1 The Sustainability Network of Washington County January 27, 2010 Jason Eisdorfer Bonneville Power Administration

2 BPA Background  The Bonneville Power Administration is a federal agency based in the Pacific Northwest.  BPA markets wholesale electric power from 31 federal hydro projects in the Columbia River Basin, 1 nonfederal nuclear plant. About 1/3 of electric power used in the Northwest comes from BPA.  BPA also operates and maintains the majority of the high-voltage transmission in the US Pacific Northwest.  BPA’s service territory includes Idaho, Oregon, Washington, western Montana and small parts of eastern Montana, California, Nevada, Utah and Wyoming.

3 Climate Change is a prime mover  Climate change by any other name: energy security; clean energy; job growth, etc.  Two major implications of climate change: The policy responses to climate change at the international, national, regional & state levels. The physical implications in the NW: stress on salmon, sea-level rise, declining snowpack and changes in hydrology, stress on forests (Global Climate Change Impacts in the US –USGCRP)

4 Federal Drivers  Legislative ACES, Kerry-Boxer, Kerry-Graham-Lieberman, Cantwell? Some form of cap and trade/dividend Or more incrementally: federal RPS and subsidies  Executive EPA: Endangerment, Clean Air Act  Judicial 2 nd and 5 th Circuit rulings on nuisance suits

5 State Drivers  States fill the void if Congress fails to act  Existing state policies kick in: Renewable Portfolio Standards (*California), Emissions Performance Standards, energy efficiency, feed-in tariffs, California’s AB 32  States join the Western Climate Initiative

6 Cap and Trade in 12 Easy Steps  1. Set the cap. 2. Determine the rate of emissions decline. 3. Determine the covered sectors, the point of regulation, and compliance obligations. 4. Determine the covered GHGs and how emissions will be measured and monitored. 5. Create allowances equal to the amount of allowable emissions each year. 6. Determine how to distribute those allowances: either by auction and/or free allocation. 7. Set the market rules: who regulates; who get to participate; linkages with other C&T programs. 8. Consider cost containment mechanisms: offsets; banking and borrowing; price cap or market reserve, etc. 9. Determine what to do with auction revenues: to consumers; to energy efficiency programs; to R&D programs; to reduce the federal deficit. 10. If using offsets, create program that defines allowable offsets and how they are used for compliance. 11. Enforce. 12. Hope it works.

7 CO2 Allowance Cost Estimates from ACES

8 McKinsey Cost Curve

9 Physical Effects In the future, warmer temperatures would result in more winter precipitation falling as rain rather than snow in the Pacific Northwest  less winter snow accumulation,  higher winter streamflows,  earlier spring snowmelt,  lower summer streamflows (and less generation),  and higher summer temperatures (and increased A/C penetration) could increase summer peaking load.

10 Decreasing April 1 Snowpack April 1 snowpack (a key indicator of natural water storage available for the warm season) has declined throughout the Northwest. In the Cascade Mountains, April 1 snowpack declined by an average of 25 percent, with some areas experiencing up to 60 percent declines.

11 The Climate Change Challenge  Climate change is changing the business of electricity  State and federal policies will likely continue to promote increased energy efficiencynew renewable energy development transmission infrastructuresmart grid cleaner transportationlarge energy storage new technologies  Important Effects on BPA Hydrology (hydro generation) and Pacific Northwest loads Costs and market prices Integration of renewable resources and other technologies (ex. EV) GHG reporting compliance

12 BPA getting ready  Short term Executive Order 13514; GHG Reporting; existing state laws. Sustainability Team.  Medium term Climate change legislation/regulation; wind integration; energy efficiency; transmission expansion; market carries cost of carbon(?); resource tracking (Boardman) and planning  Long term Physical effects on hydrology; smart grid; EVs; storage; technology innovation.