1. Northwest Power and Conservation Council A Look At The Council’s Conservation Planning Methodology and Assumptions A Look At The Council’s Conservation Planning Methodology and Assumptions Tom Eckman Northwest Power and Conservation Council 2007 Bonneville Power Administration Utility Energy Efficiency Workshop May 17, 2007

2. Northwest Power and Conservation Council slide 2 Issue – Derivation of the 5 th Plan’s Conservation Goals Derived from Integrated Resource Planning Process Derived from Integrated Resource Planning Process –Analysis of Portfolio Cost and Risk across range of future conditions (750 futures tested) –Based on a range of future market prices –Accounts for “hedge” benefits of conservation »Non-lost opportunity: $5/MWh over forecast market prices »Lost-opportunity: $10/MWh over forecast market prices

3. Northwest Power and Conservation Council slide 3 5 th Plan Relies on Conservation and Renewable Resources to Meet Load Growth * * Actual future conditions (gas prices, CO2 control, conservation accomplishments) will change resource development schedule and amounts

4. Uncertainties Impact Supply Curves (And Foretell the IRP Results) Resource potential for generic coal, gas & wind resources shown for typical unit size. Additional potential is available at comparable costs.

5. Northwest Power and Conservation Council slide 5 Lost-Opportunity Supply Curves

6. Northwest Power and Conservation Council slide 6 Non-Lost Opportunity Supply Curve

7. Northwest Power and Conservation Council slide 7 PNW Portfolio Planning – Scenario Analysis on Steroids Portfolio Analysis Model

8. Northwest Power and Conservation Council slide 8 Number of Observations Cost for Future 2 Cost for Future 1 Analysis Test 1,000s of “Resource Plans” Against 750 Difference “Futures” 100001250015000175002000022500250002750030000 32500 Power Cost (NPV 2004 $M)-> Distribution of Cost for a Plan Cost = Average Cost Across All Futures

9. Northwest Power and Conservation Council slide 9 Risk and Expected Cost Associated With A Plan Likelihood (Probability) Cost = Average Cost Across All Futures 100001250015000175002000022500250002750030000 32500 Power Cost (NPV 2004 $M)-> Risk = Average Cost of “Worst Outcomes” (>90% threshold

10. Northwest Power and Conservation Council slide 10 Plans Along the Efficient Frontier Permit Trade-Offs of Costs Against Risk Least Risk Least Cost

11. Northwest Power and Conservation Council slide 11 A B C D Efficient Frontier Background

12. Northwest Power and Conservation Council slide 12 The Plan Calls for Accelerating Conservation Development Because it Reduces Cost & Risk

13. Northwest Power and Conservation Council slide 13 The Plan Calls for Accelerating Conservation Development Because Reduces Carbon Dioxide Emissions

14. Northwest Power and Conservation Council slide 14 Timing Matters – Three Conservation Deployment Schedules Tested

15. Northwest Power and Conservation Council slide 15 The 5 th Plan Calls for 700 aMW of Savings From 2005 - 2009

16. Northwest Power and Conservation Council slide 16 Annual Achievable Conservation Deployed Fifth Power Plan (Mean Deployment Schedule)

17. Northwest Power and Conservation Council slide 17 Issue: How Much is Achievable? How much of the identified conservation potential: How much of the identified conservation potential: –Can we expect to ‘achieve’ –Over what time frame?

18. Northwest Power and Conservation Council slide 18 Findings Empirical evidence supports Council’s forecast of achievable conservation potential Empirical evidence supports Council’s forecast of achievable conservation potential Council’s assumed near-term achievable acquisition rates are well supported and may be conservative Council’s assumed near-term achievable acquisition rates are well supported and may be conservative

19. Northwest Power and Conservation Council slide 19 Council Conservation Methodology Regional Act requires that resources are included in the plan if they are available: Regional Act requires that resources are included in the plan if they are available: –‘at an estimated incremental system cost no greater than that of the least-cost similarly reliable and available alternative’ This Establishes Three Screening Filters This Establishes Three Screening Filters –Technically Feasible –Economically Feasible –Achievable Potential

20. Northwest Power and Conservation Council slide 20 Achievable Potential Constraints Fifth Power Plan Non-Lost Opportunity Non-Lost Opportunity –Maximum of 120 Average Megawatts/year –85% of Economically Achievable over 20 years Lost-Opportunity Lost-Opportunity –15% of Economically Achievable Savings in first year increasing to 85% by 12-years –About 65% over 20 years –About 50% over 10 years

21. Northwest Power and Conservation Council slide 21 What Evidence Do We Have? Hood River Conservation Project Hood River Conservation Project Performance relative to 1983 Plan expectations Performance relative to 1983 Plan expectations Annual BPA & Utility Program Performance Annual BPA & Utility Program Performance

22. Northwest Power and Conservation Council slide 22 Evidence: Hood River Hood River Conservation Project Hood River Conservation Project 1982-84 experiment in Hood River County 1982-84 experiment in Hood River County Try to weatherize all electric-heated homes Try to weatherize all electric-heated homes Measures installed at no cost to participants Measures installed at no cost to participants Result: 85% Achieved Result: 85% Achieved –85% of Technically Feasible Residential Weatherization Savings Achieved Over 2 years

23. Northwest Power and Conservation Council slide 23 Evidence: Performance Relative to 1983 Plan Expectations New Residential and Commercial Construction (Model Conservation Standards) New Residential and Commercial Construction (Model Conservation Standards) Residential Appliances Residential Appliances Residential Water Heating Residential Water Heating Commercial Lighting Commercial Lighting Commercial HVAC Equipment Commercial HVAC Equipment Irrigation (kWh/acre) Irrigation (kWh/acre) Industrial Industrial

24. Northwest Power and Conservation Council slide 24 New Buildings & Equipment Compare 1983 MCS to what Happened 1983 Model Conservation Standards 1983 Model Conservation Standards –1983 MCS represent 1983 expectations for new buildings & equipment Compare 1983 MCS to historic: Compare 1983 MCS to historic: –Building codes –Appliance Efficiency Standards –Market Penetration

25. Northwest Power and Conservation Council slide 25 Lost-Opportunity Residential New Construction Council Goal 40% Improvement by 2002 (85% of 40% = 34%)

26. Northwest Power and Conservation Council slide 26 Regional Average Annual Space Heating Use of New Single Family Homes Constructed Between 1983 and 2002 Vintage Annual Use (kWh/sq.ft./yr) Percent of 1983 Use Improvement over 1983 19836.3100%0% 19865.588%12% 19895.486%14% 19924.064%36% 2001 (MCS) 3.759%41%

27. Northwest Power and Conservation Council slide 27 1983 Plan Forecast “0” Market Share of Energy Efficient Manufactured Housing

28. Northwest Power and Conservation Council slide 28 Residential Water Heating Use

29. Northwest Power and Conservation Council slide 29 Average Energy Use of New Refrigerators 1983 Plan Baseline 1983 Plan Achievable by 2002 Actual 2002 Use

30. Northwest Power and Conservation Council slide 30 Average Energy Use of New Freezers 1983 Plan Baseline 1983 Plan Achievable by 2002 Actual 2002 Use

31. Northwest Power and Conservation Council slide 31 Average Energy Use of New Dishwashers 1983 Plan Baseline1983 Plan Achievable by 2002 Actual 2002 Use

32. Northwest Power and Conservation Council slide 32 Average Energy Use of New Clothes Washers 1983 Plan Baseline1983 Plan Achievable by 2002 Actual 2002 Use

33. Northwest Power and Conservation Council slide 33 Commercial Lighting Power Density Codes Surpass 1983 MCS Building Type Lighting Power Density (Watts/sq.st.) 1983 Plan Target (MCS) Oregon2004 Washington 2004 Idaho and Montana Seattle 2004 Office1.51.01.01.01.0 Retail Stores 1.5 Varies 1.5+ Schools2.01.11.351.21.2 Warehouses0.70.50.80.80.5

34. Northwest Power and Conservation Council slide 34 Change in Lighting Power Density of Existing Buildings Audit Date Lighting Power Density (Watts/sq.ft.) Reduction in Lighting Power Density (%) All Buildings OfficesRetail OfficeRetail As found in 1987 1.51.61.9 As found in 2001 1.21.41.520%13%21%

35. Northwest Power and Conservation Council slide 35 Change in Fluorescent Lighting Efficacy 1983 - 2003

36. Northwest Power and Conservation Council slide 36 Commercial HVAC Equipment Efficiency Requirements System Type Capacity Under 65,000 Btu/hr Capacity 65,000 Btu/hr and Larger 1983 Achievable SEER Current Code Minimum SEER 1983 Achievable EER Current Code Minimum EER Air Cooled 7.8138.211.0 Evaporative or Water cooled 8.8149.214.0

37. Northwest Power and Conservation Council slide 37 Irrigation Sector Achievable Potential

38. Northwest Power and Conservation Council slide 38 Industrial Sector Achievable Potential 1983 Council’s forecast of achievable conservation potential was equivalent to about 6 percent of non-DSI industrial electric loads 1983 Council’s forecast of achievable conservation potential was equivalent to about 6 percent of non-DSI industrial electric loads Motors comprise approximately 60 percent of industrial energy use Motors comprise approximately 60 percent of industrial energy use – Federal minimum efficiency standards required 3 - 10 % improvement over 1983 efficiency levels for covered sizes

39. Northwest Power and Conservation Council slide 39 Other Documented Industrial Sector Efficiency Improvements 20 to 30 % improvement in multiple cold-storage facilities 20 to 30 % improvement in multiple cold-storage facilities 15 to 30 percent improvements in compressed air systems for many plants across different industries 15 to 30 percent improvements in compressed air systems for many plants across different industries 50 percent in improvement in lighting in manufacturing spaces with high ceilings; and, 50 percent in improvement in lighting in manufacturing spaces with high ceilings; and, industry-specific process changes in the range of 20 percent improvement. industry-specific process changes in the range of 20 percent improvement.

40. Northwest Power and Conservation Council slide 40 Ramp Rate Constraints Year-over-Year Change in Conservation Acquisitions Are Not Limiting

41. Northwest Power and Conservation Council slide 41 Why the 1983 “Achievable Potential” Forecast Was Important In 1983 lead times for construction of new generation (coal & nuclear) were 12-15 years In 1983 lead times for construction of new generation (coal & nuclear) were 12-15 years Average resource size ~ 1000 MW Average resource size ~ 1000 MW Therefore, if conservation resources were to offset the construction of new generation the Council needed to forecast “achievable savings” 12-15 years out Therefore, if conservation resources were to offset the construction of new generation the Council needed to forecast “achievable savings” 12-15 years out –Even if successful, “options” would only defer construction lead time by 5-7 years

42. Northwest Power and Conservation Council slide 42 Why It’s Less Important Today Lead time for new generating resources is 2-5 years Lead time for new generating resources is 2-5 years Average resource size ~ 250 – 350 MW Average resource size ~ 250 – 350 MW Ability to expedite (or delay) construction now greater Ability to expedite (or delay) construction now greater Issue is “near-term” ramp rate, rather than long term “maximum achievable” Issue is “near-term” ramp rate, rather than long term “maximum achievable”

43. Northwest Power and Conservation Council slide 43 Lack of Sustained Acquisition Program Activity Precludes Direct Comparison With 1983 Plan Forecast of Achievable Potential

44. Northwest Power and Conservation Council slide 44 End