power and Conservation Council slide 25 Sources of Savings by Sector

27. Northwest Power and Conservation Council slide 26 2025 Lighting Conservation Potential 930 MWa by 2025

28. Northwest Power and Conservation Council slide 27 Residential Sector

29. Northwest Power and Conservation Council slide 28 Total Residential Sector Cost- Effective & Realistically Achievable

30. Northwest Power and Conservation Council slide 29 Residential Compact Fluorescent Lamps 30 sockets/home potential 30 sockets/home potential 23 sockets/home achievable 23 sockets/home achievable 60 Watts to 13 Watts average reduction 60 Watts to 13 Watts average reduction Levelized cost 1.7 cents/kWh Levelized cost 1.7 cents/kWh Target ~11 million per year 2005-2009 for 160 aMW Target ~11 million per year 2005-2009 for 160 aMW Up to 20% of near-term targets Up to 20% of near-term targets

31. Northwest Power and Conservation Council slide 30 Residential Sector Realistically Achievable Potential for Water Heating (300 aMW)

32. Northwest Power and Conservation Council slide 31 Residential Heat Pump Water Heaters Lots of electric water heaters in place Lots of electric water heaters in place 200 MWa by 2025 @4.3 cents per kWh levelized 200 MWa by 2025 @4.3 cents per kWh levelized 1 of 4 DHW replacements 1 of 4 DHW replacements Availability, cost & reliability issues Availability, cost & reliability issues Possible regional program for economy of scale Possible regional program for economy of scale

33. Residential Sector Realistically Achievable Potential for Space Conditioning (290 aMW)

34. Northwest Power and Conservation Council slide 33 Residential Sector Realistically Achievable Potential for Appliances (140 aMW) Savings of 50% beyond federal standard recently adopted for 2007

35. Northwest Power and Conservation Council slide 34 Commercial Sector

36. Northwest Power and Conservation Council slide 35 Total Commercial Sector Realistically Achievable Potential = 1105 aMW (Medium Forecast – 2025 )

37. Northwest Power and Conservation Council slide 36 Commercial Sector Realistically Achievable Potential for Buildings = 685 aMW (Medium Forecast - 2025)

38. Northwest Power and Conservation Council slide 37 Commercial Lighting About 20 separate lighting measures About 20 separate lighting measures Significant improvement in fluorescent lamp & ballast technology Significant improvement in fluorescent lamp & ballast technology Improvements in metal halide lighting Improvements in metal halide lighting Improvements in display and spot lighting Improvements in display and spot lighting More efficient lighting designs & fixtures More efficient lighting designs & fixtures Daylighting in warehouses, schools, some retail Daylighting in warehouses, schools, some retail Needs training, product availability Needs training, product availability

39. Northwest Power and Conservation Council slide 38 Fluorescent Technology VintageSystem Lumens per Watt Gain over T12 Gain over 700T8 Gain over 800T8 Pre 1990 T12 ES MB 63 Early 90s 700 T8 EB 7721% Late 90s 800 T8 EB 8535%11% Today HP T8 RS EB 8839%14%3% Today HP T8 IS EB 9448%22%10% Source: Robert Sardinsky, Rising Sun Enterprises

40. Northwest Power and Conservation Council slide 39 2025 Achievable Savings from Lamps & Ballasts in New & Remodeled Buildings by Business Type

41. Northwest Power and Conservation Council slide 40 Lighting Equipment Savings in New Commercial Buildings 175 MWa in 2025 @ Less Than 1 Cent per kWh

42. Northwest Power and Conservation Council slide 41 Savings from Lighting Equipment in New & Remodel Applications By Measure 175 MWa in 2025 @ Less Than 1 Cent per kWh

43. Northwest Power and Conservation Council slide 42

44. Northwest Power and Conservation Council slide 43 2025 Savings from Lighting Equipment Commercial Buildings Retrofit 115 MWa @ 1.8 cents per kWh

45. Northwest Power and Conservation Council slide 44 Retrofit Lighting Potential by Business Type

46. Northwest Power and Conservation Council slide 45 New Data Available Commercial Building Stock Assessment Completed 2004 Completed 2004 Snap shot of building characteristics 2001 Snap shot of building characteristics 2001 Change analysis 1987 to 2001 Change analysis 1987 to 2001 812 sites from 1987 study were resurveyed 812 sites from 1987 study were resurveyed 345 new sites 1995-2001 vintage 345 new sites 1995-2001 vintage Data are public Data are public

47. Northwest Power and Conservation Council slide 46

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49. Northwest Power and Conservation Council slide 48 LPD Change Analysis

50. Northwest Power and Conservation Council slide 49

51. Northwest Power and Conservation Council slide 50 IS THAT AS GOOD AS IT GETS?

52. Northwest Power and Conservation Council slide 51 Daylighting in New Buildings 70 MWa in 2025 @ 3.6 cents per kWh Mostly “top” day lighting (skylights) Mostly “top” day lighting (skylights) –Warehouse, School, Some Retail, Some Office “Side” day lighting potential limited “Side” day lighting potential limited –Codes & standards capture some –Dimming controls expensive & problematic

53. Northwest Power and Conservation Council slide 52 Top Day Lighting in New Buildings 70 MWa in 2025 @ 3.4 Cents per kWh

54. Northwest Power and Conservation Council slide 53 LED Traffic Lights 8 MWa in 2025 @ xxx cents per kWh Not in 4 th Power Plan Significant adoption since 4 th Plan –Red 56%, Green 38%, Walk 4% Spotty penetration PNW –Seattle & Portland completed R&G –Ada County Idaho at 10% complete Still remaining retrofit potential Costs dropping, green now cost- effective

55. Northwest Power and Conservation Council slide 54 LED Exit Signs 36 MWa in 2025 @ 2.3 cents per kWh Stock estimates vary widely –At least 2 million signs PNW Many remain to retrofit 32 watts to 3 watts Most new construction is LED Total potential by 2025 is 36 MWa Cheap ~2.3 cents per kWh

56. Northwest Power and Conservation Council slide 55 What about lighting controls? Some in retro commissioning measures Some in retro commissioning measures Some in day lighting in new buildings Some in day lighting in new buildings Codes capture much of lighting control in new buildings Codes capture much of lighting control in new buildings Not analyzed in this plan: Not analyzed in this plan: –Individualized cubical dimming & occupancy controls –Occupancy sensors in warehouse with HPT8 or T5HO

57. Northwest Power and Conservation Council slide 56 Part 3: So What Should We Do About It? Identify conservation acquisition targets that are part of a least-cost & least-risk plan Identify conservation acquisition targets that are part of a least-cost & least-risk plan Five-year action plan for conservation Five-year action plan for conservation

58. Northwest Power and Conservation Council slide 57 Action Plan for Lighting Retrofit CFL in residential Retrofit CFL in residential –Re-lamp about 10-11 million sockets per year –Increase range of product type, output, features & availability Commercial lighting equipment (lamp, ballast, fixture, controls) Commercial lighting equipment (lamp, ballast, fixture, controls) –Ramp up acquisition rates to levels of mid 1990s –Simplify specifications for HPT8 & T5HO –Expand efficient task & display lighting options –Improve commercial codes LPD levels –Ramp up new building lighting design efforts

59. Northwest Power and Conservation Council slide 58 Action Plan for Lighting (2) Expand day lighting applications, support & research on PNW issues Expand day lighting applications, support & research on PNW issues Retrofit remaining exit signs with LED or better Retrofit remaining exit signs with LED or better Retrofit remaining traffic signals with LED Retrofit remaining traffic signals with LED Improve lighting in refrigeration devices Improve lighting in refrigeration devices

60. Northwest Power and Conservation Council slide 59 Regional Near-Term Conservation Targets (2005-2009)

61. Northwest Power and Conservation Council slide 60 Regional Conservation Resource Acquisition Targets Five-Year Target (2005–2009) = 700 aMW Five-Year Target (2005–2009) = 700 aMW About 140 aMW per year, mostly retrofit About 140 aMW per year, mostly retrofit

62. Northwest Power and Conservation Council slide 61 Conservation Costs (Total Resource Cost) Total Resource Acquisition Cost 2005–2009 = $1.64 billion Total Resource Acquisition Cost 2005–2009 = $1.64 billion Estimated Utility System Cost 2005–2009 = $1.2-$1.4 billion Estimated Utility System Cost 2005–2009 = $1.2-$1.4 billion –($200-270 million per year)

63. Northwest Power and Conservation Council slide 62 Illustrative Near-Term Lighting Targets (~280 MWa in 5 Years)

64. Northwest Power and Conservation Council slide 63 So how does that little candle “Shine a good deed in a weary world?” If developed, conservation identified saves us nearly $2 billion (NPV) & reduces risk If developed, conservation identified saves us nearly $2 billion (NPV) & reduces risk Reduce environmental impact Reduce environmental impact Defer need for generation, transmission & distribution Defer need for generation, transmission & distribution Lighting measures figure prominently Lighting measures figure prominently –One-third of 2025 potential –As much as 40% of 5-year targets –Large fraction of economic value (low cost)

65. Northwest Power and Conservation Council slide 64 PORTIA That light we see is burning in my hall. How far that little candle throws his beams! So shines a good deed in a naughty world. NERISSA When the moon shone, we did not see the candle. PORTIA So doth the greater glory dim the less: A substitute shines brightly as a king Unto the king be by, and then his state Empties itself, as doth an inland brook Into the main of waters.

66. Northwest Power and Conservation Council slide 65 The End Go forth, do your good deeds. Cast your beams of light. Take us to a better future. Your work will contribute greatly to the main of waters of our energy future.

67. Northwest Power and Conservation Council slide 66 The End

68. Northwest Power and Conservation Council slide 67 Spare Slides

69. Northwest Power and Conservation Council slide 68 Other Conservation Measures

70. Northwest Power and Conservation Council slide 69 Commercial Sector Realistically Achievable Potential for Equipment & Infrastructure (Medium Forecast - 2025) = 420 aMW New since 4 th Plan

71. Northwest Power and Conservation Council slide 70 Power Supplies in Equipment US stock 2.5 billion units US stock 2.5 billion units Use 6% of US electricity Use 6% of US electricity 15-50% savings 15-50% savings 155 MWa PNW in 2025 155 MWa PNW in 2025 TV Cordless phone Computers Visa machine Answering machines Chargers 3.1

72. Northwest Power and Conservation Council slide 71 Power Supplies in Equipment International markets Recent successes with Intel Good candidate for market transformation –Many products means many market approaches Good candidate for cooperative national & international efforts Good candidate for state standards

73. Northwest Power and Conservation Council slide 72 Packaged Refrigeration Appliances Reach-in Refrigerators & Freezers Reach-in Refrigerators & Freezers Ice Makers Ice Makers Beverage Merchandisers Beverage Merchandisers Walk-ins Walk-ins Vending Machines Vending Machines Water Coolers Water Coolers 70 MWa PNW savings 70 MWa PNW savings (Some is lighting improvement) (Some is lighting improvement)

74. Northwest Power and Conservation Council slide 73 Packaged Refrigeration Example Delfield model 6051 two-door reach-in refrigerator Delfield new Vantage 6000 series two-door reach-in refrigerator Net incremental production cost = $0

75. Northwest Power and Conservation Council slide 74 Process optimization Sensors & controls Remote monitoring Training Municipal Sewage Treatment 832 PNW facilities 832 PNW facilities 2000 MGD total treated flow 2000 MGD total treated flow 340 MWa total electricity use 340 MWa total electricity use 30% to 70% documented savings in small & mid-size plants 30% to 70% documented savings in small & mid-size plants Many non-energy benefits Many non-energy benefits 60 MWa savings potential 60 MWa savings potential

76. Northwest Power and Conservation Council slide 75 Industrial Sector Conservation Potential Estimate of 5% of 2025 forecast loads Estimate of 5% of 2025 forecast loads 350 aMW at 1.8 cents per kWh 350 aMW at 1.8 cents per kWh –Process controls –Drive systems –Lighting –Refrigeration Significant uncertainty around estimate Significant uncertainty around estimate –Changes in region’s industrial mix

77. Northwest Power and Conservation Council slide 76 Irrigated Agriculture Sector Realistically Achievable Potential = 80 aMW Most in Idaho and Washington Most in Idaho and Washington

78. Northwest Power and Conservation Council slide 77 http://www.nwcouncil.org/energy/powerplan/ draftplan/Default.htm

79. Northwest Power and Conservation Council slide 78 Uncertainties

80. Northwest Power and Conservation Council slide 79 Demand uncertainty

81. Northwest Power and Conservation Council slide 80 Natural gas uncertainty

82. Northwest Power and Conservation Council slide 81 Climate change policy and resource choices

83. Northwest Power and Conservation Council slide 82 Market price of electricity Avg= 39.9

84. Northwest Power and Conservation Council slide 83 The “Supply Curve”

85. Northwest Power and Conservation Council Spare Slides

86. Northwest Power and Conservation Council slide 85 Analytic Tools

87. Northwest Power and Conservation Council slide 86 Number of Observations Cost for Future 2 Cost for Future 1 Distribution of Cost for a Plan 100001250015000175002000022500250002750030000 32500 Power Cost (NPV 2004 $M)->

88. Northwest Power and Conservation Council slide 87 Risk and Expected Cost Associated With A Plan Likelihood (Probability) Avg Cost 100001250015000175002000022500250002750030000 32500 Power Cost (NPV 2004 $M)-> Risk = average of costs> 90% threshold

89. Northwest Power and Conservation Council slide 88 Increasing Risk Increasing Cost Review Cost and Risk 2

90. Northwest Power and Conservation Council slide 89 Space of feasible solutions Feasibility Space Increasing Risk Increasing Cost Efficient Frontier Review

91. Northwest Power and Conservation Council slide 90 Electricity Crisis 2000-2001

92. Northwest Power and Conservation Council slide 91 Recent History

93. Northwest Power and Conservation Council slide 92 Retail 2000-2001 -- Prices shot up… Wholesale

94. Northwest Power and Conservation Council slide 93 2001–2003 Generation boomed…

95. Northwest Power and Conservation Council slide 94 Loads slumped …and will take some time to recover Electricity Crisis

96. Northwest Power and Conservation Council slide 95 Crisis of 200-2001 Failure to develop adequate resources Failure to develop adequate resources Failure to anticipate the price volatility short supplies might spur Failure to anticipate the price volatility short supplies might spur Failure to put in place effective market rules and mechanisms; and Failure to put in place effective market rules and mechanisms; and Actions of some who took advantage of the market’s vulnerability. Actions of some who took advantage of the market’s vulnerability. The impact on the region’s economy The impact on the region’s economy –At least $2.5 billion, a 35% retail rate increase –As much as $6 billion in increased power purchase costs and foregone economic activity.

97. Northwest Power and Conservation Council slide 96 Estimating Conservation Potential About 150 measures, 1000s of permutations About 150 measures, 1000s of permutations –By house type & size, space-heat fuel, building type, vintage, climate zone, state, system type, plant size, ….. Based on estimates of existing & forecast stock Based on estimates of existing & forecast stock –Number of appliances, homes, floor area by business type, turnover rates, demolition rates, … –Separate estimates for “new” & “retrofit” Based on estimates of existing measure penetration Based on estimates of existing measure penetration –Exclude fraction already adopting measure –Account for adopted codes and standards De-rate technical potential by 15% to reflect what is pragmatically “Achievable” De-rate technical potential by 15% to reflect what is pragmatically “Achievable”

98. Northwest Power and Conservation Council slide 97 Estimating the Resource: Savings Energy (kWh) by time of day and month Energy (kWh) by time of day and month –Both savings and value of savings vary by time –Value based on base case Mid-C price forecast –Account for interaction between end uses »Lighting measures influence heating and cooling needs –Account for overlap between measures »Day lighting applied after high-efficiency lamps Capacity (kW) for T&D deferral Capacity (kW) for T&D deferral –Based on coincidence with PNW peak kW (January) –Deferral of long-term T&D expansion costs

99. Northwest Power and Conservation Council slide 98 Estimating the Resource: Costs Incremental cost over base case Incremental cost over base case Measure capital Measure capital Labor & profit Labor & profit Net ongoing O&M (positive or negative) Net ongoing O&M (positive or negative) Program administration costs added (20%) Program administration costs added (20%) All quantifiable costs regardless of who pays All quantifiable costs regardless of who pays

100. Northwest Power and Conservation Council slide 99 Cost-Effectiveness Cost-effective means Benefit/Cost Ratio > 1 Cost-effective means Benefit/Cost Ratio > 1 Use Net Present Value of benefits & costs Use Net Present Value of benefits & costs Estimate all quantifiable savings and all costs regardless of who bears costs or reaps savings Estimate all quantifiable savings and all costs regardless of who bears costs or reaps savings Just a “gauge” for estimating fraction of potential that could be developed Just a “gauge” for estimating fraction of potential that could be developed –Today’s estimate of avoided costs is surely wrong Use portfolio analysis to determine how much conservation to develop under a range of avoided costs Use portfolio analysis to determine how much conservation to develop under a range of avoided costs

101. Northwest Power and Conservation Council slide 100 Estimating the Resource: Built-in Conservatisms Only available technologies & practices Only available technologies & practices No forecasts of technology or cost improvement No forecasts of technology or cost improvement Careful measure applicability screening Careful measure applicability screening Measure interactions & overlap considered Measure interactions & overlap considered Code or better base case for “new” & replacement Code or better base case for “new” & replacement All quantifiable non-energy costs and benefits All quantifiable non-energy costs and benefits Multiple data sources considered Multiple data sources considered Conservative values chosen Conservative values chosen

102. Northwest Power and Conservation Council slide 101 Conservation Targets

103. Northwest Power and Conservation Council slide 102 Regional Conservation Resource Acquisition Targets 2005 – 2009 = 700 aMW

104. Northwest Power and Conservation Council slide 103 Total Resource Acquisition Cost 2005 – 2009 = $1.64 billion Charlie Grist: Check TRC numbers. Do not match Tables&Graphs. Charlie Grist: Check TRC numbers. Do not match Tables&Graphs.

105. Northwest Power and Conservation Council Is 700 aMW 5-years “Doable”?

106. Northwest Power and Conservation Council slide 105 It’s Less Than the Average Annual PNW Conservation Achievements 1991 - 2002

107. Northwest Power and Conservation Council slide 106 It’s Close to Bonneville,Utility and Alliance Conservation Achievements 2000 - 2001

108. Northwest Power and Conservation Council slide 107 It Might Cost Less Than the Average Annual Utility System Conservation Investments from 1993 - 1996

109. Northwest Power and Conservation Council slide 108 It’s Lower Than the Annual Utility System Conservation Investments Were As A Share of Total Revenues from 1993 - 1996

110. Northwest Power and Conservation Council slide 109 It Could Cost Less Than the Average Annual Utility System “First Year” Conservation Cost 1991 - 2002

111. Northwest Power and Conservation Council slide 110 It Could Cost Less Than the Average Annual Utility System Levelized Conservation Cost 1991 - 2002

112. Northwest Power and Conservation Council slide 111 700 aMW conservation over 5- years – a challenge but doable We’ve done that much at times in past We’ve done that much at times in past –Less than average annual achievement from all sources 1991-02 –Utility system has spent more in the past –Many major utilities have conservation targets at or near this level Mostly taps new sources of improved efficiency Mostly taps new sources of improved efficiency –40% is lost-opportunities that are not available yet –Nearly two-thirds is new measures or new applications –Getting it all means making PNW 10% more efficient over 20 years There is a rate impact but There is a rate impact but –About 2/3 of cost of meeting target is already in current rates –Additional cost ~$50 - $75 million/yr = less than 1% of regional utility revenue requirements

113. Northwest Power and Conservation Council slide 112 Choosing a Plan

114. Northwest Power and Conservation Council slide 113 Identifying the plan Because we face uncertainty – need to find “Plans” that perform well over wide range of possible “Futures” Because we face uncertainty – need to find “Plans” that perform well over wide range of possible “Futures” –Futures -- scenarios describing possible combinations of hydro conditions, loads, fuel prices, market prices, CO2 penalties and so on over planning period –Plans – types and amounts of resources and earliest “be prepared to start construction” dates (options)

115. The Portfolio Model Evaluates Performance of large number (~1000) of alternative plans over large number (750) futures Evaluates Performance of large number (~1000) of alternative plans over large number (750) futures  Average cost  Risk – average of the 10% most costly outcomes  Seeks least- cost plan for given risk Cost of System Operation and Expansion

116. Northwest Power and Conservation Council slide 115 D A B C Choosing A Plan D

117. Northwest Power and Conservation Council slide 116 Common characteristics of the least cost plans All include “aggressive” conservation All include “aggressive” conservation –700 aMW over next 5 years; 2500 aMW over 20 years All include demand response All include demand response –Up to 2000 MW by 2016 – dispatches when prices > $150/MW-hr None require start of construction of generating resources before 2010 None require start of construction of generating resources before 2010 –From regional standpoint, reliance on market thru end of decade appears less costly than developing additional generation Moving down the efficient frontier (lowering risk) Moving down the efficient frontier (lowering risk) –Increasing costs of being prepared to develop additional resources and developing if necessary – insurance premium

118. Northwest Power and Conservation Council slide 117 Action Plan Details

119. Northwest Power and Conservation Council slide 118 The Action Plan – what needs to happen over next 5 years Develop resources now that can reduce cost and risk to the region Develop resources now that can reduce cost and risk to the region – 700 average megawatts of conservation, 2005 – 2009 – 500 megawatts of demand response, 2005 – 2009 –Secure cost-effective lost opportunity cogeneration and renewable energy projects –Develop cost-effective generating resources when needed

120. Northwest Power and Conservation Council slide 119 Action Plan (2) Prepare to construct additional resources Prepare to construct additional resources –Develop and maintain inventory of ready-to- construct projects –Resolve uncertainties associated with large-scale wind development »50-100 MW/year of commercial development – consistent with utility IRPs –Encourage use of state-of-the-art generating technology when siting and permitting projects –Plan for needed transmission –Improve utilization of available transmission capacity

121. Northwest Power and Conservation Council slide 120 Action Plan (3) Confirm the availability and cost of additional resources that promise cost and risk mitigation benefits Confirm the availability and cost of additional resources that promise cost and risk mitigation benefits –Oil sands cogeneration –Coal gasification –Carbon sequestration –Energy storage technologies –Demonstration of renewable and high efficiency generation with Northwest potential

122. Northwest Power and Conservation Council slide 121 Action Plan (4) Establish policy framework to ensure the ability to develop needed resources Establish policy framework to ensure the ability to develop needed resources –Work with entities in NW and West to establish adequacy targets appropriate for Northwest and the rest of the Western system. –Work through Grid West, RRG process to address emerging transmission issues within the next two years –Revise the role of the Bonneville Power Administration in Power Supply consistent with the Council’s May 2004 recommendations.

123. Northwest Power and Conservation Council slide 122 Action Plan (5) Monitor key indicators that could signal changes in plans Monitor key indicators that could signal changes in plans –Track regional load-resource situation and adjust as necessary –Monitor conservation development – intensify efforts or turn to alternatives if necessary –Monitor efforts to resolve uncertainties regarding the cost and availability of wind generation –Monitor climate change science and policy for developments that would affect resource choices.