1. Portfolio Analysis Mike Hopkins
Senior Manager, Price Risk & Resource Planning

2. What is Portfolio Analysis?
Evaluation of different groupings of demand-side and supply-side resources to meet load forecast
Considers both energy and capacity requirements
Enables assessment of tradeoffs between different portfolios
How do the different portfolios perform under changing conditions?
Enables selection of preferred portfolio to meet the objectives
FBC directed to do portfolio analysis in BCUC acceptance of LTRP

3. Portfolio Analysis Process
1. Load-Resource Balance
Energy Gaps
Capacity Gaps
2. Develop Feasible Resource Options
3. Identify Uncertainties & Risks
(Load, DSM, Market, Resources)
4a. Develop Base Portfolio
5. Evaluate Portfolios
A portfolio is a set of resources that specifies: Which resources to acquire? When each resource is acquired?
Portfolio analysis is a process to develop portfolios, analyze their performance, and select the preferred portfolio
The process uses both Quantitative modeling techniques (mathematical programming, probabilistic analysis, excel-based tools developed in-house for cost saving and transparency purposes) and Qualitative judgments
Base Portfolio would be determined by lowest cost NPV
Alternative portfolios would be based on consideration of cost, environmental or other factors
For example, one portfolio could include nat gas while another might just include clean or renewable resources
-In step 1, we consider LRB before any DSM
-In step 2, we pre-screen resource options and include both demand and supply-side resources (cost-effective DSM is usually a preferred resource for meeting the objectives and is almost like a default resource) – e.g. we may not need large capacity resources like PHS or large hydro dam projects
-In step 3, we examine uncertainty/risks with both existing (e.g. our generation and water mgmt) and future resources (e.g. solar costs or gas prices for gas gen)
-Step 4 and 5 assumes expected forecast
-Step 5 includes evaluation based on objectives – e.g. cost-effective, environmental, technical/size/flexibility – also includes PRM to see if the portfolios meet the PRM criteria (e.g. some gas-fired gen with forced outage rates may not meet PRM requirements) –
-we will also evaluate rate impacts on customers of the different portfolios
-Step 6 includes contingency risk analysis for the preferred portfolio – e.g. “what if” scenarios
4b. Develop Alternative Portfolios
6. Preferred Portfolio 2

4. Portfolio Analysis Technical Financial Environmental Social/Economic
Consideration of Resource attributes:
Technical
Financial
Environmental
Technical – baseload, peaking, intermittent, how resources fit our load requirements
Financial – e.g. capital and operating costs, avoided transmission cost
Environmental – e.g. GHG emissions – we may rank resource options using high, med, low
Social/Economic – i.e. contribution to economy (e.g. GDP, employment, government revenue) – this may be more qualitative than quantitative
Social/Economic

5. Portfolio Analysis – Base Portfolio
Assumptions of the base portfolio:
Base case load forecast (before DSM & Other Savings)
Base case DSM & Other Savings
Current carbon tax
Mid electricity price
Mid gas price
Continued access to market purchases
93% clean or renewable resources
CEA objective relating to 93% clean or renewable applies to BC Hydro or a prescribed utility
CEA self-sufficiency objective is specific to BC Hydro (BC Hydro to be self-sufficient by 2016) and states that other public utilities should consider self-sufficiency - FBC considers this more of a LT objective - while there is currently low-cost market electricity supply, there may be risks with LT reliance on market supply as noted in FBC 2012 LTRP

6. Portfolio Analysis – Alternative Portfolios
Possible alternative portfolios:
Self-sufficiency (no market supply)
100% market reliance
More conservative DSM
No 93% clean or renewable requirement
Flexible termination of BCH PPA
More aggressive DSM
100% clean or renewable resources

7. Portfolio Analysis Criteria to evaluate portfolios:
Economics (cost, rate impacts)
Self-sufficiency
Environment (e.g. GHG emissions)
Clean or renewable
Resource adequacy (LOLE target)
Portfolio evaluation: Score or ranking
Sensitivity analysis: e.g. high/low electricity/gas/carbon prices
Contingency analysis on the preferred portfolio:
e.g. high/low gaps

8. Questions?