1. Sixth Northwest Conservation & Electric Power Plan Draft Wholesale Power Price Forecasts Maury Galbraith Generating Resource Advisory Committee Meeting Portland, Oregon March 19, 2009 Northwest Power and Conservation Council

2. 2 Northwest Power and Conservation Council Outline 1.Mid-Columbia Wholesale Power Price Forecast 2.Supply and Demand Fundamentals – WECC Resource Expansion – PNW Resource Expansion 3.Sensitivity Cases Forecasts

3. 3 Northwest Power and Conservation Council Historic Mid-C Average Monthly On- and Off-Peak Prices Source: IntercontinentalExchange (ICE)

4. 4 Northwest Power and Conservation Council Forecast Mid-C Average Annual Prices

5. 5 Northwest Power and Conservation Council Forecast PNW Natural Gas Prices

6. 6 Northwest Power and Conservation Council Market Fundamentals Model Market Price Determined by Supply and Demand Hourly Market Price Based on Variable Cost of the Last Resource Used to Satisfy Demand

7. 7 Northwest Power and Conservation Council WECC Load & Resource Balance – Energy Economic Dispatch Basis Under Average Hydro Conditions Supply Equals Demand

8. 8 Northwest Power and Conservation Council WECC Incremental RPS Energy by State “Forced” Resource Additions

9. 9 Northwest Power and Conservation Council WECC Incremental RPS Energy by Technology Tend to be “Low” Variable Cost Resources

10. 10 Northwest Power and Conservation Council WECC New AURORA Resource Energy by Technology

11. 11 Northwest Power and Conservation Council Cumulative RPS and AURORA Resource Additions in 2030 Model Tends to Add NG Resources to Meet Area Reserve Margin Targets

12. 12 Northwest Power and Conservation Council WECC Load & Resource Balance – Capacity Coincident Peak (Summer) Building to each Area’s Reserve Margin Causes “Over-build”

13. 13 Northwest Power and Conservation Council PNW Load & Resource Balance – Capacity Winter Sustained Peaking Capacity and 18% Reserve Margin Model Builds to Winter Peak

14. 14 Northwest Power and Conservation Council PNW Load & Resource Balance – Capacity Summer Sustained Peaking Capacity and 35% Reserve Margin Model Does Not Build to Summer Peak

15. 15 Northwest Power and Conservation Council PNW Load & Resource Balance – Energy Economic Dispatch Basis Under Average Hydro Conditions Model Result: Economic to Rely on Other Zones

16. 16 Northwest Power and Conservation Council Fundamentals Summary Incremental RPS resources primarily provide energy Model tends to add resources with high capacity value to meet reserve margin targets Modeling reserve margin targets for multiple zones tends to result build-out of under-utilized capacity PNW Pool is capacity deficit later than other zones Overall energy result is that the PNW can economically access under-utilized resources in neighboring zones This is NOT a power plan Considering applying reserve margin target to three pools: (1) PNW; (2) CAISO; and (3) all other zones

17. 17 Northwest Power and Conservation Council Annual CO 2 Emission Prices

18. 18 Northwest Power and Conservation Council Impact of CO 2 Emission Price Scenarios on Mid-C Wholesale Power Price Forecast

19. 19 Northwest Power and Conservation Council PNW Annual CO 2 Emissions by Scenario

20. 20 Northwest Power and Conservation Council Conclusions Mid-Columbia wholesale power prices increase from $45/MWh in 2010 to $85/MWh in 2030 (Base Case) Significant uncertainty due to underlying fuel price and CO 2 emission price uncertainty Significant reductions in PNW power system CO 2 emissions with: –$7/MMBtu natural gas price and $86/ton CO 2 emission price; or –$4/MMBtu natural gas price and $43/ton CO 2 emission price

21. 21 Northwest Power and Conservation Council Major AURORA Updates Reduction in the number of load-resource zones used to model the Western Interconnect  Updated transmission links between the modeled load-resource zones Updated demand forecasts for each of the load-resource zones Updated fuel price forecasts for each of the zones Updated hydro condition modeling for the Northwest zones Updated inventory of existing generating resources in each of the zones Updated estimates of future Regional Portfolio Standard resource development by zone Updated inventory of candidate resources for future development by zone  Improved dispatch parameters for combined cycle combustion turbines Updated carbon dioxide price forecasts