2013 Integrated Resource Plan. Supply-Side Resources (Utility-scale) Renewable Portfolio Standards Wind Integration Study Update August 13, 2012

Transcription

1 2013 Integrated Resource Plan Supply-Side Resources (Utility-scale) Renewable Portfolio Standards Wind Integration Study Update August 13,

2 Overview Utility-scale Supply-Side Resources Lunch Break (1/2 hour) 11:30 PT / 12:30 MT Renewable Portfolio Standards Wind Integration Study Update 2

3 Utility-scale Supply-Side Resources

4 Discussion Outline Background Data sources General assumptions Format changes since 2010 Resource Update and Overview New Coal Gas Renewables Geothermal Wind Solar Energy Storage Nuclear 4

5 Background Data sources Third-party performance and cost estimates Publicly available data Recent projects General assumptions 2012 dollars Capacities and costs adjusted to proxy site elevations Capital costs for brownfield sites Direct: EPC overnight construction costs, taxes, construction contingency, profit Owner s development costs: project management/engineering, emissions offsets, permitting, interconnections, capital spares, contingency Owner s costs: AFUDC, escalation, capital surcharge, property tax Format changes since 2010 Supply-Side Resources (SSR) Resource and Operating Characteristics, Costs, Environmental Additional attributes: water consumption 5

6 New Coal Resources Update New coal not considered a viable option Recent federal actions on new coal MATS: new coal mercury limit very low and unobtainable with current technology EPA is relooking at the regulation for new coal. NSPS GHG: new greenhouse gas regulation proposes CCS on new coal to achieve 1,000 lbs CO 2 /MWh limit Coal cost assumptions modified by the cost changes in CCCT plants First selection in 2025 for CCS on SCPC/IGCC 6

7 Gas Resources Update Black & Veatch prepared Engineer, Procure and Construct (EPC) capital cost estimates and performance data in 2012 O&M costs developed from third party sources SCCT frame F class exhibits greater economies of scale due to larger machine and more established technology; yields lower capital costs, relative to other SCCT options New J Class added (in 1x1) 18% higher capacity than 1x1 G 5% lower heat rate than 1x1 G 340 MW simple cycle 7

8 Gas Resources Update J Class Machine 8

9 Index Gas Resources Update: Price Trend 140 Gas Turbine World Equipment Price Trends (2012 GTW Handbook) Year of Order Simple Cycle Combined Cycle Price rebound since 2010 due to: inexpensive natural gas, stricter emissions regulations for coal plants, gradual economic recovery 9

10 Gas Resources: Performance and Cost Fuel Resource Elevation (AFSL) Net Capacity (MW) Base Capital ($/KW) Average Full Load Heat Rate (HHV Btu/KWh)/Efficiency Natural Gas Intercooled SCCT Aero x1 1, ,034 8,839 Natural Gas SCCT Frame "F" x1 1, ,950 Natural Gas IC Recips x 6 1, ,254 8,447 Natural Gas CCCT Dry "G/H", 2x1 1, ,013 6,773 Natural Gas CCCT Dry "G/H", DF, 2x1 1, ,135 Natural Gas CCCT Dry "J", Adv 1x1 1, ,495 Natural Gas CCCT Dry "J", DF, Adv 1x1 1, ,611 Natural Gas SCCT Aero x3 4, ,225 9,739 Natural Gas Intercooled SCCT Aero x1 4, ,127 8,867 Natural Gas SCCT Frame "F" x1 4, ,950 Natural Gas IC Recips x6 4, ,368 8,447 Natural Gas CCCT Wet "F", 2x1 4, ,118 6,666 Natural Gas CCCT Wet "F", DF, 2x1 4, ,901 Natural Gas CCCT Dry "F", 1x1 5, ,269 6,815 Natural Gas CCCT Dry "F", DF, 1x1 5, ,518 Natural Gas CCCT Dry "F", 2x1 5, ,174 6,738 Natural Gas CCCT Dry "F", DF, 2x1 5, ,482 Natural Gas CCCT Dry "G/H", 1x1 5, ,144 6,866 Natural Gas CCCT Dry "G/H", DF, 1x1 5, ,262 Natural Gas CCCT Dry "G/H", 2x1 5, ,132 6,743 Natural Gas CCCT Dry "G/H", DF, 2x1 5, ,105 Natural Gas CCCT Dry "J", Adv 1x1 5, ,056 6,495 Natural Gas CCCT Dry "J", DF, Adv 1x1 5, ,611 Natural Gas SO Fuel Cell 4, ,033 7,262 Natural Gas Intercooled SCCT Aero x1 6, ,189 8,867 Natural Gas SCCT Frame "F" x1 6, ,950 Natural Gas IC Recips x6 6, ,469 8,447 Natural Gas CCCT Dry "G/H", 2x1 6, ,174 6,743 Natural Gas CCCT Dry "G/H", DF, 2x1 6, ,105 Natural Gas CCCT Dry "J", Adv 1x1 6, ,091 6,495 Natural Gas CCCT Dry "J", DF, Adv 1x1 6, ,611 10

11 Renewable Resources Update Wind: near term turbine costs have declined due to decreased market demand combined with surplus manufacturing capacity Solar: includes thermal and photovoltaic Geothermal: updated based on geothermal resources study commissioned by Company in 2011 Capital cost estimates do not include tax incentives 11

12 Turbine Price (2010 $/kw) Renewable Resources Update: Wind Turbine Price Trends 2,000 1,800 1,600 1,400 1,200 1, [1]? Source: Lawrence Berkeley National Laboratory s 2011 report Understanding Trends in Wind Turbine Prices Over the Past Decade [1] Based on limited available data, may have dropped in

13 Renewable Resources Update: Wind Global increase in supply and drop in demand has had downward pressure on near term wind turbine prices Supply Side Forces Increase in manufacturing capacity during the past 10 yrs Foreign countries accused of dumping supply in the US Demand Side Forces Lower demand in the US due in part to uncertainty over future tax incentives and lower power market forecasts Lower demand outside the US 13

14 Renewable Resources Update: Wind Looking Forward to 2018 Potential Cost Pressures Lower turbine prices - Evolution in turbine design could benefit specific projects Stable turbine prices - Turbine supply could contract to match demand Higher turbine prices - If demand increases in the near term, prices could rise. Supply consolidation and/or supply chain dynamics could also result in upward price pressure. Possible bust-boom cycle for the industry over the next 5-10 years if demand stays low in the near term and then increases 14

15 Renewable Resources Update: Wind Transmission constraints hinder acquisition of new wind resources Evolution of turbine design could benefit specific projects Future permitting requirements could push costs upward Policy drivers and costs comparison to undifferentiated alternatives expected to be continued factors PacifiCorp expects slight rise in turbine prices that may be offset by site specific performance PacifiCorp is requesting input on verifiable performance information to inform the IRP process 15

16 Renewable Resources Update: Solar Photovoltaic Supply: excess capacity resulting in plummeting prices Demand: costs still not at grid parity Potential to reach wind cost parity in time frame? Short-term focus on PV Oregon 2011 Black & Veatch analysis on utility-scale solar projects Cost based at about $4,200/kW (all-in) Capacity factor at about 19% (Oregon Utah) Concentrating Solar Power Being undercut by PV pricing More sensitive to site characteristics that PV Site-specific, relative to PV Permitting challenges (size, location, view shed) Oregon: Utility-Scale Photovoltaic Requirement Black Cap 2 MW project nearing completion; 6.7 MW remaining 16

17 Renewable Resources Update: Geothermal Recommended by Utah in April 1, 2010 acknowledgement order: The Division recommends that the Company conduct a geothermal commercial potential study for geothermal energy using both Blundell technology and other alternative geothermal technologies. The study should evaluate greenfield projects in both PacifiCorp s east and west control areas. This study should be filed with the Commission for comments as soon as it is completed. Inasmuch as the Company does not currently have an estimate of the amount of economically developed geothermal resources in the states it serves, the Division recommends that the Company make this determination and include a description of all factor mentioned in the previously referred to in DPU data request 1.32e study identified 8 commercially viable sites The levelized cost of energy (LCOE) for these projects ranged from $46/MWh to $100/MWh 17

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19 Renewable Resources Update: Geothermal Utah recommended further study of projects in early stages of development PacifiCorp issued a request for information (RFI) to geothermal developers and hired Black & Veatch to evaluate responses and prepare a report 2011 report selected 6 sites with promise for PacifiCorp PHASE DEVELOPER PROJECT LOCATION MW TYPE Oski Energy Cove Fort Cove Fort, UT 15 Binary (Kalina) 2 Davenport Newberry Newberry Volcano Deschutes County, OR 15 Likely Binary /Flash EGS 1 Standard Steam Trust Newdale Newdale, ID Undef. Binary Ida-Therm Renaissance Honeyville, UT 100 Binary AltaRock Energy Buck Mountain Klamath Falls, OR 10 Dual Flash EGS 0 Surprise Valley Surprise Valley Hot Springs Modoc County, CA 2-5 Binary 19

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21 Renewable Resources Update: Geothermal Geothermal development has significantly higher upfront investment costs and initial project risk than wind or solar A minimum of approximately11% of total project cost is needed for geothermal confirmation (deep drilling, well testing and reservoir testing to confirm 25% of estimated generation capacity). Higher levels of well and resource capability certainty increase development costs Well failure rates can approach 20% Wind and solar confirmation costs are normally less than 1% of total project costs PacifiCorp will need an approved cost recovery mechanism to address dry-hole and well risk to pursue development of new geothermal resources 21

22 Energy Storage Update 2011 study conducted by HDR Engineering Pumped Storage Permitting and lead time Battery Storage Location analysis for utility installations Include storage at the generation location and/or at the load to optimize transmission cost and capacity Lithium-ion: small/expensive on a $/MWh basis Sodium-sulfur: larger/expensive/still in development Redox flow: small/unique applications/expensive Compressed Air Energy Storage (CAES) Flywheels: still in development 22

23 Energy Storage Update: Technology Share 23

24 Energy Storage Update: Proposed Pumped Storage 24

25 Energy Storage Flywheels and Batteries 25

26 Energy Storage: Performance 26

27 Energy Storage: Performance and Cost Beacon Power Flywheel A123 Li-Ion NGK NAS Prudent VRB Xtreme Dry Cell Premium ZnBr Pumped Storage CAES System Cost ($/kw and/or $/kwh) $600 per kw plus $1,600 per kwh (Sandia) $2,406 per kw (ARRA) $900 (High Power) $1,100 (High Energy) $4,000 per kw $644 per kwh $1,800-2,000 per kw $ per kwh plus $ per kw $1,500 - $3,000 per kw $1,400 - $1,700 per kw Rated System (MW) 20 1 (High Power) 89 (High Energy) , Rated Capacity (hrs) (High Power) 4 (High Energy) 7.2 max (standard discharge is 6) to to

28 Nuclear Resource Update Two options provided Advanced large reactor, similar to Vogtle Plant currently under construction by Southern Company in Georgia Westinghouse AP1000: 1,118 MW each Similar technology to what is currently being considered by Blue Castle near Green River, Utah 2025 Availability Small modular reactor (SMR) Self-contained, factory-built components Westinghouse 225 MW mpower 160 MW NuScale 40 MW Hyperion 25 MW (Use in the SSR Optimistic) 2030 Availability 28

29 RENEWABLE PORTFOLIO STANDARDS 29

30 Overview Renewable Portfolio Standards (RPS): A requirement on retail electric suppliers to supply a minimum percentage or amount of their retail load with eligible sources of renewable energy. Typically backed with penalties of some form Often accompanied by a tradable renewable energy credit (REC) program, to facilitate compliance Never designed the same in any two states 30

31 State Renewable Portfolio Standard Policies Source: DESIREUSA. ORG 31

32 Renewable Portfolio Standards - PacifiCorp Legislation Senate Bill 1078 (2002) Assembly Bill 200 (2005) Senate Bill 107 (2006) Senate Bill 2 First Extraordinary Session (2011) Requirement or Goal CA OR WA UT 20% by 2010 Average of 20% through % by December 31, % by December 31, 2020 and beyond Based on the retail load for that compliance period Senate Bill 838, Oregon Renewable Energy Act (2007) House Bill 3039 (2009) At least 5% of load by December 31, 2014 At least 15% by December 31, 2019 At least 20% by December 31, 2024 At least 25% by December 31, 2025 and thereafter Based on the retail load for that year Invest in 20 MW solar byjanuary 1, PGE, PacifiCorp and Idaho Power combined Initiative Measure No. 937 (2006) At least 3% of load by January 1, 2012 At least 9% by January 1, 2016 At least 15% by January 1, 2020 Annual targets are based on the average of the utility s load for the previous two years Senate Bill 202 (2008) Goal of 20% by 2025 (must be cost effective) Annual targets are based on the adjusted retail sales for the calendar year 36 month prior to the target year Adjustments for generated or purchased from qualifying zero carbon emissions and carbon capture sequestration and DSM 32

33 Eligible Technologies CA OR WA UT Anerobic Gas Biomass Fuel Cells (A) (A) (A) Geothermal Hydro (B) (C) (D) (E) Landfill Gas Municipal Solid Waste Ocean Thermal Photovoltaics Solar Thermal Electric Tidal Wave Wind (A) Fuel cells using only renewable fuels (B) Less than 30 MW in operation before 9/1/2002 and efficiency upgrades (C) Up to 50 amw per year Low Impact Hydro, efficiency upgrades after 1995, new hydro (D) Hydro efficiency upgrades after 1999 (E) Up to 50 amw per year low impact hydro, efficiency upgrades after 1995, any hydro facility located in state 33

34 Other RPS Criteria CA OR WA UT Geographic Eligibility WECC WECC Pacific Northwest WECC REC Products Types and Limitations Banking Credit Multipliers Alternative Compliance Cost Containment Product Content Category (PCC) 1, 2 and 3 PacifiCorp not subject to PCC limits RECs must be retired within 36 months Bundled Unbundled limited to 20% of Annual Target, unless from a QF Unlimited None 2x: Solar In Oregon, operational by 2016 Bundled Unbundled Eligible Renewable Generation RECs from prior, current and subsequent period may be used 1.2x: Apprentice Program 2x: Distributed Generation No Yes Yes Yes, in development 4% of Revenue Requirement 4% of Revenue Requirement Bundled Unbundled limited to 20% of Annual Target Unlimited 2.4x: Solar PV or Solar Thermal in Utah Unspecified; Defined Process Must be cost effective 34

35 RPS Modeling: IRP Process Update RPS modeling in prior IRPs Incremental renewables reflected in System Optimizer resource selection State & federal RPS requirements incorporated into the System Optimizer model as a system constraint System Optimizer RPS limitations (compliance flexibility, banking) were mitigated by other external assumptions/drivers System Optimizer portfolios were tested after the fact to confirm compliance was achieved when accounting for the rules specific to each state & assumed federal RPS Despite System Optimizer modeling limitations, external factors/assumptions contributed to sufficient renewable resources to achieve compliance (tax credits, gas prices, CO 2 cost assumptions) 2013 IRP modeling process Changes to external drivers (tax credits, gas prices, CO 2 cost assumptions) require an assessment of RPS compliance in advance of System Optimizer modeling to ensure compliance can be achieved Core scenarios will include a minimum level of RPS eligible resources that achieve compliance with known and assumed RPS requirements The RPS Scenario Maker will be used for this purpose 35

36 RPS Scenario Maker State Retail Load Forecasts RPS Rules (including REC Trading) RPS Scenario Maker Minimum RPS Compliance Resource Schedules Eligible Resource Options RPS resource schedules used to specify lower bounds on resource capacity selection; model allowed to select more. Will incorporate minimum schedules with and without Geothermal. Core Cases Sensitivities Improved detail on state and assumed federal RPS rules as compared to RPS modeling capabilities in the System Optimizer model Improved capability to test alternative RPS compliance strategies (i.e. use of unbundled RECs) Flexibility in evaluating resource allocation among states 36

37 Data Requirements/Overview Key inputs (State/System Specific Data) Retail sales forecast and associated annual compliance target in MWh Estimated bank balance in MWh (as applicable) Forecast volume of qualifying generation from existing resources in MWh User defined incremental resource additions Resource type, timing, size, location, state allocation Optimize use of compliance flexibility mechanisms specific to each state and assumed federal RPS programs Use of unbundled RECs Use of banked RECs (OR) and flexibility among multi-year compliance periods (WA and CA) 37

38 GWh GWh GWh GWh Illustrative Example: Start with no Incremental Resource Additions (Starting Position)* 12,000 10,000 8,000 6,000 4,000 2,000 0 Oregon RPS Compliance Outcome 1, Washington RPS Compliance Outcome Unbundled REC Surrendered Bundled Bank Surrendered Unbundled REC Surrendered Bundled Bank Surrendered Current Year Generation Surrendered Compliance Shortfall Current Year Generation Surrendered Compliance Shortfall Year-end Bundled Bank Balance Year-end Unbundled REC Bank Balance Year-end Bundled Bank Balance Year-end Unbundled REC Bank Balance Annual Requirement Bundled Bank Sales Annual Requirement California RPS Compliance Outcome 30,000 25,000 20,000 15,000 10,000 5,000 0 Federal RPS Compliance Outcome Unbundled REC Surrendered Bundled Bank Surrendered Unbundled REC Surrendered Bundled Bank Surrendered Current Year Generation Surrendered Compliance Shortfall Current Year Generation Surrendered Efficiency Surrendered Year-end Bundled Bank Balance Year-end Unbundled REC Bank Balance Compliance Shortfall Year-end Bundled Bank Balance Annual Requirement Year-end Unbundled REC Bank Balance Annual Requirement *Note: the data shown here is for illustrative purposes, and does not reflect the Company s actual compliance position. 38

39 Illustrative Example (Assume 400 MW of System Wind in Southeast WY in 2017 and 2018) INCREMENTAL RESOURCE INPUTS (MW) CF Incremental New West Situs Wind MW (East WY) 35.00% Incremental New West Situs Wind MW (OR) 29.00% Incremental New West Situs Wind MW (WA) 29.00% Incremental New OR Situs Wind MW (East WY) 35.00% Incremental New OR Situs Wind MW (OR) 29.00% Incremental New OR Situs Wind MW (WA) 29.00% Incremental New WA Situs Wind MW (East WY) 35.00% Incremental New WA Situs Wind MW (OR) 29.00% Incremental New WA Situs Wind MW (WA) 29.00% Incremental New CA Situs Wind MW (East WY) 35.00% Incremental New CA Situs Wind MW (OR) 29.00% Incremental New CA Situs Wind MW (WA) 29.00% Incremental New System Wind MW (East WY) 35.00% Incremental New System Wind MW (OR) 29.00% Incremental New System Wind MW (WA) 29.00% Incremental Total Resources can be added to test effect on RPS compliance Geographic location (East WY, OR, WA, etc.) State allocation (System, Situs Assigned) Spreadsheet structure allows flexibility in defining resource type, location, and allocation assumptions 39

40 Illustrative Example (OR): Compliance Calculation* OREGON RPS COMPLIANCE CALCULATIONS System Allocation Factor 25.6% 25.2% 25.2% 24.9% 24.5% 24.4% 24.2% 23.9% Annual Compliance Target (MWh) 675, ,000 2,100,000 2,105,000 2,110,000 2,115,000 2,120,000 2,700,000 Unbundled REC Cap (MWh) 135, , , , , , , ,000 Existing Qualifying Generation (MWh) 1,603,252 1,629,776 1,353,766 1,342,592 1,323,122 1,320,115 1,297,580 1,282,460 New West Situs Wind MW (East WY) New West Situs Wind MW (OR) New West Situs Wind MW (WA) New OR Situs Wind MW (East WY) New OR Situs Wind MW (OR) New OR Situs Wind MW (WA) New WA Situs Wind MW (East WY) New WA Situs Wind MW (OR) New WA Situs Wind MW (WA) New CA Situs Wind MW (East WY) New CA Situs Wind MW (OR) New CA Situs Wind MW (WA) New System Wind (East WY) , , , ,631 New System Wind (OR) New System Wind (WA) Annual compliance, and unbundled REC caps (as applicable) are tracked Expected annual output from existing qualifying resources, specific to each state, are shown for each year Allocated share of incremental new resource generation flows into each state compliance calculation (yellow highlight) *Note: the data shown here is for illustrative purposes, and does not reflect the Company s actual compliance strategy. 40

41 Illustrative Example (OR): Compliance Calculation Cont d* OREGON RPS COMPLIANCE CALCULATIONS Bundled Current Year Addition 1,603,252 1,629,776 1,353,766 1,342,592 1,387,000 1,683,087 1,892,161 1,869,091 Bundled REC Bank Balance 4,218,800 5,278,053 5,227,829 4,897,595 4,552,187 4,247,187 3,988,274 3,180,435 Unbundled REC Current Year Addition 0 1,000,000 1,000, Unbundled REC Bank Balance 0 864,000 1,444,000 1,023, , , Unbundled Surrendered 0 136, , , , , ,000 0 Bundled Bank Surrendered 675, ,000 1,680,000 1,684,000 1,688,000 1,692,000 1,942,000 2,700,000 Qualifying Generation Surrendered Compliance Shortfall Compliance Summary (GWh) Annual Requirement ,100 2,105 2,110 2,115 2,120 2,700 Unbundled REC Surrendered Bundled Bank Surrendered ,680 1,684 1,688 1,692 1,942 2,700 Current Year Generation Surrendered Compliance Shortfall Year-end Bundled Bank Balance 5,822 6,908 6,582 6,240 5,939 5,930 5,880 5,050 Year-end Unbundled REC Bank Balance ,444 1, The user can define unbundled REC purchases (green highlight), illustrative example shows 1,000,000 MWh in 2014 and 2015 Underlying formulae implement a banking hierarchy while considering constraints (i.e. unbundled REC limits) Banked unbundled RECs get used first (up to limit, as applicable) Current year unbundled RECs get used next (up to limit, as applicable) Banked bundled RECs get used next Current year bundled RECs are used next Any excess contributes to the bank balance for use in subsequent years Any shortfalls are tracked and reported *Note: the data shown here is for illustrative purposes, and does not reflect the Company s actual compliance strategy. 41

42 GWh GWh GWh GWh Illustrative Example: Compliance Outcome* 12,000 10,000 8,000 6,000 4,000 2,000 0 Oregon RPS Compliance Outcome 1, Washington RPS Compliance Outcome Unbundled REC Surrendered Bundled Bank Surrendered Unbundled REC Surrendered Bundled Bank Surrendered Current Year Generation Surrendered Compliance Shortfall Current Year Generation Surrendered Compliance Shortfall Year-end Bundled Bank Balance Year-end Unbundled REC Bank Balance Year-end Bundled Bank Balance Year-end Unbundled REC Bank Balance Annual Requirement Bundled Bank Sales Annual Requirement California RPS Compliance Outcome 30,000 25,000 20,000 15,000 10,000 5,000 0 Federal RPS Compliance Outcome Unbundled REC Surrendered Bundled Bank Surrendered Unbundled REC Surrendered Bundled Bank Surrendered Current Year Generation Surrendered Compliance Shortfall Current Year Generation Surrendered Efficiency Surrendered Year-end Bundled Bank Balance Year-end Unbundled REC Bank Balance Compliance Shortfall Year-end Bundled Bank Balance Annual Requirement Year-end Unbundled REC Bank Balance Annual Requirement *Note: the data shown here is for illustrative purposes, and does not reflect the Company s actual compliance position. 42

43 Summary The RPS Scenario Maker will be used to establish a renewable resource floor that will be input into the System Optimizer model The System Optimizer can select incremental resources above this minimum level (i.e. high gas, high CO 2, tax credit scenarios) The minimum renewable resource requirements will be developed consistent with other core scenario and sensitivity case attributes Transmission footprint Retail sales (load forecast sensitivities) Geothermal Wind & solar capacity factors RPS case definitions Sensitivity cases will be completed to explore alternative RPS compliance strategies 43

44 2012 Wind Integration Study Update

45 Agenda Correlation Analysis 30-Minute Sensitivity Result Company Tolerance Guidance Next Steps 45

46 Correlation Analysis In response to stakeholder concerns, the Company has further explored the issue of correlation between wind and load reserve components The relationship between load and wind errors was evaluated using simple linear regression Load deviations treated as the independent variable Wind Following evaluated as a function of Load Following Wind Regulating evaluated as a function of Load Regulating 46

47 Correlation Analysis East BAA, Following The trendline shows a weak relationship between wind and load following error in the East BAA Low r-square value (below 2%) suggest this relationship is not a predictor as a component of reserves application 47

48 Correlation Analysis East BAA, Regulating The trendline shows a weak relationship between wind and load regulating error in the East BAA Low r-square value (below 2%) suggest this relationship is not a predictor as a component of reserves application 48

49 Correlation Analysis West BAA, Following The trendline shows no relationship between wind and load following error in the West BAA Low r-square value (below 1%) suggest this relationship is not a predictor as a component of reserves application 49

50 Correlation Analysis West BAA, Regulating The trendline shows no relationship between wind and load regulating error in the West BAA Low r-square value (below 1%) suggest this relationship is not a predictor as a component of reserves application 50

51 Correlation Analysis - Failure Rates for Load, Load and Wind West East Load Only 2.53% 2.52% Add Wind 9.50% 11.28% Load and Wind 3.20% 2.75% Stakeholders requested comparison of the impact of calculating load and wind component reserves Studies performed using 2011 operational data backcast with reserves requirements at 97% tolerance For Load-only analysis: load following and regulating component reserves combined by RSS and evaluated against load-only forecast errors Add Wind: Wind generation forecast errors and requisite reserves demands were added, but no incremental reserves For Load and Wind analysis: all component reserves combined by RSS and evaluated against combined forecast errors These percentages are useful for evaluating the suitability of the method, but they do not represent operational outcomes. 51

52 30-minute Sensitivity Result 30-minute balancing market sensitivity Scheduling interval assumption reduced from hourly to half-hourly Self-supply of ramp reserves is assumed Following reserves are half-hour interval rather than hourly Wind Following forecast taken at ten minutes into scheduling interval Test Case result presented in Slide 28 of the June 20 th meeting Both calculations performed at 97% tolerance West East Ramp Total Scenario Test Case Industry movements toward sub-hourly scheduling Efforts of transmission service providers to develop and align business practices for sub-hourly scheduling FERC Order 764 requires sub-hourly service by September 2013 Multiple efforts looking at developing energy imbalance markets/tools As these efforts evolve, and it becomes evident sub-hourly scheduling can be used to meet reliability obligations, the Company will consider the effects on its reserve requirements Until that time, the Company will assume current scheduling practices in its planning activities 52

53 Company Tolerance Guidance The Company must be able to self-supply regulation reserves for wind and load events Any failure to provide sufficient regulation reserves could lead to disruption of services to customers Contingency reserves may not be applied to serve regulation reserves In the operational hour, the Company s system operators will meet reserve requirements without exceptions System Operators use observed data to adapt to current conditions Current weather conditions and forecasts Load and generation actual values and trends The L10 is a natural buffer on the system, and is published by NERC. East L10 = 47.88MW, West L10 = 33.41MW. Therefore, the Company will apply a 99.7% tolerance, net of the system L10 for each BAA, in its production cost studies: West East Ramp Total 97% % - L %

54 Next Steps Late August 2012 The Company will schedule a progress review meeting with TRC members to discuss wind integration study production cost results and IRP stakeholder comments Late August/Early September 2012 The Company makes available to IRP stakeholders draft 2012 WIS results Mid September 2012 IRP stakeholders can provide the Company and TRC with comments on the draft 2012 WIS results October 2012 The Company reviews and addresses IRP stakeholder comments, receives final comments from the TRC, and finalizes the 2012 WIS report 54

55 Public Process Activities

56 August-September 2012 Activities August 14 th Utah state stakeholder meeting August 24 th Conference call on distributed resource characterizations, (1-2 pm Pacific / 2-3 pm Mountain) August 31 st Stakeholder recommendations and comments on portfolio development cases due (please provide earlier if possible) September 10 th Targeting this date for distribution of portfolio development cases September 14 th Public Input Meeting will cover: Load forecast Load & resource balance Portfolio development case discussion and assumption details (environmental policy, price scenarios, etc.) Portfolio risk assessment 56