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New Generation Projects:New Generation Projects:Northwest IssuesNorthwest Issues

APPA New Generation WorkshopAPPA New Generation Workshop

August 1, 2007August 1, 2007

Kurt J. CongerKurt J. Conger

EXS, Inc.EXS, Inc.

kconger@nrgxs.comkconger@nrgxs.comEnergy Expert Services, Inc.Energy Expert Services, Inc.Kirkland, WAKirkland, WA

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Institutional DriversInstitutional Drivers

BPA Regional DialogBPA Regional Dialog Renewable Portfolio StandardsRenewable Portfolio Standards Greenhouse Gas RegulationGreenhouse Gas Regulation FERC Order 890FERC Order 890 NERC Reliability RequirementsNERC Reliability Requirements

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Resource Planning ChallengesResource Planning Challenges

Transmission System CongestionTransmission System Congestion Environmental OppositionEnvironmental Opposition Load Growth UncertaintyLoad Growth Uncertainty Fuel Price UncertaintyFuel Price Uncertainty Delays in BPA Regional DialogDelays in BPA Regional Dialog

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BPA Regional DialogBPA Regional Dialogand New Resourcesand New Resources

Current BPA wholesale power contracts expire Current BPA wholesale power contracts expire in 2011in 2011

Long-term tiered rate methodology adoptedLong-term tiered rate methodology adopted New Tier 1 contracts, based on the cost of New Tier 1 contracts, based on the cost of

existing system, will have a 20-year termexisting system, will have a 20-year term BPA Tier 2 product or non-Federal options for BPA Tier 2 product or non-Federal options for

new resourcesnew resources

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BPA Tier 1 Rate BasicsBPA Tier 1 Rate Basics

Take-or-pay purchase commitments in 2008Take-or-pay purchase commitments in 2008 HWM determines customer share of FBSHWM determines customer share of FBS

HWM = High Water Mark (derived from load HWM = High Water Mark (derived from load forecast)forecast)

FBS = Federal Base SystemFBS = Federal Base System Forecast of Net LoadForecast of Net Load 2010 True-up Based on Actual Load Net of 2010 True-up Based on Actual Load Net of

Non-Federal ResourcesNon-Federal Resources

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BPA Tier 2 Rate BasicsBPA Tier 2 Rate Basics

Power purchased from BPA beyond the HWM Rate set to fully recover BPA’s costs of securing

additional resources Customers can choose non-Federal power options

other than the BPA Tier 2 product Tier 2 Alternatives:Tier 2 Alternatives:

New RenewablesNew Renewables Default: portfolio of purchased power at market-based ratesDefault: portfolio of purchased power at market-based rates Vintaged: portfolio of long-term resources (10 year min)Vintaged: portfolio of long-term resources (10 year min)

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Renewable Portfolio StandardsRenewable Portfolio Standards

Washington I-937: Initiative 937 mandates that all Washington I-937: Initiative 937 mandates that all large utilities cover 15% of their energy load with large utilities cover 15% of their energy load with eligible renewable resources by 2020.eligible renewable resources by 2020.

Oregon SB 838: Oregon passed a renewable portfolio Oregon SB 838: Oregon passed a renewable portfolio standard (RPS) that will require the largest utilities in standard (RPS) that will require the largest utilities in Oregon to provide 25 percent of their retail sales of Oregon to provide 25 percent of their retail sales of electricity from renewable sources in 2025.  Smaller electricity from renewable sources in 2025.  Smaller utilities will have similar, but lesser, obligations.utilities will have similar, but lesser, obligations.

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Constrained Transmission PathsConstrained Transmission Paths

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Potential BPA CorridorsPotential BPA Corridors

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NWCPUD Case Study:NWCPUD Case Study:

Rapid Load GrowthRapid Load Growth BPA Regional DialogBPA Regional Dialog Two Powerplant Options ConsideredTwo Powerplant Options Considered

Energy Northwest PMECEnergy Northwest PMEC Intermountain Power Project #3Intermountain Power Project #3

May 15 Ballot ResultsMay 15 Ballot Results

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Comparison TableComparison Table

MetricMetric PMECPMEC IPP3IPP3

TechnologyTechnology IGCCIGCC SCPCSCPC

Plant CapacityPlant Capacity 630 MW630 MW 900 MW900 MW

EPC Cost (2006$/kw)EPC Cost (2006$/kw) $2,550$2,550 $1,815$1,815

Interest RateInterest Rate 5.25%5.25% 4.80%4.80%

Term (years)Term (years) 3030 3535

Capacity FactorCapacity Factor 92%92% 90%90%

Fuel Cost ($/MWh)Fuel Cost ($/MWh) 11.3111.31 14.5514.55

Cost of Electricity at Plant ($/MWh)Cost of Electricity at Plant ($/MWh) $50.00$50.00 $39.68$39.68

TransmissionTransmission $3.60$3.60 $13.23$13.23

Total Delivered Cost per MWhTotal Delivered Cost per MWh $53.60$53.60 $52.91$52.91

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Ballot ResultsBallot Results

““Voters spurn PUD coal planVoters spurn PUD coal plan”” 81% of voters opposed81% of voters opposed NWCPUD “recommendation was the best in NWCPUD “recommendation was the best in

terms of reliability and overall cost to the terms of reliability and overall cost to the customers”customers”

Voters provided clear direction that they Voters provided clear direction that they wanted other alternativeswanted other alternatives

Current challenge: adequate energy supply at Current challenge: adequate energy supply at an affordable price an affordable price

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Questions?Questions?

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