relationship of regional resource adequacy standards to utility planning pnw resource adequacy...

Relationship of Regional Resource Adequacy

Standards to Utility Planning

PNW Resource Adequacy Steering Committee Meeting

June 27, 2007

June 27, 2007 Resource Adequacy Steering Committee Meeting

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Objectives

• Show the connection between regional resource adequacy standards and utility planning.

• Must not “trample on the jurisdiction of states

or prerogatives of individual utilities in planning and acquiring resources to meet load.”


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Steering Committee’s Charge

• Develop a simple “rule of thumb” process to convert regional energy and capacity targets into useful values for utilities.

• Utilities can use this process as a general screening tool but will continue to use their own methods to develop resource plans.


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Regional Energy Adequacy Standard

• Based on a 5% winter energy LOLP

• Resources = average annual load• Assuming adverse hydro conditions• Out-of-region market supply and• In-region market supply (uncontracted IPP,

non-firm hydro)


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Regional Capacity Adequacy Standard

• Based on a 5% capacity LOLP • Resources = avg peak load + reserve margin

• Assuming adverse hydro conditions and• In-region and out-of-region market supply

• Reserve margin covers• Operating reserves• Extreme temperature events• Other contingencies


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Developing a Rule-of-Thumb Process

• Need to take into account dependence on• Non-firm hydro and hydro flexibility• Out-of-region winter market supply • In-region market supply

• A utility will be energy or capacity constrained depending on its resource mix


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Binding Constraint

EnergyEnergy

EnergyEnergy

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CapacityCapacity

Hydro/Thermal Mix

100% Hydro100% Hydro

100% Thermal100% Thermal

Region

Binding Constraint as a function of

Resource Mix


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Simple Example:100% Thermal Utility

• Annual load = 1,000 MWa

• Peak single-hour load = 1,600 MW

• Winter capacity reserve = 25% or 400 MW• 7% operating reserves• 15% reserves for extreme temp• 3% reserves for other contingencies


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Simple Example:100% Thermal Utility

• Capacity target = 2,000 MW

• Energy target = 1,000 MWa

• Capacity-constrained

• Resource planning focuses on the capacity target


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Form for a “Rule-of-Thumb” Method• Determine reliance on non-firm/uncommitted

resources• Non-firm hydro and hydro flexibility• In-region and out-of-region market supplies

• Energy standard: • Resources = annual average load

• Capacity standard: • Resources = avg peak load + reserve margin


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Non-firm/Uncommitted Regional Resources

Capacity• Out-of-region market

• 3,000 MW winter• None in summer

• Hydro flexibility• 2,000 MW winter• 1,000 MW summer

• Uncontracted IPPs• 3,000 MW winter• 1,000 MW summer

1,500 MWa(from LOLP)

2,500 MWa(revised)

Energy


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Current Assumptions forthe Regional Energy Standard

• Existing uncontracted in-region IPP generation (2,500 MWa, revised)

• Other non-firm/uncommitted resources (1,500 MWa, derived from the LOLP analysis):

– Out-of-region winter market – Hydro flexibility & non-firm hydro

• Non-firm/uncommitted resources = 4,000 MWa or about 18% of the regional load

• If sum of regional firm resources ≥ 82% firm load, then enough resources to “keep lights on”


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Non-firm/Uncommitted Resources for Utility Planning

• Utility decides on % of non-firm/uncommitted resources based on its risk mitigation strategy, or other methods

• In lieu of the above, a very rough estimate:• In-region Market = Regional total * Load share• Out-of-Region Market = Regional total * Load share• Non-firm hydro = Regional total * Hydro share

• Utility is “physically adequate” if:• Resources = annual average load• Resources = avg peak load + reserve margin


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Caveats to “Rule of Thumb” Process

• Utilities need to make their own decisions regarding their risk tolerance for non-firm/ uncommitted resources in their portfolio mix in coordination with their regulators/ local boards

• The Forum process determines a minimum level of physical resource adequacy, but does not address the risk to high electricity prices


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WECC Single-Hour Capacity Reserve Margin


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WECC Single Hour Reserve Margin Targets 1/

1/ Approved at June 2007 WECC PCC Meeting

relationship of regional resource adequacy standards to utility planning pnw resource adequacy...

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