Northwest Power and Conservation Council Draft Plan Proposed Regional Conservation Targets for Power Committee June 10, 2009 Updated for CRAC June 19, 2009

Northwest Power and Conservation Council slide 2 Why We Ask Council for Guidance on Targets Near term conservation targets determine medium term action plan on other generating resources Near term conservation targets determine medium term action plan on other generating resources If significantly lower or higher targets are desired, portfolio model may need to be re-run to evaluate impact on other resources options If significantly lower or higher targets are desired, portfolio model may need to be re-run to evaluate impact on other resources options

Northwest Power and Conservation Council slide 3 Proposed Targets MWa Cumulative

Northwest Power and Conservation Council slide 4 Alternative Targets Staff received comment from some Conservation Resources Advisory Committee members that approximately 20 percent lower target should be set Staff received comment from some Conservation Resources Advisory Committee members that approximately 20 percent lower target should be set –This lower target would not include any of the “new” measures in the conservation assessment –Action Plan would include recommendation for minimum regional investment in deployment of these “new resources” – but not savings targets Staff also was encouraged to evaluate higher conservation “ramp rate” constraints Staff also was encouraged to evaluate higher conservation “ramp rate” constraints –Portfolio Model results showed some additional cost and risk reduction –State (and maybe National) Climate action goals require aggressive efficiency programs

Northwest Power and Conservation Council slide 5 Alternatives to Proposed Targets – Discretionary Conservation

Northwest Power and Conservation Council slide 6 Alternatives to Proposed Targets – Lost Opportunity Conservation

Northwest Power and Conservation Council slide 7 Cumulative Savings

Northwest Power and Conservation Council slide 8 The “Big Picture” Through 2007 the region acquired 3600 aMW of conservation savings Through 2007 the region acquired 3600 aMW of conservation savings –This is equivalent to meeting all of the electricity needs of Idaho and Western Montana in 2008 Acquiring 1200 aMW of conservation savings by 2014 Acquiring 1200 aMW of conservation savings by 2014 –Could meet 50% regional load growth* –Is equivalent to adding the critical water output of three Bonneville Dams Acquiring the ~5800 aMW of conservation savings by 2029 Acquiring the ~5800 aMW of conservation savings by 2029 –Could meet 85% of regionally load growth* »This would keep most public utilities out of “Tier 2” for the next 20 years –Is equivalent to the critical water output of the seven largest hydroelectric projects in the PNW or meeting all of the 2008 electricity needs of the state of Oregon *Under medium load growth the region is forecast to grow by approximately 2350 aMW by 2014 and 6900 aMW over the next 20 years without any additional conservation.

Northwest Power and Conservation Council slide 9 CFL Countdown Issue: Issue: –Estimate recent regional savings NOT including CFLs addressed by EISA Why: Why: – Recent savings is heavy with CFLs –Proposed targets do not include EISA CFLs –What is current non-CFL savings? –How big a gap between current non-CFL savings and proposed non-CFL targets

Northwest Power and Conservation Council slide 10 CFL Countdown First Estimate non-CFL savings: First Estimate non-CFL savings: –155 MWa in 2008 Updated Estimate: Updated Estimate: –140 MWa in 2008 Difference: Difference: –About 15 MWa of reported regional savings were from CFLs that replaced burned-out CFLs –So total estimated savings were too high –Differences in BPA/Utility & NEEA reporting

Northwest Power and Conservation Council slide 11 Updated Analysis in MWa Utility-Reported Non-NEEA Savings Utility-Reported CFL Savings via local rebates Non-CFL, Non-NEEA Utility-Reported Savings Add Back NEEA Non-CFL Savings Net Market Effects & Baseline Corrected for Replacements 2830 Total Estimated Non-CFL Savings Savings estimates include line losses & 5 th Plan Baseline Adjustment

Northwest Power and Conservation Council slide 12 Historical Regional CFL Savings Source: NEEA Data and Projections

Northwest Power and Conservation Council slide 13 Historical & Projected Regional CFL Savings Historical Forecast Source: NEEA Data and Projections

Northwest Power and Conservation Council slide 14 Alternatives to Cope with “CFL Detox” Adopt staff proposal of 1200 aMW target for 2010 – 2014 period Adopt staff proposal of 1200 aMW target for 2010 – 2014 period Alt 1 – Adopt 1200 aMW target, but add savings from CFLs covered by federal standards to conservation potential in (~20 to ~25 aMW/yr) Alt 1 – Adopt 1200 aMW target, but add savings from CFLs covered by federal standards to conservation potential in (~20 to ~25 aMW/yr) Alt 2 – Same as Alt 2, but reduce 2010 – 2012 targets by aMW/yr and move these savings to 2013 – 2014 Alt 2 – Same as Alt 2, but reduce 2010 – 2012 targets by aMW/yr and move these savings to 2013 – 2014 Alt 3 – Other Suggestions Alt 3 – Other Suggestions

Northwest Power and Conservation Council slide 15

Northwest Power and Conservation Council slide 16 Why These Targets Fastest “Realistically Achievable” Acquisition Schedule Fastest “Realistically Achievable” Acquisition Schedule –All portfolio sensitivity analysis supports these (or higher) targets –Historical achievements (200 aMW in 2007, ~220 aMW in 2008), equal to or above than near term targets –Proposed ramp rates based on “grounds up” measure-by-measure estimate of achievable savings –Region is better positioned today to achieve conservation than it has been at any point since the Act was past

Northwest Power and Conservation Council slide 17 Base Case Least-Risk Plan Conservation “Build Out” Schedule From Regional Portfolio Model Proposed Target

Northwest Power and Conservation Council slide 18 Portfolio Analysis Supports Accelerated Conservation Acquisition Least-risk plans: Least-risk plans: –Model builds discretionary conservation at maximum pace for first 2400 MWa in all sensitivity cases –High premium for Lost-Opportunity in all sensitivity cases »$50/MWh premium over market (up to $120/MWh) »$40/MWh premium for high-pace discretionary sensitivity Slower-paced sensitivity case shows large cost & risk penalty Slower-paced sensitivity case shows large cost & risk penalty Faster-paced sensitivity case shows smaller cost & risk reduction Faster-paced sensitivity case shows smaller cost & risk reduction

Are These Targets “Doable”? Rationale Based on Past Achievements Recent Utility Program Performance Equals Near Term Targets Recent Utility Program Performance Equals Near Term Targets Prior Utility Program “Ramp Rates” Support Proposed Pace Prior Utility Program “Ramp Rates” Support Proposed Pace Recent Changes in State Codes & Federal Standards Support Medium Term Pace Recent Changes in State Codes & Federal Standards Support Medium Term Pace Market Driven Changes Show Increasing “Non- Programmatic” Improvements in Efficiency (based on survey of building characteristics) Market Driven Changes Show Increasing “Non- Programmatic” Improvements in Efficiency (based on survey of building characteristics) –(e.g., the “Walmart Effect”)

The Region Is Well Ahead of the 5 th Plan’s Targets

Northwest Power and Conservation Council slide 21 Share of Savings by Funding Source

Northwest Power and Conservation Council slide 22 Contribution of CFLs to Regional Conservation Savings

Northwest Power and Conservation Council slide 23 Utility Conservation Acquisitions Are Stable At Record Levels (“Mr. Toad’s Wild Ride”* May Have Finally Ended) See:

Are These Targets “Doable”? Rationale Based on Forecast “Achievability” Proposed targets based on program “ramp rates” built up from measure-by-measure analysis Proposed targets based on program “ramp rates” built up from measure-by-measure analysis “Ramp Rate” Estimates Based On “Ramp Rate” Estimates Based On –Measure Characteristics »(e.g., new measures slower than measures in existing programs) –Implementation Strategies »(e.g. market transformation near-term ramps slower than “house-by-house” deployment) –Size & Cost »(e.g., lower cost measures deployed faster than higher cost measures) –Physical Availability of Equipment »(e.g., deployment of heat pump water heaters low for first five years because product is just entering market) –Training & Education Requirements »(e.g., savings based on “improved practices” deployed slower than “widget-to-widget” change outs)

Forecast Achievability M easure-by-Measure Cumulative Sum of Ramp-Ups = 1270 aMW (~1270 MWa: 370 aMW LO aMW NLO) Maximum Annual Rates from Conservation Supply Curves: Retrofit at <$70/MWh and Lost-Opportunity at <$120/MWH

Forecast Achievability for New Initiatives Measure-by-Measure Cumulative Sum of Ramp-Ups = ~340 aMW (130 aMW LO aMW NLO) Maximum Annual Rates from Conservation Supply Curves: Retrofit at <$70/MWh and Lost-Opportunity at <$120/MWH

Northwest Power and Conservation Council slide 27 Estimated Impact on “Regional Revenue Requirements” Assumptions: Assumptions: –2008 Regional Retail Electricity Sales Revenue = $11.4 billion –2008 Conservation Investments in Retail Sales Revenue = ~ $300 million (2.6%) –Utility Share of New Conservation Cost = 65% »Lost-Opportunity Resources = $3.0 million/aMW »Discretionary Resources = $2.6 million/aMW

Northwest Power and Conservation Council slide 28 Impact on Regional “Revenue Requirement”

Northwest Power and Conservation Council slide 29 Estimated Cumulative Impact on Regional “Revenue Requirement” to Achieve Proposed Conservation Targets

Northwest Power and Conservation Council slide 30 Comparison of 2010 “Targets” with Utility Projected Savings for 2008 and 2009

Northwest Power and Conservation Council slide 31 Preliminary Estimates of Expenditures & Budgets

Northwest Power and Conservation Council slide 32 Top Reasons Why We Have Never Been Better Positioned to Hit Targets 12) Sum of measure ramp rates >1200 MWa 11) 2008 actual is higher than 2010 proposed start 10) ~140 MWa/YR of non-CFL in 2008 w/o new measures 9) New measures & initiatives could add >100MWa/YR 8) Magnitude & acceleration of historic ramp up periods exceeds 6P ramp up 7) Exceed 5P targets by ~40% 6) Large budget ramp up 5) Proposed NEEA budget doubles 4) Poised for codes & standards 3) Tiered Rates 2) Some large utilities & ETO already have plans to exceed their “share” of targets 1) It matters more than ever

Northwest Power and Conservation Council slide 33 HPWH Ramp Rate Looked for comparable consumer product on which to base market growth Looked for comparable consumer product on which to base market growth So What - So What - –Has a higher efficiency, but cost 2-3 more –Was used in Europe and Asia, but “unknown” to US consumers and contractors –Has special installation (i.e., venting) requirements –Had a limited distribution network –Had to overcome prior less than “positive” consumer experience with earlier versions of the technology Answer - Instantaneous gas-fired water heaters Answer - Instantaneous gas-fired water heaters

Northwest Power and Conservation Council slide 34 National Instantaneous Gas- Fired Water Heater Sales

Northwest Power and Conservation Council slide 35 HPWH Ramp Rate vs. Instantaneous Gas-Fired Water Heater Market Growth

Northwest Power and Conservation Council slide 36 What Technology Could This Be? Plan Date Incremental Cost/Unit (nominal$) 20-year Savings Included in Plan 1983$ aMW 1986$1490 Not Cost-Effective 1989$ $ $ $ aMW

Northwest Power and Conservation Council slide 37 What Technology Could This Be? Plan Date Incremental Cost/House (nominal$) 20-year Savings Included in Plan 1983$ aMW 1986 No Estimate $36 24 aMW 1995$30 44 aMW 2004$ aMW