1. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N Balancing an Over-Supply of Generation October 12, 2010 Public Meeting

2. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 2 Federal Columbia River Power System  The US Army Corps of Engineers and the Bureau of Reclamation operate the federal dams for multiple public purposes. Flood Control, irrigation, power production, navigation, recreation, fish protection (Endangered Species Act, Clean Water Act) Some purposes (such as system reliability, flood control and fish protection) take precedence over resource operations. Balancing these purposes can be challenging when there is insufficient operational flexibility at the dams to manage uncertainty in water supply or demand for power.  BPA’s Role Markets the power produced from the federal dams within the constraints and requirements for other river purposes Primary high-voltage transmission provider in the Columbia River Basin − BPA integrates new power sources into the transmission grid that request such service consistent with FERC open access policies. − Significant growth in wind power in the past few years is far in advance of regional load growth.

3. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 3 Background  While the water supply volume for the Columbia River has been below average for 10 of the past 11 years, generation oversupply can occur in even below average water years. Years in red had at least one week of non-fish spill at Grand Coulee and Chief Joseph in light load hours.

4. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 4 Background  Due to the inherent uncertainty in weather, the forecasted water supply volume can vary significantly over the course of a year. Yellow shaded areas mark periods when the forecast changed by 10 Maf or more within two months. If there is sufficient turbine capability and load, 10 Maf could be as much as 8200 MW-months of FCRPS generation in the Spring.

5. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 5 Weather Conditions in June 2010  Extremely wet and cool weather pattern dominated Pacific Northwest weather.  Most of the region saw precipitation amounts significantly above average.  In addition to precipitation, normal snow melt would have contributed between 3 and 7 1/2 inches across the basin, but the precipitation took an additional 1/2 to 3 inches of the snow pack with it.  Seattle/Portland/Spokane (BPA’s “load centers”) temperatures averaged 2.6 degrees below normal during this period. In June, below average temperatures implies below average loads.

6. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 6 Short-Term Forecasts  The combination of the natural weather-induced streamflows and the increased discharge at upstream reservoirs resulted in a significant increase in the “regulated” inflows into Lower Granite and Grand Coulee during this period.

7. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 7 Short-Term Forecasts  Combining the Columbia and Lower Snake pieces resulted in the following picture of “regulated” flows into McNary. The highest 7-day average McNary flows in this period was 355 kcfs. HYDSIM 70-year studies indicate that there is a 1-in-3 chance of reaching these levels of McNary flow for a month or longer.

8. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 8 FCRPS Spill  Total Dissolved Gas (TDG) High TDG levels can result in gas bubble trauma in fish (similar to the bends in divers). − Gas bubble trauma can also occur at lower TDG levels if the duration is long. − Installation of flow deflectors has reduced levels of TDG. Clean Water Act allows for spill levels up to 110% TDG.  TDG Waiver Process The Corps requests a waiver from Oregon and a criteria adjustment from Washington which allows greater levels of TDG in the system for Biological Opinion spill. − Biological Opinion spill occurs April – August on Lower Snake and Lower Columbia hydro project in order to improve fish passage. − The Corps routinely monitors TDG levels and adjusts the allowable spill accordingly. Appendix 4 of the annual Water Management Plan describes the method by which TDG levels are managed system-wide in the event of involuntary spill. − Grand Coulee and Chief Joseph are included  The FCRPS will be operated to meet the standards set forth in the Clean Water Act and any related waivers.

9. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 9 FCRPS Spill  Involuntary Spill Lack of turbine spill occurs when there are insufficient generating units available. − All lower Snake and lower Columbia projects (except for John Day and The Dalles) had lack of turbine spill that exceeded 120% TDG levels during this period. Lack of market spill occurs when there is a lack of power demand. − Occurred at Grand Coulee, Chief Joseph, Dworshak and the Willamette River projects at levels at or below 120% TDG during this period.  Between June 1 – 22, routine testing of migrating salmon smolts in the lower Snake and lower Columbia river determined minimal effects resulting from gas bubble trauma. However, in-river mortality is difficult to measure since effected fish would generally perish outside of the collection facility.

10. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 10 FCRPS Spill Reduction Actions - 1  Actions Taken by Federal Partners To Minimize System TDG Reduced generation of the Columbia Generating Station nuclear plant to the lowest level possible without risking its ability to return to full power. Cancelled or delayed non-essential generating unit outages and transmission control maintenance. Arranged to use 2 feet of flood control space at John Day Dam to reduce involuntary spill and prevent lower Columbia flooding. Shaped Hungry Horse and Dworshak dams’ generation as much as possible into heavy load hours. Coordinated with B.C. Hydro a 5 kcfs reduction at Arrow Dam.  Continued on next slide…

11. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 11 FCRPS Spill Reduction Actions - 2  Actions Taken by Federal Partners To Minimize System TDG, continued Reduced flows at Albeni Falls Dam as much as possible Reduced wind balancing reserves Lack of market spill at Grand Coulee, Chief Joseph, Dworshak and the Willamette River projects (more than 750,000 MWh over the whole month of June). BPA Power and Transmission coordination resulted in generation being moved around the system to minimize capacity reduction on intertie lines to California while maintaining transmission reliability. Disposed of over 73,000 MWh at zero cost for the month of June  Operationally, there was very little else that could have been done to manage system TDG levels.

12. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 12 Power Market Conditions  Mid-Columbia off-peak prices were negative June 9 – 14.  The California ISO reported that prices were as low as -20 $/MWh.

13. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 13 Power Market Conditions  BPA balancing authority generation significantly exceeded load in early June. Federal and non-federal resources are shown

14. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 14 Transmission Operations  Intermittent outages and reduced capacity on both AC and DC interties to California  Intermittent 25% derates on the Northern Intertie to British Columbia  Reductions in transmission availability limited BPA’s ability to find power demand and resulted in increased lack of market spill  BPA declared a “no touch” condition from June 11-14 for control system automation. No computer system updates or testing to ensure no interruption to transmission dispatcher computer systems.

15. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 15 Impacts of Wind Generation  Balancing Reserves Incremental (INC) reserves: Capacity that is reserved for when wind generation drops or falls below the schedule within an hour. Decremental (DEC) reserves: Generation above minimum that is reserved for when wind generation increases or is above the schedule within an hour. Administered by BPA’s Dispatcher Standing Order (DSO) 216 − For June 2010, these reserve amounts were 850 MW INC and 1050 MW DEC. − If wind generation goes beyond these levels in either direction, wind generators are instructed to reduce their output or schedules are curtailed. − BPA informed wind project owners that there may be times when the amount of balancing reserves made available may need to be reduced to meet reliability or high priority hydro operational requirements.

16. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 16 Impacts of Wind Generation  Balancing Reserves Because of concern about exceeding system TDG levels, BPA reduced balancing reserves − Approximately 75 hours of DEC reserve reductions and 1 hour of INC reserve reduction − Reducing DEC reserves allowed the FCRPS to generate at higher levels during wind ramps and had a minor impact on lack of market spill In hindsight, a more effective way to manage system TDG levels may be to reduce the amount of INC reserves − This would have allowed for the potential to increase on-peak hydro generation, thus decreasing spill BPA balancing authority wind data

17. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 17 Impacts of Wind Generation  Resources Competing for Load Thermal resources will generally displace at an energy price that is equal to-or-less than their fuel cost. − However, there may be other reasons for thermal resources to run during these conditions, such as for voltage support, regulation or balancing reserves. Some wind resources receive production tax credits (PTC) and renewable energy credits (REC) based on the output of the wind. − The energy price to displace a resource receiving these credits is negative, meaning that the seller of power would have to pay the wind resource owner to be displaced. If the growth of wind generation exceeds the pace of load growth net of conservation, conditions such as this may become more frequent absent additional transfer capability.

18. B O N N E V I L L E P O W E R A D M I N I S T R A T I O N 18 Conclusions  Some purposes (such as system reliability, flood control and fish protection) will continue to take precedence over resource operation.  The Northwest federal hydropower system succeeded in managing through two weeks of oversupply to minimize effects from gas bubble trauma for endangered and threatened fish in the Columbia River system.  Lower Columbia flows conditions like those experienced in June 2010 are not rare in the Spring (1 in 3 probability).  Minimizing the amount of TDG in the system will get more difficult as additional resources compete for load and as additional balancing reserve obligations decrease the flexibility of the hydro and thermal resources.  Additional policies and protocols need to be developed to assure FCRPS’ ability to comply with environmental mandates while at the same time allowing reliable and equitable power production in the BPA balancing authority area.