D R A F T. SNOHOMISH COUNTY PUD NO Integrated Resource Plan through 2037

Transcription

1 D R A F T SNOHOMISH COUNTY PUD NO Integrated Resource Plan 2018 through 2037 March 23, 2018

2 SNOHOMISH PUD DRAFT 2017 IRP, Rev TABLE OF CONTENTS 1 EXECUTIVE SUMMARY SECTION 1-1 GUIDING PRINCIPLES FOR 2017 IRP 2 LOAD RESOURCE BALANCE 2 HIGHLIGHTS OF THE 2017 IRP IRP SCENARIOS 6 WINTER ON-PEAK CAPACITY NEED 7 LONG TERM RESOURCE STRATEGY 9 PROPOSED ACTION PLAN 13 2 WHO WE ARE SECTION 2-1 LOAD GROWTH 2 CURRENT TRENDS 2 HISTORICAL PERSPECTIVE 3 OVERVIEW OF THE PUD S PORTFOLIO 5 3 PLANNING ENVIRONMENT SECTION 3-1 PUD S STRATEGIC PRIORITIES 1 THE ECONOMY PUGET SOUND AND BEYOND 2 ELECTRIC INDUSTRY INITIATIVES AND EFFORTS 2 ENERGY POLICY & REGULATORY REQUIREMENTS 7 FEDERAL COLUMBIA RIVER POWER SYSTEM 15 4 SCENARIOS AND PLANNING ASSUMPTIONS SECTION 4-1 SCENARIOS 1 SENSITIVITIES 6 LOAD FORECASTS 6 PLANNING ASSUMPTIONS 10 5 ANALYTICAL FRAMEWORK SECTION 5-1 IDENTIFYING FUTURE RESOURCE NEED 1 PROBABILISTIC ANALYSIS OF EXISTING LOAD RESOURCE BALANCE 2 PLANNING STANDARDS 5 RESOURCE OPTIONS 7 RESOURCE MODELING ASSUMPTIONS 22 OVERGENERATION EVENTS 23 UNBUNDLED RENEWABLE ENERGY CREDITS 23 DEVELOPING INTEGRATED PORTFOLIOS 26 i

3 SNOHOMISH PUD DRAFT 2017 IRP, Rev PORTFOLIOS AND PROPOSED LONG TERM RESOURCE STRATEGY SECTION 6-1 PORTFOLIO DEVELOPMENT 1 PORTFOLIO FINDINGS 3 PORTFOLIO RESULTS 4 DETERMINATION OF THE PROPOSED LONG TERM RESOURCE STRATEGY 12 PROPOSED LONG-TERM RESOURCE STRATEGY 15 7 KEY INSIGHTS AND PROPOSED ACTION PLAN SECTION 7-1 KEY INSIGHTS 2 PROGRESS ON 2015 IRP ACTION ITEMS 13 PROPOSED 2017 ACTION PLAN 14 APPENDICES (NOT ATTACHED TO THE DRAFT PDF DOCUMENT) Appendix A: Probabilistic Load Resource Balance Model & Determining Need Appendix B: Portfolio Optimizer Model Appendix C: Portfolio Results for Scenarios & Sensitivities Appendix D: <PLACEHOLDER> 2017 Conservation Potential Assessment (CADMUS Report) Appendix E: Avoided Costs for Conservation Methodology Appendix F: Glossary i

4 Section 1: Executive Summary 1 EXECUTIVE SUMMARY Integrated resource planning is a comprehensive process that considers how a utility will meet its objective to provide reliable electric service to its customers at the lowest, reasonable cost under a variety of futures. This process must also consider the risks and uncertainties inherent in a rapidly changing and complex industry. To achieve this objective, a range of alternatives are considered. Accordingly, an integrated resource plan (IRP) must be flexible and allow the utility to adapt to changing circumstances, without adverse financial impacts. 1 Key elements in an IRP include: 1. A variety of futures or scenarios the utility could face; 2. An analysis of the utility s existing and committed resources under each scenario to determine the potential range of future energy and capacity needs; 3. The types of demand- and supply-side resources considered to be reliable and commercially available over the study period to meet future need; 4. Candidate portfolios that identify the mix of resources to meet future energy and capacity needs by scenario, based on lowest reasonable cost criterion; 5. A selected portfolio or resource strategy that best positions the utility to meet future needs; and 6. A near term action plan with steps the utility can take to implement the plan over the next two to four years. The PUD s 2017 IRP covers the 20-year planning horizon of 2018 through Revised Cod of Washington, Chapters and prescribe the statutory requirements of an integrated resource plan Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-1

5 Section 1: Executive Summary Guiding Principles for 2017 IRP The guiding principles for the PUD s 2017 IRP effort were to: 1. Meet load growth first by pursuing all cost-effective conservation; 2. Understand the probabilistic range of available energy and capability from the PUD s existing and committed resources and the overall impact on the load resource balance across the 20-year study period; 3. For future load growth not met by the PUD s existing/committed resources and new conservation acquisitions, pursue clean, renewable resource technologies. However, planning must take into consideration resource options that provide the optimum balance of environmental and economic elements Comply with all applicable Board policies, regulations, state laws and established IRP planning standards; and 5. Preserve the PUD s flexibility to adapt to changing conditions.. Load Resource Balance Under the 2017 IRP planning assumptions for the PUD s existing and committed resources, 3 the PUD expects it will remain in a surplus average annual energy position across the 2018 to 2037 study period, after the acquisition of new cost-effective cumulative conservation. This remains true for all 2017 IRP scenarios, except for the High Growth Load scenario. Figure 1-1 shows the PUD s 2016 actual monthly load and generation from its existing and committed resources. 2 The Board of Commissioners adopted its Climate Change Policy and Strategies in March Full text available at 3 The 2017 IRP has assumed a subsequent BPA long-term power supply contract for the post-2028 period. See Section 5 for planning assumptions for the BPA power supply contract. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-2

6 amw Section 1: Executive Summary Figure Actual Snohomish PUD Load and Existing and Committed Resources (by Month, in amw) 1,200 1, Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec BPA Slice BPA Block Market Purchases Wind Other Renewables PUD-Owned Hydro PUD System Load The PUD is a winter peaking utility that experiences its peak customer demand during the onpeak periods in the winter months of November through February. The highest customer demand typically occurs in the month of December. The PUD s highest recent peak winter demand occurred in December 2008 at 1560 MW, which is more than double the 2016 actual average annual system load of 748 amw. The PUD s all-time summer peak occurred in July 2009 at 946 MW. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-3

7 Section 1: Executive Summary Highlights of the 2017 IRP Two significant elements in the 2017 IRP analysis were the probabilistic analysis of the PUD s load and its existing and committed resources, and revisions to the planning standards and the associated metrics used to measure resource need. Two new planning standards based on the probabilistic analysis were used to measure the PUD s future capacity need during the on-peak hours of its historically most deficit month and most deficit week, across the 20-year study period. In this way, candidate portfolios were developed to satisfy the PUD s two most deficit periods, 19 out of 20 times. 4 Other highlights include: New energy efficiency and conservation is the single largest resource addition for every portfolio for each scenario. Conservation is estimated to serve 74% of the PUD s future load growth, 5 resulting in the PUD having no annual energy need over the 2018 through 2037 study period under average hydrological conditions, except under the High Growth scenario. 6 The need for winter on-peak capacity drives future resource additions in all scenarios. Short-term and long-term capacity resources 7 that are dispatchable, are needed to augment the PUD s owned and contracted resources to provide seasonal load and peak matching, and ensure the PUD s winter planning standards are met 19 out of 20 times; load and peak matching resource additions resulted in the lowest cost portfolios. The PUD will continue to meet its Washington state annual renewables requirement through a combination of renewable energy credits (RECs) from contracted for renewable resources, 4 Section 5, Analytical Framework, details probabilistic modeling of the PUD s loads and its existing and committed resources used in the 2017 IRP analysis and the established planning standards. 5 The amount of economic achievable potential identified over the 20 year study period as a percent of total resource need under the Long Term Resource Strategy. 6 After new conservation additions, the PUD forecasts no average annual energy need through 2037 unless 1) poor hydrological conditions occur/persist; 2) there is a fundamental change in Federal hydro operations that affect the PUD s long term BPA power contract; 3) the post 2028 BPA products differ from existing product offerings. 7 A dispatchable capacity resource refers to a generator or source of electricity that can be turned on or off, or otherwise adjusted up or down as needed ( dispatchable ) at the request of power grid operator or plant owner. The fastest plants to dispatch are hydroelectric projects with storage and natural gas. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-4

8 Section 1: Executive Summary incremental hydro, and RECs allocated through the BPA long-term contract. Given the PUD s forecast surplus annual energy position under average water conditions, procuring some portion of compliance RECs from third parties in the post-2020 period was identified to be the most cost effective way to meet renewables requirements at this time. 8 The climate change analysis showed impacts to both the PUD s existing resources and its future resource needs. With changes expected to regional precipitation and temperature patterns over time, winter needs are expected to gradually decline as a result of increased hydro production during the November through February period, while summer needs are expected to increase over time as a result of warmer temperatures and increased summer air conditioning load, and declines in spring and summer hydro productiondue to reduced snowpack. 9 The timing and scale of carbon costs in each scenario affected the forecast market price and the fuel costs for certain supply side resource options available to the candidate portfolios. The higher the level of carbon pricing, the further up the conservation supply curve (cost) the model acquired. In general, the larger the amount of total new cumulative conservation found to be cost effective for the portfolio, the later in the study period new supply-side resource addition occurred, and the addition was typically smaller in size. In the event of an unanticipated need for generating resources, the 2017 IRP identified numerous commercially available and reliable resources. If and when a new resource addition is determined to be needed, the PUD would perform a thorough due diligence review, and conduct a comprehensive economic evaluation for a site specific resource. 8 The 2017 IRP Action Plan contains an action item to develop a least cost approach to meet its annual state renewables requirement, including monitoring applicability of the no load growth and financial cost cap methods, as well as procuring RECs from third parties for eligible renewable resources situated in Washington, Oregon and Idaho. 9 The Climate Change analysis is based on regionally downscaled data consistent with Representative Concentration Pathway 4.5 of the UN Intergovernmental Panel on Climate Change s Fifth Assessment Report (2014). Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-5

9 Section 1: Executive Summary 2017 IRP Scenarios The 2017 IRP utilized five scenarios that considered the range of possible futures the PUD could face for the 2018 through 2037 study period. Figure 1-2 below summarizes the primary socio-economic drivers considered by the five scenarios evaluated in the 2017 IRP analysis: 10 Primary Socio-Economic Drivers Low Load Growth Figure 1-2 Snohomish PUD s 2017 IRP Scenarios Business as Usual with No Carbon (BAU) Business a-usual with California Carbon in 2022 High Load Growth Climate Change Avg Load Growth 0.5% 1.1% 1.1% 2.3% 1.0% Natural Gas Price ($/MMBtu) Electricity Prices 11 ($/MWh) Carbon Price ($/ton) $2.89-$5.80 $3.25-$6.64 $ $8.60 $ $10.56 $2.89-$5.80 $37.43-$81.71 $ $27.17-$ $68.03-$ $37.43-$81.71 $ $29.95 $0.32 $20.68-$59.27 $43.96-$89.84 $13.19-$29.95 Electric Vehicle Adoption 12 Indoor Ag, Cannabis Load amw 1-25 amw 1-25 amw 3-60 amw 1-25 amw 3-4 amw 4-22 amw 4-22 amw 5-41 amw 4-22 amw Weather 14 Normal Normal Normal Normal Climate Change 3 degrees The 2017 IRP scenarios are described in Section Section 4 describes the planning assumptions associated with natural gas, carbon and market price forecasts. 12 Electric vehicle adoptions rates were derived from a 2017 joint study performed by Energy and Environmental Economics (E3), Economic & Grid Impacts of Plug-In Electric Vehicle Adoption in Washington & Oregon, March 2017, sponsored by Snohomish PUD, Chelan County PUD, Puget Sound Energy, Tacoma Power, Avista Utilities and Seattle City Light. 13 Informed by data gathered from Washington State Liquor & Cannabis Board found at 14 Normal weather based on assumed for See Appendix A for additional details. 15 The Climate Change weather forecast assumed 1 degree warming has already occurred and 2 degrees are expected by 2037; estimate informed by regional downscaling of Representative Concentration Pathway 4.5 from the United Nation s Intergovernmental Panel on Climate Change s 5 th Assessment Report. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-6

10 Section 1: Executive Summary Winter On-Peak Capacity Need Similar to the adopted 2013 IRP and the adopted 2015 Update to the 2013 IRP, the 2017 IRP analysis shows that after all cost-effective conservation is acquired, a long term capacity need exists in all of the scenarios except for the Low Growth scenario. In the Low Growth scenario, a short term capacity product meets the near term 2018 through 2022 need, with new cumulative conservation meeting the long term need after In general, the 2017 IRP analysis found that the acquisition of new cumulative conservation defers the PUD s need for any new long-term capacity resources until the late 2020 s. The addition of a long term capacity resource is expected to meet seasonal and peak loads and also serves to limit the PUD s exposure to price volatility and delivery risk associated with the short term energy market. 16 The 2017 IRP analysis does not select or predict what long term capacity resource may eventually be acquired to meet this forecast seasonal load and peak matching need. The renewable resources predominantly available in the Northwest today (wind and solar) do not possess the operating characteristics necessary to meet the PUD s on-peak capacity need at this time, in a reliable and cost competitive manner. 17 Staff does expect continued advancement in demand response, energy storage, and pumped hydro storage technologies that hold tremendous promise for the future. The 2017 IRP s candidate portfolio for each scenario selected varying amounts of new conservation, and some combination of supply-side resources that provided capacity to meet the PUD s future seasonal and peak loads. Figure 1-3 illustrates the PUD s December On-Peak load resource balance for each scenario, before the addition of any new conservation. The bars represent the PUD s existing and committed resources, and the gap between those bars and load 16 A Winter Capacity Product (WCP) was added to the list of dispatchable resource options for candidate portfolios to evaluate as part of the adopted 2015 IRP Update. The WCP represented a short-term seasonal contract for firm energy and capacity, backed by a specific generating resource. The levelized cost of the WCP for IRP modeling purposes was based on the long-term fixed costs of a simple cycle combustion turbine acquired for the November through February period, for each year of the study. The 2015 IRP Update s Preferred Portfolio added a 25 MW capacity resource beginning in Carnegie Institution for Science study of meeting U.S. electricity needs with wind and solar, study summary at Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-7

11 Section 1: Executive Summary forecast for each scenario represents the load resource balance deficit that could be expected one out of 20 time, expressed as the P5 or 5% probability of occurrence. 18 Figure 1-3 Snohomish PUD s December On-Peak Load Resource Balance With Existing/Committed Resources before New Conservation by Scenario (in amw) The new resource additions by portfolio for the five scenarios is summarized in Figure 1-4: Scenario Figure 1-4 Summary of Resource Additions by Scenario (in amw) Total Conservation Short Term Capacity Contract (Dec HLH amw) Long Term Capacity (Dec HLH amw) Renewables (amw) Low Growth w/low Carbon n/a n/a 68 BAU w/no Carbon n/a 78 Climate Change w/low Carbon BAU w/california Carbon n/a High Growth w/mid High Carbon 152 n/a RECs (amw) 18 The PUD s load resource balance for the December on-peak period were modeled probabilistically across multiple scenarios and time periods and detailed in Appendix A. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-8

12 Section 1: Executive Summary Long Term Resource Strategy The two primary sources of uncertainty and risk that most affected the 2017 IRP candidate portfolios were the timing and level of carbon policy and the impacts related to climate change. The candidate portfolio that best addressed carbon uncertainty in the absence of a defined state or federal policy at the time of this analysis, and the uncertainty associated with regional climate change, is the Climate Change scenario with the low carbon pricing. 19 The Climate Change scenario with the low carbon cost and market environment was determined to be the PUD s 2017 IRP Long-Term Resource Strategy. 20 This strategy pursues the acquisition of 114 amw of cumulative conservation over the 20-year period as the resource of choice. The acquisition of conservation defers the need for a long term capacity resource addition until This provides the PUD with the time and flexibility to further assess the impacts of any future carbon legislation, the type of load and peak matching resource or resources it wishes to consider, including the timing or development of any future resource addition. Carbon Policy Uncertainty Staff evaluated the Climate Change scenario under various carbon policies to gain an understanding of the range of potential impacts on the candidate portfolios. To mitigate carbon uncertainty until more is known about a future carbon policy, the Low Societal Cost of Carbon, effective in 2018, was selected. Climate Change Uncertainty The University of Washington s Climate Impacts Group has performed extensive work on regional climatology. The Climate Impacts Group suggests that across time, the region will experience milder winters with increasing amounts of precipitation and less snowpack. The expectation is for increases over time in winter hydroelectric production, and reductions over 19 Beginning in 2018, the PUD incorporated elements of climate change into its energy risk portfolio management processes and financial planning and ratemaking purposes. 20 See Section 5 for the Analytical Framework and Section 6 for detailed portfolio results and selection of the Long Term Resource Strategy. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-9

13 Net On-Peak Position at P5 (in amw) Section 1: Executive Summary time to summer hydro production, due to lack of snowpack build and reduced spring snowmelt. The forecast impact on the PUD s load resource balance is a winter capacity need that gradually decreases in the post-2027 period, while a new summer need begins to emerge in the late 2030 s, with warmer temperatures and increases in air conditioning load, combined with a regional decline in summer hydro production. Figure 1-5 Impact of Climate Change on Summer and Winter Load Resource Balance Deficits (100.0) (200.0) (300.0) (400.0) HLH 2037 HLH Planned Resource Additions The incremental planned demand-side and supply-side resource additions that serve the December On Peak need in the Long Term Resource Strategy are shown in Figure 1-6: Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-10

14 amw Section 1: Executive Summary Figure IRP Long Term Resource Strategy December On-Peak in amw 1,400 1,200 1, Forecast Market Purchase Distributed Generation Short-Term Capacity Contract Long-Term Capacity Resource Conservation Existing Resources Load 1,027 1,061 1,076 1,098 1,118 1,130 1,150 1,170 1,184 1,207 The addition of 114 amw of new cost-effective conservation over the 20-year planning horizon, with a 10-year conservation potential of 92.7 amw by The expected 20- year cumulative contribution of new conservation to the winter on-peak period is 152 amw. A 50 MW short-term capacity contract for the 2018 through 2022 period addresses near term seasonal capacity needs. Distributed generation renewable resources like rooftop solar and other technologies, bundled with the associated environmental attributes help diversify the PUD s portfolio and aid the PUD in meeting the annual renewables requirement. The long-term capacity resource addition for seasonal load and peak matching is deferred until 2028, as a result of new cumulative conservation and the benefits to the winter on-peak period. The long term capacity addition also addresses the emerging summer need identified late in the study period. This deferred need allows the PUD time to Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-11

15 Section 1: Executive Summary investigate and evaluate the various types of long-term capacity and demand response resources that may be available to meet this need, including future BPA products. Procure unbundled RECs to meet forecast annual State renewables compliance requirements. The PUD s forecast REC need across the study period varies from approximately 450,000 in 2021, to approximately 960,000 in Regulatory Planning Standard The 2017 IRP analysis and Long Term Resource Strategy comply with the state Energy Independence Act s (EIA), consistent with RCW Chapter , for: 1) conservation via a utility specific analysis and determination of cost effective 10 year conservation potential; and 2) serving at least 9% and then 15% of the PUD s total annual retail load with a combination of eligible renewable resources, renewable energy credits (RECs), or a combination of both. 21 The 2017 IRP portfolio analysis also considered the impacts of overgeneration, consistent with RCW (1)(e). 21 Based on Revised Code of Washington, Chapter , and per the prescribed methodology in Washington Administrative Code, Chapter Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-12

16 Section 1: Executive Summary Proposed Action Plan The 2017 Integrated Resource Plan has identified several near term actions to ensure the PUD can meet the needs of its customers in a rapidly changing environment, well into the future: 1. Pursue all cost effective conservation and further explore capacity contributions, including the feasibility of demand response as a future utility-scale capacity resource for the PUD. 2. Explore the best mix of resource alternatives in the Northwest for capacity resources to meet peak needs, including the ongoing evaluation of battery and pumped hydro storage, and discussions with BPA for seasonal load and peak matching products. 3. Ensure customer owned and distributed renewables programs are complementary to the PUD s overall power supply portfolio strategy. 4. Develop a least-cost renewables compliance approach to meeting the state s renewables requirements under the Washington Energy Independence Act (EIA). 5. Enhance short and long-term resource portfolio modeling capabilities; expand cost and risk tradeoff analyses. 6. Conduct an internal survey about the IRP to determine how the reference document is used; validate key findings and incorporate into PUD s next IRP process. 7. Re-assess the methodology used to determine the value associated with the deferral of PUD transmission and distribution investments; monitor the Northwest Power & Conservation Council s regional review of same. 8. Continue to participate in regional forums and assess impacts associated with climate change, reduction in greenhouse gas emissions, renewable portfolio standards, and regional power and transmission planning efforts. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-13

17 Section 1: Executive Summary Organization of the Document The organization of the 2017 IRP document is as follows: Section 1 is this Executive Summary. Section 2 describes the PUD, including current load forecast and trends, existing and committed power supply resources, and demand side programs. Section 3 discusses the industry s changing dynamics and planning environment, including recently adopted or proposed legislation that may affect utility operations and costs. These set the stage for the IRP planning process. Section 4 details the scenarios, range of forecasts and planning assumptions incorporated in the 2017 IRP analysis. Section 5 summarizes the analytical framework and planning standards used to examine the PUD s load resource balance and identify future resource need. Section 6 describes the portfolio results by scenario and selection of the Long Term Resource Strategy. Section 7 describes the key insights of the 2017 IRP analysis and the near-term Action Plan to implement the selected Long Term Resource Strategy. Snohomish PUD DRAFT 2017 Integrated Resoure Plan 1-14

18 Section 2: Who We Are 2 WHO WE ARE The Public Utility District No. 1 of Snohomish County (the PUD) began utility operations in 1949 by purchasing the electric distribution facilities for Snohomish County and the Camano Island portion of Island County from Puget Power & Light. The PUD is the 12th largest public utility in the U.S. and the second largest in Washington state serving more than 341,000 electric customers and about 20,000 water customers. The PUD is committed to delivering the best possible service, keeping rates competitive and maintaining the highest levels of reliability for our customers. As stewards of critical community resources, the PUD takes its responsibility seriously. The PUD is governed by a Board of Commissioners, which is composed of three members. They represent separate commissioner districts, and are elected at-large for staggered sixyear terms. The legal responsibilities and powers of the PUD, including the establishment of rates and charges for services rendered, reside with the Board of Commissioners. The PUD is a not-for-profit utility and takes great pride in serving our customers in our community. Figure 2-1 Snohomish County PUD s Service Area Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-1

19 MWh Section 2: Who We Are Load Growth The PUD s load growth from 1970 to 2017 averaged 1.7% annually, with residential, commercial and industrial loads growing at average annual rates of 1.8%, 3.7% and -0.8% respectively, as shown in Figure 2-2. From 2010 through 2016, the PUD acquired 73 average megawatts of new conservation, or roughly 10% of the PUD s total retail load. For the 2008 through 2017 period, after new conservation, the PUD s average annual rate of load growth was -0.5%. 8,000,000 7,000,000 6,000,000 5,000,000 Figure 2-2 Historical and Forecast Annual MWh Retail Sales 4,000,000 3,000,000 2,000,000 1,000,000 0 Residential Load Commercial Load Industrial Load Total Load Current Trends The current economic environment for Snohomish County and Washington state is exceedingly strong. In 2016, Washington s real GDP grew at a rate of 3.7%, the fastest of any state in the nation. Snohomish County itself ranked second nationally behind Pierce County in the net number of people moving into the county at 10,500, with historically low 4.0% unemployment rate at the end of the year. In 2016 and 2017, the PUD connected an average of 4,100 new premises per year, as compared to the 2,200 per year pace seen during the 2011 and 2012 timeframe. This pace is expected to slow to a long-term trend of approximately 2,800 new premises per year by Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-2

20 Section 2: Who We Are Snohomish County s main employment base is in aerospace manufacturing, primarily Boeing s Everett Plant, and hundreds of small aerospace companies delivering parts for the 747, 767, 777, and 787 programs. Naval Station Everett, Snohomish County and Providence Hospital are major employers in the region. Growth also continues in the biotech sector in South Snohomish County, and continued changes to the manufacturing sector in the Everett area. The Port of Everett s development of the Waterfront Place Central and Riverfront is also underway and is expected to provide jobs and easy access to the waterfront. This effort located east of downtown Everett will transform the waterfront into a sustainable and unique commercial, recreation, and residential community. 22 Historical Perspective Figure 2-7 shows that historically, the PUD s total retail sales rebound and resume their prior, upward slope, following recessionary periods (see first two recession periods circled). Given the strong economic conditions in Snohomish County and Washington state, the historical trend would suggest the same would occur after the third recession. Instead, recovery from the recent Great recession has been markedly different for the PUD; its retail sales have remained flat through year 9 of the recovery. The flattening of retail sales in recent years is likely due to a number of factors some new to the post-recession world and others, such as culminations of decades of energy efficiency acquisitions, and the growing impact of building codes and standards improvements. 22 Section 2 Who We Are, discusses the PUD s load forecast methodology and current trends. Section 4 Scenarios and Planning Assumptions, describes the various future socio-economic factors and elements considered in the five different scenarios studied in the 2017 IRP analysis. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-3

21 MWH Avereage Megawatts Section 2: Who We Are Figure 2-7 Historical and Forecast (Before Conservation) Annual MWh Retail Sales 1, Recessions With Rising Residential Commercial Industrial Total Retail Sales The PUD is expected to continue to experience positive load growth for the foreseeable future, reflective of the population inflows and strong economic conditions in the Puget Sound area. After acquiring the forecast level of new conservation identified as cost effective, staff anticipates the recent trend of flat to declining retail sales will persist, as detailed in Figure 2-8. Figure 2-8 Historic Snohomish PUD Load by Sector in Annual MWh 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Total Without New Conservation Total With New Conservation Industrial Commercial Residential Total Forecast (No Conservation) Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-4

22 Section 2: Who We Are Overview of the PUD s Portfolio The PUD relies on a diversified power portfolio consisting of a broad range of conservation and energy-efficiency programs, a long-term power supply contract with the Bonneville Power Administration (BPA), PUD-owned hydroelectric projects, and several long-term renewable power supply contracts. The PUD buys and sells power in the short-term energy market to balance daily and seasonal variations in its customer loads and owned and contracted resources. In 2016, the BPA contract provided over 82% of the PUD s power needs, primarily sourced from the Federal hydro system; 23 the PUD s owned hydroelectric resources provided nearly 7%; 24 7% came from a combination of long-term wind contracts and customer-owned, renewable distributed generation; and approximately 4% was from short-term market purchases (Figure 2-9). For calendar year 2016, the Washington State Department of Commerce fuel mix reported the PUD s annual fuel mix to be 98% carbon free. 25 Figure Snohomish PUD Power Supply Portfolio & 2016 BPA Fuel Mix 2016 PUD Portfolio 2016 BPA Fuel Mix 23 The Bonneville Power Administration markets the output of the Federal Columbia River Power System and delivers firm power to the PUD at cost, under its long-term contract for the Block and Slice products. 24 PUD-owned hydroelectric generation includes: 112 MW Jackson Hydroelectric Project; 7.5 MW Youngs Creek Hydroelectric Project;.65 MW Woods Creek Hydroelectric Project; and a 20% share of the 27 MW Packwood Lake Hydroelectric Project, located in Packwood, WA. 25 In accordance with RCW 19.29A.060, the PUD annually discloses its fuel mix to the Department of Commerce. The PUD s energy sources are listed on its website at and State Fuel Mix reports are at Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-5

23 amw Section 2: Who We Are The shape of the PUD s load resource balance is an important consideration in long term resource planning. The PUD s loads have been historically highest during the winter, while existing and committed resources have produced more energy in the spring. The net result is monthly energy surpluses and deficits the PUD must manage. Figure 2-10 illustrates the shape of the PUD s 2016 actual load and existing resources: 26 1,200 1,000 Figure Actual Firm Monthly Loads with Existing and Committed Resources (in amw) Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec PUD-Owned Hydro Other Renewables Wind Market Purchases BPA Block BPA Slice The dotted line in Figure 2-10 shows the PUD s average load by month during calendar year The PUD s annual load shape is driven largely by electric heating loads during the winter months this has historically made the PUD a winter peaking utility. Monthly, daily and hourly energy imbalances are balanced by selling or purchasing energy from the short-term wholesale power market. The majority of market purchases in 2016 were made during the winter period when resource supply timing did not always match the increased customer need on an hour-to-hour basis, even though it was sufficient on an average monthly basis. 26 Water Year 2016 as measured at The Dalles was 96% of average for the Jan-July period, based on the period. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-6

24 Section 2: Who We Are Existing & Committed Resources The PUD relies on a portfolio of resources to meet customer demands. These include: Supply side resources o BPA power contract o PUD-owned generating resources o Long-term renewable power supply contracts o Small renewables program and customer-owned generation o Short-term market purchases o Regional transmission contracts Demand side resources o PUD energy efficiency programs o Demand response programs Existing Supply Side Resources BPA Power Contract The PUD meets its load obligations by managing the energy available from the BPA power contract in concert with its owned resources and other long-term power supply contracts. The BPA is a revenue-financed federal agency under the Department of Energy that markets wholesale electricity to more than 135 utility, industrial, tribal and governmental customers in the Pacific Northwest. Its service area covers more than 300,000 square miles with a population of approximately 12 million in Idaho, Oregon, Washington and parts of Montana, Nevada, Utah and Wyoming. The BPA sells, at wholesale rates, electric power generated from 31 federal hydroelectric projects in the Columbia River basin, including one nonfederal nuclear plant and several other small nonfederal power plants. The federal hydroelectric projects and the related electrical system are known collectively as the Federal Columbia River Power System (the Federal System ), which has an expected aggregate output of approximately 9,089 annual Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-7

25 Section 2: Who We Are average megawatts under average water conditions and approximately 8,135 annual average megawatts under adverse water conditions. The Federal System produces more than onethird of the region s electric energy supply. Block-Slice Product The PUD currently purchases the Block-Slice product from BPA for the contract term of October 1, 2011 through September 30, The PUD purchases more than 80% of its power supply from the BPA under this long-term power contract. The Block-Slice product is a combination of two energy products: Block Product: The Block product provides the PUD with power in flat monthly amounts that are determined based on the PUD s average monthly load. In 2017, the Block product provided the PUD with 495 amw in January when customer heating demand is seasonally high, while in June when temperatures are more moderate, the Block amount is 346 amw. For all of 2017, the PUD received 3,363,849 MWh from the Block product. Slice Product: The Slice product provides the PUD with variable amounts of power that reflect the output of the Federal System. The PUD takes responsibility for managing this product within the hourly contractual constraints and physical limits of the Federal System. This product provides the PUD with the ability to follow its customer loads and resources by storing and dispatching energy. The majority of the PUD s short-term wholesale market sales are from surplus Slice energy, which varies with the seasonal and daily variations in the Slice product s output. If snowpack and water conditions are above average in the region, the energy output is also above average. If snowpack and water conditions are low, the PUD s energy supply is correspondingly reduced. Every two years, BPA determines the total of its customers loads and the size of the Federal hydro or Tier 1 System, in order to allocate costs for the next two year rate period. This Rate Period High Water Mark process establishes the maximum amount of energy the PUD is eligible to purchase from the BPA at cost, or the Tier 1 rate. The size of the Tier 1 System varies due to changes in BPA s system obligations, customer load growth, and maintenance outages and refurbishments to the Federal hydro system. Figure 2-11 shows the actual BPA Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-8

26 Section 2: Who We Are Tier 1 System Size and Tier 1 contract allocation amount to the PUD for the 2012 through 2017 period: 27 Figure 2-11 BPA Tier 1 System Size and Contract Allocation to Snohomish PUD Fiscal Year BPA Tier 1 System Size (in amw) Maximum Tier 1 Available to PUD Rate Period High Water Mark (in amw) Actual BPA Tier 1 Contract Allocation to Snohomish PUD (in amw) Figure 2-12 shows the actual annual average megawatt hours (amw) provided to the PUD by BPA under the long term Block-Slice contract by fiscal year, the December on-peak amw, and the December Peak Week on-peak hours for 2012 through 2017: 28 Fiscal Year Figure 2-12 Snohomish PUD BPA Contract Actual Annual MWh (Block and Slice Combined) Annual amw December On-Peak amw December Peak Week (amw) ,076 1, ,016 1, ,032 1, ,076 1, The BPA Slice product is allocated contractually based on the customer s Slice percentage with monthly output based on critical water; actual amounts will vary. 28 Peak Week is defined to be the on peak hours represented by hour ending 0700 through hour ending 2200, Monday through Friday, for a total of 80 on peak hours for the peak week in a month. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-9

27 Section 2: Who We Are PUD-Owned Generating Resources Jackson Hydroelectric Project The Jackson Hydroelectric Project (Jackson Project) is located on the Sultan River, north of the City of Sultan, and is owned and operated by the PUD. The project has two large 47.5 MW nameplate Pelton generating units and two small 8.4 MW Francis generating units for a total nameplate capacity of MW. The firm energy for the project, based on the water year, is ~29.5 amw. The average annual or expected output is approximately 49 amw. Project output is delivered directly into the PUD s electric system. The Jackson Project is operated to produce the optimum amount of electrical energy, subject to specified minimum releases of water into the Sultan River for maintenance of fish and the diversion of water into the City of Everett s water reservoir system. An agreement from 1961, with subsequent amendments, established the rights and duties of the City of Everett and the PUD to the uses of water from the project. The City of Everett receives its water supply from Lake Chaplain Reservoir, which the project feeds through the two 8.4 MW Francis units. The PUD received a new 45-year project license as the sole licensee in September The new license did not alter how the project is operated. Historical output for the project varies with the amount and timing of rainfall that affects stream flows that fuel the project. Power production is typically highest in the late fall through late spring periods due to precipitation and snowmelt. The shape of the project s output roughly matches the PUD s seasonal load shape. The project has some seasonal ramping capability, depending on time of year, and also has some ability to be dispatched in conjunction with storage in the Spada Lake Reservoir. That said, license requirements to maintain stream flows and supply the City of Everett s potable water supply do limit the project s ability to follow the PUD s load within a day. For the 2012 through 2016 period, the Jackson Project generated an annual average of 426,208 MWh, with a minimum of 308,865 MWh in 2012 and a maximum of 512,423 MWh Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-10

28 MWh Section 2: Who We Are in During a regional drought in 2015, the project generated 375,100 MWh, or 43 amw. Figure 2-13 denotes the project s average generation by month for this period: Figure 2-13 Jackson Hydroelectric Project Actual Production in MWh by Month 70,000 60,000 50,000 40,000 30,000 20,000 10, Month Woods Creek Hydroelectric Project The Woods Creek Hydroelectric Project is located in Snohomish County, north of the city of Monroe, with a nameplate capacity of 0.65 MW. The PUD purchased the powerhouse and adjoining acreage in February Prior to its acquisition, the PUD had been purchasing the output from this plant. This project is adjacent to Woods Creek, a tributary of the Skykomish River, with the powerhouse located at the base of a natural impassible barrier to anadromous fish, and typically produces the majority of its generation during the November through April period. Since acquiring the project, the PUD has made numerous engineering and efficiency improvements which has increased annual production from the historical 10 year average production of 497 MWh to just under 1,800 MWh, depending on hydrological conditions. These improvements to the project that result in increased hydro production from the existing project with no additional diversion or impoundment of water are considered to be incremental hydro. Incremental hydro qualifies and can be applied toward the PUD s Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-11

29 MWh Section 2: Who We Are annual renewables requirement. 29 For the 2012 through 2016 period, Woods Creek has generated an annual average of 1,774 MWh. Figure 2-14 shows the generating profile for this resource: Figure 2-14 Woods Creek Hydroelectric Project Actual Production in MWh by Month Month Youngs Creek Hydroelectric Project In 2008, the PUD purchased the unconstructed Youngs Creek Hydroelectric Project located on Youngs Creek, a tributary of Elwell Creek near Sultan in Snohomish County. The project is situated above a natural impassable barrier to anadromous fish. Commissioning of this new run of river resource, with single Pelton unit at 7.5 MW nameplate, occurred in November Youngs Creek was the first new hydroelectric resource to be constructed in the region in more than 17 years, and is licensed through For the 2012 through 2016 period, the project generated an annual average of 18,312 MWh, with the majority generated during the winter and spring months (Figure 2-15). 29 Washington Administrative Code (WAC) Section (13)(b) provides: Incremental electricity produced as a result of efficiency improvements completed after March 31, 1999, to a hydroelectric generation project owned by one or more qualifying utilities [see definition of qualifying utility in RCW ] and located in the Pacific Northwest or to hydroelectric generation in irrigation pipes and canals located in the Pacific Northwest, where the additional electricity generated in either case is not a result of new water diversions or impoundments. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-12

30 MWh Section 2: Who We Are Figure 2-15 Youngs Creek Hydroelectric Project Actual Production in MWh by Month 3,500 3,000 2,500 2,000 1,500 1, Month Calligan Creek Hydroelectric Project In 2015, the PUD received an original 40-year license for the Calligan Creek Hydroelectric Project located on Calligan Creek, a tributary to the North Fork Snoqualmie River in King County. The project is located above Snoqualmie Falls, a natural barrier to anadromous fish. Construction on this 6.0 MW, run of river facility began in 2015 and began commercial operation in February The powerhouse has a a single 6 MW Pelton unit. Based on historic hydrology records, the anticipated output from this project is an average of 20,700 megawatt-hours (MWh) annually, the majority of which will be generated during the months of November through April. Hancock Creek Hydroelectric Project In 2015, the PUD received an original 40-year license for the Hancock Creek Hydroelectric Project located on Hancock Creek, a tributary to the North Fork Snoqualmie River in King County. The project is located above Snoqualmie Falls, a natural barrier to anadromous fish. Construction on this 6.0 MW, run-of-the-river facility began in 2015 and began commercial operation in February The powerhouse has a single 6 MW Pelton unit. Based on historic hydrology records, the anticipated output from this project is an average of 22,100 megawatt-hours (MWh) annually, the majority of which will be generated during the months of November through April. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-13

31 Section 2: Who We Are Arlington Microgrid Solar Array The PUD announced plans in 2017 to build the Arlington Microgrid Solar Array, as part of its new local office complex in Arlington, Washington, located east of the Arlington Municipal Airport. This facility will demonstrate multiple new energy technologies, including energy storage paired with a solar array, interconnected to form a microgrid or system that can be islanded and run independently from the electrical grid. The project will be funded in part through a Clean Energy Fund II grant provided by the Washington State Department of Commerce. The microgrid project will consist of a: 500 kw utility scale solar array; Modular Energy Storage Architecture (MESA) compliant 500 kw/1000 kwh lithium ion battery; Micro-turbine for back-up generation; Several vehicle-to-grid (V2G) charging systems; and Clean Energy Technology Center (CETC) to provide the load and demonstration area. All of these components will be interconnected and controlled via a central control system. Figure 2-16 shows an overview of the design and components that will be integrated at the Arlington Microgrid Solar Array: Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-14

32 Section 2: Who We Are Figure 2-16 Diagram of the Arlington Microgrid Components Key milestones for the Arlington Microgrid at the time of this writing are: Design & Equipment Procurement Site Preparation & Construction Commissioning & Reports The installed battery system at the Arlington Micrgrid would be available to be called on to provide grid support and provide ancillary services via the PUD s Distributed Energy Resource Optimizer (DERO), a software system. Other components envisioned for the Arlington Microgrid include a demonstration of how electric vehicles and vehicle to grid (V2G) charging systems can potentially provide a benefit to the grid by providing another source of stored energy in the event of a power outage. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-15

33 MWh Section 2: Who We Are At some future time, the Clean Energy Technology Center (CETC) could also serve as the new North County local office in the event of a large scale power outage, such as a Cascadia Rising major earthquake event. The general concept is that in the event of a power disruption, the microgrid would disconnect from the utility grid and act as the back up power supply to the CETC and/or local office. While connected to the grid, the solar array is expected to provide approximately 544 MWh per year according to NRELs PV Watts calculator as shown in Figure At the time of this writing, the PUD is in the preliminary stages of planning a community solar program associated with the 500 kv solar array at this location. This program would continue to support the PUD s clean renewable energy development efforts within its service territory, and provide opportunities for PUD customers who otherwise may not be able to participate or benefit from solar energy at this time. Typically community solar programs have offered customers the ability to either lease or purchase shares of the solar project, without having to provide their own rooftop, or fund and install their own solar panels Figure 2-17 Preliminary Arlington Microgrid Estimated Monthly Output 500kW Solar Array (MWh) Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-16

34 Section 2: Who We Are MESA Battery Storage Initiative The PUD and several project partners have been engaged since 2011 in the design of a new model of battery architecture, known as the Modular Energy Storage Architecture (MESA). MESA is a set of nonproprietary design and connectivity standards that provide a scalable approach for energy storage control system integration and optimization. The goal of the PUD's energy storage or MESA project has been to standardize the electric and communications interfaces between the battery components and the utility s control systems, to drive down the integration costs for this flexible technology. Energy storage has the capability to be dispatched when needed, and the PUD this technology a key component in the future integration of renewable resources and standard resources such as run-of-river hydro, and helping to serve peak loads. MESA 1 Battery System The MESA 1 project was installed in 2015 and 2016 in the PUD s service territory. It has a nameplate of 2 MW and is comprised of two types of lithium-ion battery systems. The first battery system is a 1 MW,.5 MWh, utilizing GS Yuasa batteries, and the second is a 1 MW,.5 MWh system utilizing LG Chem batteries. Both systems use a power conversion system from Parker-Hannifin. Since completion the project has undergone use case testing with Pacific Northwest National Laboratories, been enrolled in demand response program with the BPA, and used in a BPA Technology Innovation Fund project studying the sharing of energy storage between transmission and distribution use cases. The battery has also been utilized by the PUD for energy shifting and energy imbalance mitigation. The Washington State Department of Commerce provided $2.4M to help fund this project. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-17

35 Section 2: Who We Are MESA 2 Battery System The MESA 2 project has a 2.2 MW nameplate and was installed in July It utilizes vanadium flow battery technology, manufactured locally by UniEnergy Technologies, in Mukilteo, Washington. The vanadium flow battery technology was developed at the Pacific Northwest National Laboratory and provides twice the energy density of other flow batteries. It is a promising new entrant in the utility-scale battery storage market. The power conversion system is provided by the German company, AEG Power Solutions. The MESA 2 system is currently undergoing use case testing with Pacific Northwest National Laboratories. The Washington State Department of Commerce provided $4.4M to help fund this project. Distributed Energy Resource Optimizer (DERO) The DERO project was installed in 2017 and consists of controls integration to allow the PUD s Power Schedulers to remotely manage energy storage. DERO automatically provides optimized schedules for review and deployment by Power Scheduling and allows for schedules to be remotely loaded into individual energy storage systems. The software and integration was provided by Doosan GridTech. The Washington State Department of Commerce provided $1.8M to help fund this project. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-18

36 Section 2: Who We Are Long-Term Power Supply Contracts The PUD has several long-term contracts for energy, each associated with a specific generating resource. The PUD has no ability to shape deliveries under these contracts. Hampton Lumber Mill Darrington Cogeneration Contract In 2006, the PUD executed a 10-year contract with Hampton Lumber Mills-Washington, Inc., for 100% of the electrical output from the 4.5 MW cogeneration project that utilizes wood waste. The project is a primary employer for residents in the town of Darrington, WA. The project began commercial operation in February 2007 and produces approximately 2 amw. The contract was amended in December 2011 to reflect acquisition by the PUD of both the energy and RECs from the project for the 2012 through 2016 term; a 2016 amendment extended the contract term through This project is recognized as an eligible renewable resource under the EIA, and also qualifies for the two times distributed generation multiplier for every MWh generated. Packwood Lake Hydroelectric Project This small hydroelectric project is located at Packwood Lake, 20 miles south of Mount Rainier in Packwood, Washington, and began operating in This project is managed and operated by Energy Northwest and has a nameplate capacity of 27.5 MW. The PUD is a participant in this project and contracts for a 20% share, or 1.3 amw, on a firm energy basis. Since October 2011, the PUD has been taking delivery of its 20% contractual share, which it plans to maintain for the foreseeable future. The PUD s 20% share of the project s output has averaged just under 20,000 MWh for 2012 through 2016 period. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-19

37 amw amw Section 2: Who We Are Contracted Wind Fleet The PUD purchases the wind energy and environmental attributes or RECs from three wind projects under four long-term contracts. The White Creek, Hay Canyon and Wheat Field wind projects are situated in the Pacific Northwest and have a combined nameplate rating of 217 MW. Historical production for the contracted wind fleet is reflected in Figures 2-18 and The aggregate historical annual capacity factor for the PUD s contracted wind resources is approximately 25%. The wind contracts were modelled as a single fleet based on their aggregate historical actual production by month, in the 2017 IRP analysis. These long term contracts expire during the 2024 through 2029 period. Figure 2-18 Actual Average Monthly Wind Fleet Production (in amw) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 60.0 Figure 2-19 Actual Annual Wind Fleet Production (in amw) Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-20

38 Section 2: Who We Are White Creek Wind Project In 2007, the PUD executed a 20-year power purchase contract with LL&P Wind, a wholly owned subsidiary of Lakeview Light and Power, Tacoma, Washington, for approximately 10% of the output and RECs from the White Creek Wind Project. The project is located in south-central Washington along the Columbia River Gorge. The PUD s share of the White Creek output is equivalent to 20 MW of wind capacity, with 6 amw of wind energy forecasted each contract year. The project is an eligible renewable resource under I-937 and began commercial operation in November 2007; the PUD began taking output and RECs from the project in January This contract expires in Hay Canyon Wind Project The PUD executed two power purchase agreements in February 2009 for 100% of the wind energy and RECs from the Hay Canyon Wind Project. This MW nameplate project interconnects to BPA s transmission system and is located in north central Oregon along the Columbia River Gorge. It was developed by Hay Canyon Wind, LLC, a subsidiary of Iberdrola Renewables, Inc. 30 The PUD contracts for 50% of the project s output under a 15- year power purchase agreement, and 50% under an 18-year power purchase agreement. These contracts expire in 2024 and 2027, respectively. The Hay Canyon Wind Project is an eligible renewable resource under the EIA; the PUD began talking delivery of energy and RECs from the project in March Wheat Field Wind Project The PUD signed a 20-year power purchase agreement for the entire output and RECs associated with the 97 MW nameplate Wheat Field Wind Project in The project is located in north central Oregon and interconnects to the BPA s transmission system. The project was developed by Wheat Field Wind Project, LLC, in conjunction with Horizon Wind Energy, LLC, a subsidiary of Energías de Portugal. 31 The Wheat Field Wind Project is 30 In December 2015, Iberdrola USA finalized acquisition of UIL Holdings to create a new company, Avangrid. The Hay Canyon contracts are now managed by Avangrid out of its Portland, OR offices. 31 In July 2011, Horizon Wind Energy changed its name to EDP Renewables North America LLC. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-21

39 Section 2: Who We Are an eligible renewable resource under the EIA; the PUD began taking delivery of energy and RECs from the project in April This contract expires in Small Renewables Program The Small Renewables Program was adopted by the Board of Commissioners in August 2011 to encourage development of customer-owned, distributed generation inside the service area. The program established a standard methodology for determining the price the utility may pay for the energy and environmental attributes produced by the customer-owned resource. The contract term ranges from one to five years. Participation in this program is limited to renewable resource technologies between 100 kilowatts and 2 megawatts (MW) nameplate, with a total program limit of 10 MW aggregated nameplate capacity. Customer-owned Renewables The PUD introduced its Solar Express program in March 2009 to incent the development of renewable distributed generation by residential customers. This program sunset at the end of 2017 after having reached a total of 1,167 photovoltaic systems and a total of 11.3 MW of installed rooftop solar. In aggregate, these PV systems produced 7,768 MWh in Despite the sunset of the Solar Express program, the PUD continues to interconnect customer-owned, generally rooftop, distributed generation systems upon request. Short Term Wholesale Power Market Purchases and Sales The PUD is a net seller of energy when annual snowpack and precipitation results in at or above average water years. For the 2012 through 2016 period, the PUD purchased an average of 340,000 MWh of energy, and sold an average of 2,190,000 MWh in the shortterm wholesale power markets. PUD staff make short-term energy purchases from the wholesale power market during the winter months when peak demand is expected to exceed the capabilities of the PUD s owned and contracted resources, and as needed to balance seasonal variations in loads and resources. Sales are made when the PUD s contracted resources and surpluses associated with the BPA Slice product exceed the PUD s need. The Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-22

40 Section 2: Who We Are PUD s short-term market purchases and sales fluctuate each year, reflecting variations in customer demand, weather, market and hydrological conditions. Firm Transmission Contracts The PUD relies on long-term firm transmission capacity across the BPA transmission system through its long-term firm point-to-point agreement with BPA. This firm transmission is used to schedule and deliver the PUD s power supply from the source of the generation it purchases and contracts for, to the homes and businesses it serves in Snohomish County and Camano Island. The PUD currently contracts for 1,969 MW of firm point-to-point capacity with BPA. This contract includes 16 different points of receipt (where the BPA picks up power for the PUD) and six points of delivery (where the BPA will deliver power for the PUD). Of the total, 1,365 MW is designated for delivery directly to the PUD s service territory. The remaining 601 MW is used to transport power supplies that are surplus to the PUD s needs, primarily during the spring and summer periods, to the wholesale power market. When the PUD needs more than 1,365 MW delivered to its service area, the Power Scheduling staff formally request the BPA, through its Open Access Same-time Information System (OASIS), to redirect its contract capacity to PUD points of interconnection with BPA. With limited exception, the BPA has typically granted these requests. In 2008, to ensure the ability to meet the PUD s long-term peak demand across time, the PUD requested, and was granted, an additional 350 MW of firm transmission capacity from the BPA. In total, the contracts for 2,166 MW of firm transmission capacity across the BPA transmission network. The contract term expiries for the PUD s firm transmission contracts with BPA range from 2026 through 2043; under BPA s transmission business practices, said contracts are eligible for the PUD to request renewal (rollover rights) with the first right of refusal. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-23

41 Section 2: Who We Are Existing Demand Side Resources Conservation The PUD has actively engaged in conservation and demand-side management for over 35 years. Since 1980, conservation and energy efficiency programs have resulted in the cumulative acquisition of more than 180 amw of conservation resources, or enough to power more than 125,000 homes. Figure 2-20 shows the gross annual and cumulative savings accomplishments for the PUD through 2016: 32 Figure 2-20 PUD Gross Annual and Cumulative Conservation Savings in amw 32 As illustrated here, the cumulative savings calculation does not include degradation of savings as energy efficiency measures reach the end of their useful life. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-24

42 Section 2: Who We Are The acquisition of new conservation through energy efficiency programs encourages customers to use energy more efficiently, which can defer the acquisition of new supply side resources; defer the need for new transmission and distribution system upgrades; create value for customers; increase affordability for households; and reduce operating costs for businesses. Conservation is a low cost resource with minimal environmental impacts. The PUD offers financial incentives, technical assistance and educational services for all customer classes. For residential customers, the PUD provides a comprehensive set of energy efficiency programs targeting single and multi-family residences, new construction and low-income households. Financial incentives are offered for efficiency products including new heating systems, window and insulation upgrades, LED lighting, and home appliances. For commercial and industrial customers, the PUD offers financial incentives and technical assistance to help reduce energy use and annual operating costs. Efficiency products include HVAC, high-efficiency lighting, insulation, process load efficiencies, motors, and equipment controls. Figure 2-21 highlights key programs and the sector served: Figure 2-21 PUD Energy Efficiency Programs by Target Sector Program Description Target Sector Residential Residential Multi-Family Commercial Industrial X X X X X X X X Single Family Weatherization Multi-Family Weatherization High Efficiency Lighting New Home Construction Matchmaker Commercial & Industrial Custom Incentives Existing Buildings Energy Smart Industrial Commercial Kitchen Equipment Lighting Rebates - Existing Buildings Resource Conservation Manager Custom Incentives New Buildings Pay-For-Performance Pilot X X X X X X X X X X X Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-25

43 Section 2: Who We Are Program Innovation In addition to the PUD s traditional conservation programs, the PUD actively seeks out new approaches to markets and emerging technologies. Examples include: Pay-for-Performance pilot that allows commercial building owners to acquire energy efficiency as a service. The program is designed to pay for capital improvements through energy savings over a period of ten years. In partnership with Snohomish County, the PUD secured state matching funds to help improve efficiency in low income housing. With market transformation in the area of efficient lighting, the PUD was able to revise its incentives to focus on how best to increase other efficiency opportunities for its commercial and industrial customers. Savings from these other areas can reduce peak demand periods and aid in reducing the PUD s winter capacity needs. Bundled lighting and weatherization in multi-family dwellings significantly increased the comfort and efficiency of 29 multifamily complexes, while reducing overall PUD program implementation costs. The PUD recently developed its Smart Rewards online platform. Smart Rewards provides customers a resource to research the purchase of energy efficient home appliances and products. The site serves as an aggregate location that allows customers to compare the energy efficiency, price, customer reviews, operating cost and utility incentives for models. The platform delivers an Amazon-style experience and it has helped many of our customers improve the efficiency of their homes. The PUD recently added numerous new technologies to its program offerings. Emerging products such as direct outside air systems for HVAC, heat pump water heaters, high efficiency control systems, and advanced lighting controls provide exciting new opportunities for energy savings and often provide important secondary benefits to customers. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-26

44 Section 2: Who We Are Community Programs The PUD places high value on offering programs and measures to serve all customers in our community. Recently, staff worked with the Northwest Power and Conservation Council (NWPCC or Council) to study whether the PUD s programs were reaching all customers and markets. Specific attention was given to the more hard to reach populations (low income customers, moderate income customers, multifamily tenants, manufactured home dwellers, small business owners, commercial tenants, and industrial customers). In general, the study showed that most of the hard-to-reach markets were well served by the PUD s energy efficiency programs. Low and moderate income residential customers participated at rates roughly equal to their distribution in the customer population. Manufactured home dwellers and rural residential customers had proportionally high participation rates. As a group, small business owners, commercial tenants, and industrial customers, participated proportionally throughout PUD s service territory. Regional and National Efforts The PUD remains actively engaged in regional and national conservation activities to identify new technologies, develop new delivery strategies and affect policy related to energy efficiency and conservation. The PUD actively participates and provides financial support for market transformation efforts through the Northwest Energy Efficiency Alliance, Consortium for Energy Efficiency and the Electric Power Research Institute. The PUD is a member of the Regional Technical Forum and the Snohomish County Sustainable Development Task Force and supports the Pacific Northwest Integrated Lighting Design Labs. The PUD actively participated in the development and review of the conservation supply curves developed by the Council for its Seventh Power Plan adopted in The PUD supports establishing achievable energy efficiency targets and recognizes the need to conduct research, development and demonstration activities to ensure a sustainable pipeline of future energy efficiency resources. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-27

45 Section 2: Who We Are Demand Response Program and Strategy Demand response involves the development of programs, pricing structures and technologies to influence when and how customers use electricity. By shifting electricity demands from periods when loads and power prices are high to periods of lower loads and prices, the PUD can reduce its costs and maintain or increase reliability, all of which can reduce customers power bills. Demand response programs take multiple forms: dispatchable load controls, scheduled load controls, voluntary calls to action, and price incentives. Dispatchable load control programs give utilities the ability to call on resources without any action by the customer. Dispatchable resources are often available within 10 or 15 minutes after being requested or dispatched by a utility. Scheduled load control programs require customers to temporarily change business processes and typically require advance notice by the utility ahead of a request for load reduction. The PUD s adopted 2013 IRP included an action item for staff to conduct a situational scan of demand response technologies and applications. Staff completed this work in 2014 and found that the Northwest s lack of a well-established capacity market to help determine the value of demand response and that demand response technologies in general are still evolving, to be limiting. The majority of demand response efforts in the Northwest were driven primarily by the need to: 1) demonstrate technology; 2) test customer acceptance; and/or 3) explore demand response costs and potential. National programs largely from summer peaking utilities were found to be more mature yet considered developing, and not fully mature. An action plan item in the PUD s adopted 2015 IRP Update directed that demand response be pursued and a work plan established. A demand response potential assessment was conducted by CADMUS in 2014, limited to the products and technologies identified in the situation scan, and to determine the value demand response provides by developing a methodology to identify peak hour needs and a valuation of energy savings in those hours. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-28

46 Section 2: Who We Are In 2016, the PUD supported customer participation in a demand response pilot offered by BPA, implemented by EnerNOC. The PUD s objectives in participating in the BPA pilot included: general assessment of customer interest in demand response; discover and examine customer opportunities and issues associated with implementing demand response; consider potential program modifications that could improve program performance and participation; and assess the performance and reliability of such a program in delivering peak savings. The BPA pilot allowed all involved parties to test the physical and economic dispatch of demand response technologies and evaluate the impacts upon facilities and operations, and explore pathways to promising demand response program design elements for future programs. At the present time, the PUD is developing its Demand Response Strategy that will serve as a roadmap for the PUD s demand response efforts with its customers, going forward. This initiative is expected to develop a comprehensive approach that will include clear objectives, a review of current programs, products and work to date, exploration of program options, establish near-term pilots and program offerings to deliver reliable, measureable and costeffective capacity savings, and review peer utility experiences with demand response programs and offerings across the country. Demand response is viewed as having the potential to serve as a reliable resource alternative to capacity made available from supply-side resources. Demand response may also impact and potentially defer transmission and distribution investment needs over time, as well as serve as a customer engagement offering. A comprehensive strategy will incorporate the benefits and assess the value that demand response products and programs can bring to the PUD and power supply portfolio. This effort is expected to develop specific demand response options - with quantified cost and performance attributes that can be incorporated into the list of available demand side resource options for future IRP processes. Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-29

47 Section 2: Who We Are Demand Response in the Council s Seventh Power Plan In the Council s Seventh Power Plan (Plan), demand response was identified as the region s least-cost solution for providing new peaking capacity, particularly when hydro conditions are low. The Council s action plan recommended that the annual regional resource adequacy assessment compare the cost and economic risk of increased reliance on external market purchases to developing demand response resources to meet capacity. As part of the Plan s Mid-Term Assessment in 2018, the Council will determine if the region has made sufficient progress toward acquiring cost-effective demand response or confirm the ability to import a minimum of at least 600 megawatts of additional peaking capacity. 33 The Council reviewed 11 different demand response program options, largely focusing on space and water heating technologies. Commercial sector programs included lighting controls, and industrial programs encompassed agricultural technologies such as irrigation pumping and refrigerated warehouses. Demand response was incorporated into the Council s Regional Portfolio Model and evaluated for its peak load reduction. The results were that some non-modeled uses of demand response may prove useful in the future: non-firm demand response (new pricing structures), dispatchable standby generation, and providing ancillary services to the grid (including contingency reserves, operating reserves, frequency regulation, and locational congestion relief). The Plan notes that these programs, while omitted from the Regional Portfolio Model, may still provide cost-effective services depending on other options in meeting those needs. This work is expected to be part of the Council s analysis included in the 2018 Mid-Term Assessment. 33 Northwest Power and Conservation Council, Seventh Power Plan, Executive Summary, page 1-6, found at Snohomish County PUD DRAFT 2017 Integrated Resource Plan 2-30

48 Section 3: Planning Environment 3 PLANNING ENVIRONMENT Part of the process for determining the best way to meet future customer needs and demands involves establishing an environment in which the PUD sees itself operating. This environment must consider both the current landscape of policy and trends, and how they evolve over time. To evaluate these trends, the more significant factors have been categorized by their sphere of influence on the PUD: The PUD s Strategic Priorities The Puget Sound Economy Electric Industry Initiatives and Efforts Energy Policy and Regulatory Requirements Climate Change PUD s Strategic Priorities The Board of Commissioners expects the PUD to deliver power and water to its customers in a safe, sustainable and reliable manner while successfully navigating complex change in our industry. The PUD accomplishes this by empowering its teams to provide quality service to its community and prudently managing costs while investing for the future. The Strategic Priorities, developed in and updated annually, are designed to support the PUD s missions of providing quality water and electric energy products and services and include a distinct focus on 5 key areas: Team PUD, Customer Experience, Delivering Now & For the Future, Responsible Cost & Fiscal Management, and Continual Improvement. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-1

49 Section 3: Planning Environment The Economy Puget Sound and Beyond Snohomish County, one of four central Puget Sound counties King, Pierce, Snohomish and Kitsap gained few new jobs in 2017, with an annual growth rate of 0.2%. This marks the seventh consecutive year of job growth in the region accompanied by the lowest unemployment rate in the last decade at 3.9%. Manufacturing saw a loss in jobs with no gain in 2017 mostly due to the Asian economic slowdown and political uncertainty overall. Snohomish County s neighbor to the south, King County, has been experiencing record growth in the technology sector. Companies such as Amazon, Google, and Expedia are settling in the South Lake Union neighborhood, with no signs of slowing. As the cost of living in Seattle continues to increase, and housing inventory cannot meet demand, employees of these tech firms continue to search for affordable housing, and parent companies search to reduce overhead costs. Nationally, the unemployment rate fell 0.5% in 2017, from 4.9% to 4.4%. Employment grew at 1.5%, which was slightly less than the 2016 growth rate of 1.8%. GDP growth however grew at 2.2%, a higher rate than the 2016 rate of 1.9%. The electric industry was generally affected by an abundant supply of natural gas helping to keep power prices low in many parts of the country. Electric Industry Initiatives and Efforts The electric industry in the Pacific Northwest is facing dynamic changes. As the PUD plans for the future and assesses the state of the industry, the following regional policies and guidelines relevant to utility resource planning come to the forefront. These include the Bonneville Power Administration, the Northwest Power and Conservation Council, and the potential for newly forming markets. The Bonneville Power Administration The Bonneville Power Administration (BPA) is a significant supplier of power to the region; as such its success and long term viability is of great importance to public utilities like the PUD and its customers. In 2015, BPA launched Focus 2028, to establish a common understanding with regional leaders as to the types of industry changes, challenges and strategic choices BPA may face as it tries to maintain its financial strength and cost Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-2

50 Section 3: Planning Environment competitiveness in the post 2028 period. September 2028 is when the current long-term agreements with customers like the PUD are set to expire. Focus 2028 also looked at how the agency could better manage its costs to maintain its overall financial health. BPA explained that in order to stay competitive, it must keep costs low and effectively manage its capital and program expenditures. As a follow on in 2016, BPA developed a set of key strategic initiatives (KSIs) intended to revamp legacy processes, systems and capabilities integral to BPA s corporate and commercial functions. The four KSIs with funding as part of the 2016 Integrated Program Review included: Asset Management, Commercial Operations, Long-Term Financial Health and Rates, and Business Information Systems. The PUD expects BPA will discuss funding levels to support the KSIs in the 2018 Integrated Program Review as part of its budget development process held in Summer 2018; this process review will identify the programmatic costs and inform revenue requirements ahead of the fiscal year rate case. In January 2018, BPA released its Strategic Plan for the 2018 through 2023 period. This Strategic Plan focuses on how to strengthen the agency s financial health, modernize the grid, and provide competitive power and transmission products to deliver on (BPA s) public responsibilities through a commercially successful business. Federal Interactions with BPA In the 2018 Presidential budget, President Trump included provisions to sell BPA s transmission assets, resulting in a one-time influx of cash to the federal government. This highlights the current administration s focus on privatization of government assets. Because the Transmission system is a highly valuable asset to Northwest customers, the impacts of a potential sale, and the uncertainty around the scope of these offerings must be considered while evaluating future resource choices. These budget provisions met fierce resistance from the Northwest Delegation, arguing that the public value of this infrastructure far outweighed any potential short-term gain from privatization. The proposal currently is not expected to move forward. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-3

51 Section 3: Planning Environment Northwest Power and Conservation Council The Northwest Power and Conservation Council (NWPCC or Council) is a public agency created by the Pacific Northwest Electric Power Planning and Conservation Act of The agency s three primary functions include: 1. Develop 20-year electric power plans for the Northwest that guarantees adequate and reliable energy at the lowest economic and environmental cost; 2. Develop programming to protect and rebuild fish and wildlife populations affected by hydropower development in the Columbia River Basin; and 3. Educate and involve the public in the Council s decision-making processes. Due to the nature of the Council s work and its structure within the Northwest Power Act, its five year power plan serves as a guidebook to resource planning in the region. Many utilities, as well as BPA, look to the Council s Power Plans as a key source of information for their own planning needs. The Council s Seventh Power Plan covered 2015 through 2035, and was adopted in February The plan was developed at a time when the Northwest power system was facing uncertainties such as how federal carbon dioxide emissions regulations might be implemented, changes in future fuel costs, baseload resource retirements, salmon recovery actions, the pace of economic growth, and the cost and capacity required to reliably integrate increasing amounts of renewable resources. Key findings for the Seventh Power Plan analysis include: 1. Energy efficiency was the least expensive resource available to the region; 2. Developing demand response capabilities or rely on increased market imports to meet system capacity needs when adverse or low water and extreme weather conditions occur. 3. New natural gas-fired generation is the most cost-effective resource option for the region in the near-term. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-4

52 Section 3: Planning Environment 4. After energy efficiency, the increased use of existing natural gas generation offers the lowest cost option for reducing regional carbon emissions New methods to store electric power, such as pumped storage or advanced battery technologies may enhance the value of existing variable generation, like wind. 6. Modest development of renewable generation is expected to satisfy the various renewable portfolio standards; 35 The Plan also called for the development of 600 MW of demand response to help meet peak demand needs; noted that with respect to carbon reduction, increasing regional renewable portfolio standards was not an effective option for reducing emissions; and encouraged investment in research, development, and demonstration projects for emerging technologies to help reach their full potential. Council s Regional Resource Adequacy Standard In 2013, the Council created the Resource Adequacy Advisory Committee (RAAC) to aid in the assessment of regional power supply adequacy. The Council, with the aid of the RAAC, annually assesses the adequacy of the regional supply five years out. The adequacy standard limits the likelihood of a supply shortage or loss of load probability (LOLP), to a maximum of 5 percent. The state of the system is determined using only existing resources, planned resources that are sited and licensed, and the energy efficiency savings targeted in the Council s power plan. The Council s annual assessment serves as an early warning in the event that energy efficiency and resource acquisitions don t keep pace with load growth, in order to provide sufficient time to perform any actions that might be needed. Other adequacy metrics, such as the size of potential shortages, how often they are forecast to occur, and how long they could last is also part of the annual report. 34 Northwest Power & Conservation Council s Seventh Power Plan, Executive Summary, pages 1-2 through 1-4, located at 35 Ibid., pages 1-5 through 1-6. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-5

53 Section 3: Planning Environment In 2016, the 2021 resource adequacy assessment was determined to have a LOLP of 10%, exceeding the Council s 5% LOLP standard, primarily due to the scheduled retirements of the Centralia 1 and Boardman coal plants (1,330 megawatts combined). 36 The Council updated its assessment in July 2017, determining that the 2021 LOLP was just under 7%, while for 2022, the LOLP was slightly higher at just over 7%. This update reevaluated regional load forecasts, hydro operations for the U.S. and Canada, wholesale energy market supplies available from the Desert Southwest, and an assumption that the Council s energy efficiency targets are achieved through To comply with the Council s 5% LOLP adequacy standard, the region will need to add an estimated 400 megawatts of new effective capacity by Energy Markets The Energy Imbalance Market (EIM), is operated by the California Independent System Operator (CAISO) and has had several Northwest utilities either join or signal their intention to join. While the Northwest energy market has traditionally traded on an hourly basis, the EIM is designed to balance energy and capacity needs on a sub-hourly basis. The region is monitoring the results and cost/risk tradeoffs associated with joining an EIM, particularly as to how it can help contribute flexibility and value to the region. The region is also currently discussing expanding the EIM to a day-ahead market. Cyber Security and the Grid The safety and economic security of the nation depends on the reliable functioning of critical infrastructure such as energy delivery systems. Cybersecurity threat actors may exploit the increased complexity and connectivity of these systems, placing the nation s security, economy, public safety and health at risk. Similar to financial and reputational risk, cybersecurity risk affects a company or government s financial health. It can drive up costs, impact revenue, and harm an organization s ability to innovate and to gain and maintain customers. Over the past several years, the PUD has evolved into a local, regional and 36 The Council s 2016 Adequacy Assessment Report can be found at the following link: 37 The Council s Pacific Northwest Power Supply Adequacy Assessment for 2022 can be found at the following link: Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-6

54 Section 3: Planning Environment national leader planning against cyber threats in partnership with both the public and private sectors; including the military. Adhering to the National Institute of Standards and Technology (NIST) framework, the PUD and the State of Washington are well positioned to plan and manage cyber activities and the risk environment. In May 2017, President Trump signed an executive order on cybersecurity designed to protect federal government networks and critical infrastructure, including the nation s power grid. The executive order, similar to one signed by President Obama in 2013, directs the Secretary of Energy and Secretary of Homeland Security, in consultation with national intelligence and other governments, to jointly assess the potential scope and duration of prolonged power outage associated with a significant cyber incident. The executive order largely supports NIST standards of which the PUD has been following for several years. Energy Policy & Regulatory Requirements Future legislative policy and regulatory requirements can have a profound effect on the PUD s existing power supply and any future resources it may consider, acquire or operate. While no formal carbon policy has been enacted within the State of Washington at the time of this analysis, the 2017 IRP considers that some form of emissions reduction or regulatory policy likely will be implemented in the future. In addition, there are several ongoing regulatory processes that may have a significant impact on the PUD s existing resources, such as the litigation surrounding the Federal Columbia River Power System, and the discussions over modernizing or terminating the Columbia River Treaty. Below are some of the regulatory initiatives in the planning environment that were considered to have potential impacts on the PUD s existing and future resource portfolio. Greenhouse Gas Emissions and Climate Change One of the largest uncertainties utilities face today is the impact of and response related to climate change. Whether examining climate change at either a national, state or local level, it is an important component to consider when analyzing future resource performance and/or new resource acquisitions. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-7

55 Section 3: Planning Environment Local Responses to Climate Change In the Northwest, our local community is very environmentally minded and conscious of the ongoing effects of climate change, including a robust academic community. The University of Washington Climate Impacts group is an internationally recognized organization researching the causes, effects, and mitigation tools for climate change. The PUD recognizes our local community s commitment to environmental stewardship, which the PUD has adopted as one of its strategic priorities. In response to growing public concerns over climate change, a few Puget Sound area city governments along with several corporate entities are exploring options to reduce their carbon footprint through programs with their local utility. The PUD anticipates this trend will continue as residents, businesses, and local governments try to move toward green energy options. Executive Orders and Emissions Performance Standards In 2007, Governor Christine Gregoire issued an executive order challenging the state to reduce Greenhouse Gas emissions (GHG) on a timetable leading through The milestones laid out were: By 2020, reduce overall emissions of GHG in the state to 1990 levels By 2035, reduce to 25% below 1990 levels. By 2050, reduce to 50% below 1990 levels. The passage of ESSB 6001 through the legislature in 2007 codified these standards into law, along with performance standards for existing and new natural gas generating plants. ESSB 6001 established an emission performance standard of 1,100 lbs of GHG per MWh that all electric baseload generators must meet in order to be permissible for long term financial commitments. This emission level was, at the time, thought to be an approximate average natural gas emission rate. In 2013, the Department of Commerce reduced this standard to 970 lbs per MWh. Exemptions were also built in for unexpected reliability needs on a case-bycase basis. Governor Jay Inslee issued another Executive Order in 2014, outlining a series of steps to reduce carbon pollution in Washington, including: Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-8

56 Section 3: Planning Environment Establishing a Carbon Emissions Reduction Taskforce; Committing to reduce imports of coal-fired electricity from other states; and Working to reduce emissions in the transportation sector, which is recognized as the greatest percentage of carbon emissions in the state. While this executive order was not incorporated into statute, it provides clear direction that the state takes carbon reduction seriously and has long term plans to help curb emissions. Governor Inslee was one of three flagship members of the U.S. Climate Alliance a group of states committed to upholding the Paris Climate Agreement emission standards. Since its creation on June 1, 2017, thirteen other states have joined the Alliance. The states maintain that they are committed to achieving the U.S. goal of reducing emissions percent from 2005 levels and meeting or exceeding the targets of the federal Clean Power Plan." Clean Air Rule In 2016, the Washington State Department of Ecology (DOE) enacted the Clean Air Rule (CAR), effective beginning in This rule established a cap and a reduction schedule on GHG emissions from in-state sources (natural gas plants), petroleum product producers and importers, and natural gas distributors. However, new emission sources, like new baseload gas plants, were permitted. The CAR was challenged by a number of groups, and on December 15, 2017, a Thurston County Superior Court Judge invalidated large portions of the CAR, finding that the Department of Ecology lacked authority to impose the CAR without legislative approval. Pending an appeal, the Department of Ecology has suspended the rule's compliance requirements. Facilities covered by the rule are still required to report their emissions for the Greenhouse Gas Reporting program. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-9

57 Section 3: Planning Environment E3 Carbon Study In 2017, a group of utilities, including the PUD, commissioned a study through Energy + Environmental Economics Inc. (E3), to analyze the most cost effective method to achieve meaningful carbon reduction in the electric power sector. 38 The study itself did not begin with any presuppositions about what that method would be the goal was to have an unbiased analysis to determine the least cost way to reduce emissions for the electric sector, given a set of policy goals, from present through the year Using E3 s regional model to simulate energy markets, generation dispatch, and electric loads, and layering policy decisions such as renewable portfolio standards, carbon taxes, or resource restrictions, two outputs were determined for each set of policies: the amount of GHG reduced, and the cost associated with that reduction. After evaluating numerous policy scenarios, the E3 study concluded that the most cost effective method of reducing emissions is to implement a price on carbon. A carbon price creates the most reduction of GHG emissions, while maintaining a low societal cost. Conversely, policies that call for a higher renewable portfolio standard (RPS) or that restrict the construction of new natural gas plants, result in a significantly smaller reduction in GHG emissions, and proves to be incrementally more expensive for electric consumers. Figure 3-1 shows the scenarios analyzed in the study and the relationship between cost and emissions reductions. 38 The full report, Pacific Northwest Low Carbon Scenario Analysis published by E3, can be found at 15_FINAL.pdf Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-10

58 Section 3: Planning Environment Figure 3-1 E3 Study - Annual Cost vs Reduction in GHG Emissions Comparison of Regional RPS or Carbon Policy Washington State s Energy Independence Act (EIA) - RCW Chapter In 2006, the voters of Washington State approved the Energy Independence Act (the EIA) through the state s initiative process (Initiative 937). This Act requires electric utilities with 25,000 or more customers to pursue all cost-effective energy conservation measures, and to acquire and include in their portfolios a mandated amount of eligible renewable resources, renewable energy credits, or combination of the two. The amount of eligible renewable resources required scales to the utility s retail load. Utilities have three methods for complying with the renewables portion of the EIA: meeting the load-based goals with resources or RECs, demonstrating investment of 1% of its retail revenue requirement in eligible renewable resources or RECs without load growth, or demonstrating investment in excess of 4% of the utility s annual retail revenue requirement (commonly referred to as the cost cap method) in eligible renewable resources or RECs. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-11

59 Section 3: Planning Environment The post-2020 landscape for the EIA has been discussed by the Washington State Legislature for several sessions now, with a number of bills aiming to redefine and expand the scope of the EIA. Two main approaches have been discussed: update or change the EIA to account for the post-2020 timeframe, or sunset the existing statute and pursue alternative efforts related to carbon reduction. In the 2018 legislative regular session, the Governor advance a carbon tax proposal that was estimated to generate up to $2 billion in revenue for the state. As initially proposed, it advocated for a $20 per metric ton of carbon dioxide tax, while the revenues would be directed toward carbon reduction projects, water quality projects, and transition aid for those hit hardest by the tax. Lawmakers are aware of potential initiative efforts in the state as well. In fall of 2016, a proposed carbon tax initiative (Initiative 732) was not successful. Future legislation to address carbon is expected to continue. The Trump Administration President Trump s budget proposal for 2018 envisions deep across-the-board agency cuts; including many of the Department of Energy s current programs (research labs, renewables, energy efficiency, electrification, carbon capture) along with proposals to sell off energy resources and infrastructure such as BPA transmission. The budget proposal also includes provisions to restart the investigation of Yucca Mountain as a repository for nuclear waste created across the country. This development could have an impact on the Columbia Generating Station and the rates and fees associated with the generation of nuclear energy. Energy Secretary Perry suggests the budget reflects a focus on nuclear capabilities and early stage energy research and development. The Environmental Protection Agency (EPA) has the largest percentage funding decline of any agency with a focus on infrastructure and air/water quality. President Donald Trump has made it clear in his administration that climate change is not a high priority. Since his election, President Trump has withdrawn from the Paris Agreement, a global accord addressing climate change due to concern for the levels of United States financial contribution. In March 2017, President Trump released an Executive Order Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-12

60 Section 3: Planning Environment signaling a pullback from the Clean Power Plan (CPP) put into place by the Obama administration. The CPP would have mandated that the States achieve specified reductions in greenhouse gas emissions through a variety of mechanisms, including heat rate improvements at coal and gas plants, replacement of coal with gas, energy efficiency measures, and greater reliance on renewable resources. The EPA has announced its intend to pull back the Clean Power Plan, and to replace it with a much narrower regulation that is aimed at GHG emissions from power plants. There are risks for further court challenges; however less expensive natural gas and rise in the renewable investment have placed at risk the financial stability of the coal industry, which the Trump administration has signaled is a priority. The Trump Administration also recently announced a 30% tariff on foreign solar cell imports. Solar installers have stated that they believe that this will greatly harm their business. By making the least expensive option for installing solar more expensive, demand for solar cells could decrease and harm installers. The PUD monitors shifts in renewable energy markets and this policy could have an effect on future resource decisions as its impacts on the solar market become better known. FERC s 2016 Notice of Proposed Rulemaking on Electric Storage In a November 2016, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR), stating that market rules can create barriers to entry for emerging technologies like energy storage resources. The proposed rule would require regional transmission operators and independent system operators to propose tariff revisions to recognize the physical and operational characteristics of electric storage resources, and to allow those resources to participate in organized markets. The proposed tariff revisions are based on a participation model, to ensure that a resource using the model: (1) is eligible to provide all capacity, energy, and ancillary services that it is technically capable of providing; (2) can be dispatched and is a price maker in the wholesale market as both a seller and buyer, consistent with existing market rules; (3) accounts for the physical and operational characteristics of electric storage resources through bidding parameters or other means; and, (4) establishes a minimum size requirement. In addition, the sale of electric energy from the Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-13

61 Section 3: Planning Environment wholesale electricity market to an electric storage resource, that the resource then resells back to those markets, must be at the wholesale locational marginal price. During drafting of the PUD s 2017 IRP document, FERC adopted Final Rule Order No. 841 in February The Order does not force grid operators to change technical requirements or compensation mechanisms for existing products, introduce new products, or exempt energy storage resources from performance requirements. According to a Brattle Group report, Order 841 does not address state or retail level challenges or reduce barriers that would allow for energy storage to capture distribution level or customer benefits. That underscores the important role state participation will play in the development of energy storage. Order 841 will have a significant effect, but the greater and wider effect will come from state policies. 39 Six states in the U.S. have taken steps to incorporate energy storage. A California mandate calls for its utilities to install 1,325 MW of storage by 2020; Massachusetts has a 200 MWh by 2020 goal; Oregon has a 5 MW by 2020 goal per utility; New York is working on an energy storage target with a governor proposed 1,500 MW target by 2030; and legislation has passed in Nevada and Arizon that asks regulators to investigate energy storage targets. The states of Colorado, Illinois, Indiana, Minnesota, Missouri, New Mexico, Ohio and Vermont also have active proceedings involving energy storage policies. 39 The flip side of FERC's landmark storage order: A call for states to take action, Utility Dive, March 6, 2018, URL at: Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-14

62 Section 3: Planning Environment Federal Columbia River Power System Endangered Species Act and NEPA Litigation Litigation over the operation of the Federal Columbia River Power System and associated Biological Opinions (BiOp) has been ongoing for the past 40 years. In 2014 parties challenged the sufficiency of the 2014 Supplemental BiOp, alleging that the BiOp violated the Endangered Species Act (ESA) and that adoption of the BiOp by the action agencies (the Bonneville Power Administration (BPA), Army Corps of Engineers (COR), and Bureau of Reclamation (BOR) violated the National Environmental Policy Act (NEPA). Judge Simon in the District Court of Oregon concluded that the National Oceanic and Atmospheric Administration (NOAA) Fisheries violated the ESA by adopting the 2014 Supplemental BiOp. The Court determined that the mitigation in the BiOp was insufficient to avoid jeopardy of the listed species, particularly for salmon and steelhead in the Columbia and Snake Rivers. The Court left the 2014 Supplemental BiOp in place while NOAA Fisheries prepares a new BiOp to be released in late The Court also ordered compliance with NEPA, launching a public process by the action agencies (BPA, COR, BOR) with a final Environmental Impact Statement due by Some parties, led by the State of Oregon and the National Wildlife Federation, subsequently sought an injunction requiring maximum spill at eight Federal hydroelectric projects during spring months. The injunction was granted, but has been appealed by the action agencies. If the appeal is unsuccessful and the increased spill goes into effect during the spring of 2018, it could require notable hydro operational changes that would affect the amount and timing of electric power generated by the Federal System. The PUD has no capability to predict what the outcome of this litigation will be, nor how it will affect development of the future BiOp and Environmental Impact Statement. The 2017 IRP analysis used existing and known Federal hydro system operating assumptions, based on Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-15

63 Section 3: Planning Environment the 2014 Supplemental BiOp, to model the PUD s offtake under the Slice product portion of its long term BPA power supply contract. 40 Columbia River Treaty The Columbia River Treaty is a 1964 treaty agreement between Canada and the United States addressing the flood control and power benefits derived from the development and operation of dams in the upper Columbia River basin. Either nation can terminate most of the provisions of the Treaty (upon ten year notice) at any time on or after September 16, In 2013, the U.S. Entity developed a Regional Recommendation in collaboration and consultation with states, tribes, and stakeholders within the Northwest Region. The Regional Recommendation concluded that a modernized Treaty framework - that includes ecosystem considerations is necessary to reflect the actual value of coordinated power and flood control operations with Canada. The Canadian and United States governments will soon begin a formal review of the Treaty and began negotiating changes for the joint operation of the system. These negotiations could result in modifications to the flood control and power obligations for each nation, resulting in potential impacts to the hydroelectric power produced by the Federal System, that BPA markets. At this time, PUD staff cannot predict with any certainty the outcome of these negotiations, or the impact or impacts to the Federal hydro system or the PUD s long term BPA power supply contract and power costs. 40 The 2017 IRP analysis performed a sensitivity analysis labelled No Snake River Dams to better understand the potential costs and ramifications to the PUD s existing portfolio if the Lower Snake River dams were removed. The results of this analysis can be found in Appendix C. Snohomish PUD DRAFT 2017 Integrated Resource Plan 3-16

64 Section 4: Scenario & Planning Assumptions 4 SCENARIOS AND PLANNING ASSUMPTIONS Scenarios Scenarios help explain how changes in economic, social, technical and environmental trends could affect the PUD s future load growth, and the cost and risk of various resource plans developed in response. Scenarios also provide useful insights into potential uncertainties and broad sets of risks the PUD could face under each of these futures. The 2017 IRP evaluated five scenarios that considered the range of futures the PUD could face for the 2018 through 2037 study period. Staff also conducted two sensitivities to the Business as Usual scenario. 41 Figure IRP Scenarios & Sensitivities Sensitivities - No Snake River Dams - Renewables Only BAU w/no Carbon BAU w/calif Carbon 2022 Climate Change Low Growth High Growth 41 The 2017 IRP Sensitivities are in Appendix C. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-1

65 Section 4: Scenario & Planning Assumptions Low Growth Scenario The Low Growth scenario reflects a future where Executive Branch decisions affect the country s position in the global marketplace. This is marked by the eventual withdrawal of the U.S. from Trans-Pacific Trade pact, including repeals of other national environmental policies and regulations. The effect on Washington state is, according to a statement by the Washington Council on International Trade, that 2 in 5 jobs is linked to global trade. The result is the loss of living wage jobs, and slower than historic growth rates for Washington state and the Snohomish County economy, population and employment. With other changes to federal environmental policies, horizontal shale extraction expands and the natural gas price forecast is the lowest of all the scenarios. Courtesy of Deutsche Welle, Despite these national policy changes, Washington state retains its leadership role in state environmental policy, and a carbon tax is instituted beginning in The state s annual renewables requirement remains at 9% of total retail load for utilities with more than 25,000 customers through 2019, and increases to 15% in 2020, remaining at this level through The elements in this scenario inform the PUD s future resource need in light of increasing California and Oregon renewable portfolio requirements and the PUD remaining in a net no load growth status, after new conservation has been acquired. Other factors include reduced levels of electric vehicle adoption due to increased consumer price sensitivity; a decline in industrial load growth and in the production and processing of cannabis. 42 The EPA s Low Societal Cost of Carbon at $13.19 per metric ton begins in Source: The Social Cost of Carbon, EPA. Found at Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-2

66 Section 4: Scenario & Planning Assumptions Business as Usual with No Carbon Scenario The future under the Business as Usual with No Carbon scenario ( BAU w/no Carbon ) reflects average annual load growth of 1.1% under normal historic weather conditions, before new conservation. This scenario reflect moderate socio-economic conditions. Increased production at the Boeing Everett plant associated with the 777X project is expected, and both Naval Station Everett and Boeing maintain steady employment levels through the late 2020 s. The Port of Everett is actively developing its Waterfront Place a mixed commercial, residential and marina complex, located west of historic downtown Everett, Washington. Small businesses and services continue to grow across time, while growth in the industrial and large commercial sectors remains low across the study period. The basis for the load forecast in this scenario assumes actual historic weather and temperatures based on data for the 1991 through 2015 period. No changes to future weather patterns or temperatures were incorporated in the BAU scenario. Other growth factors such as population, employment, new customer connections and electric vehicle adoption were at the midpoint of the range (see Figures 4-6 and 4-7). The current Washington State law that established a de minimus carbon price was assumed across the 20-year study period, resulting in the lowest forecast fuel costs and wholesale energy market prices of all of the scenarios. 43 The scenario also assumed a future where regional coal plants are retired 44 and that the state s Clean Air Rule will help achieve the desired level of greenhouse gas emissions reductions. Therefore, no new state or federal carbon policy was considered in this scenario. 43 Revised Code of Washington Chapter 80.80, Greenhouse Gas Emissions, Baseload Electric Generation Performance Standards, located at 44 The BAU scenario assumed retirement of Colstrip 1 and 2 was accelerated from to 2018, see p. 10. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-3

67 Section 4: Scenario & Planning Assumptions Business as Usual with California Carbon Scenario The Business as Usual with California Carbon scenario ( BAU w/ca Carbon ) assumes the same load growth rate and socio-economic conditions described above in the BAU w/ No Carbon scenario. But this scenario evaluates carbon costs at the California Cap and Trade level, effective This scenario considered the tradeoffs associated with a carbon price consistent with California s existing policy to better understand the policy s impacts on forecast fuel costs and wholesale energy prices. This scenario also helped identify the most suitable mix of future demand- and supply-side resource additions to the PUD s existing portfolio and other considerations if a carbon policy at this level began in High Growth Scenario The High Growth scenario is marked by 2.2% average annual load growth for Snohomish County. The socio-economic factors of population, employment and income growth for the Puget Sound exceed the national average across the 20 year planning horizon. The country s leadership in technology and innovation enhances its position in the global economy and the Boeing Everett Plant and Naval Station Everett complete facility expansions. The increased cost of housing in the greater Seattle area spurs residential development to more affordable Snohomish County. The advancement and application of innovative new technologies makes Puget Sound a hotbed for high tech industry, and South Snohomish County booms with new businesses and residents. Washington State University s newly sited campus in the county expands its footprint to offer new STEM education and training programs to support future employees and of the top employers. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-4

68 Section 4: Scenario & Planning Assumptions The natural gas price forecast in the High Growth scenario is the highest of the scenarios, and includes increased environmental regulations through implementation a mid-high level of carbon policy that averages $65 per ton. As a result, the High Growth scenario has the highest forecast fuel costs and market prices of all the scenarios. The volume of the demand- and supply-side resources to meet the load growth and capacity needs after new conservation in this scenario, given the higher price market environment and higher level of annual renewables requirements, proves challenging. Climate Change Scenario The Climate Change scenario assumes an average annual load growth rate of 1.0% and applies the same socio-economic factors of population, employment and income growth identical to those that underpin the Business As Usual scenario. The scenario incorporated low natural gas prices and a Low Societal Cost of Carbon beginning in 2018; both affect forecast regional fuel costs and market prices. What s different in the Climate Change from the BAU scenario is the use of current climate change science to forecast future customer demand and load patterns based on expected changes in weather patterns, and to quantify impacts to the PUD s existing and committed resource portfolio. 45 Based on extensive work performed by the University of Washington s Climate Impacts Group on regional climatology, the region is expected to experience milder winters with increasing amounts of precipitation and less snowpack. The expectation is for increases over time in winter hydroelectric production, and reductions over time in summer hydroelectric production due to lack of snowpack build and reduced spring snowmelt. The Climate Change scenario highlights a different future resource need for the PUD as a result of changes in load patterns, and later, due to changes in hydroelectric production patterns. 45 The PUD s load use patterns assumed an increase in baseline temperature of one degree effective 2017 and two additional degrees by This approach best adapted the internationally and regionally-recognized best science to the PUD s own weather normalization model. Appendix A describes the climate change analysis in greater detail. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-5

69 Section 4: Scenario & Planning Assumptions Sensitivities The 2017 IRP evaluated two sensitivities in order to query the range of impacts that could occur as compared to the Business-as-Usual w/no Carbon scenario (BAU w/no Carbon). A sensitivity analysis varies an element in the analysis for the purpose of asking what if questions. Discussion on the two sensitivities can be found in Appendix C Load Forecasts The range of load forecasts developed for the 2017 IRP rely on a mix of econometric and deterministic approaches. An econometric approach was used for modeling historical weather, consumption, and customer information to build a baseline from which future years can be predicted. In building this baseline, the PUD relies on actual consumption data from the past several years by sector, and then holding other things constant, forecasts what consumption would have been under normal or expected historical weather. With the baseline established, PUD staff then adjusted for expected future conditions including changes in: population, housing type and efficiency, electric vehicle adoption, 46 assumptions based on permitting by the Washington State Liquor and Cannabis Board on grow or processing locations, county employment and projections in the goods-producing, service-producing and military sectors, known industrial developments, and other factors. These changes are summed and net effects are applied over the forecast period. Figure 4-2 shows the average annual load forecast by scenario for the 2018 through 2037 study period, before new conservation. 46 Estimates for electric vehicle adoption (plug-in electric and battery electric technologies) in the PUD s service territory were derived from a 2017 joint study performed Energy and Environmental Economics (E3), Economic & Grid Impacts of Plug-In Electric Vehicle Adoption in Washington & Oregon, March This study was sponsored by Snohomish PUD, Chelan County PUD, Puget Sound Energy, Tacoma Power, Avista Utilities and Seattle City Light. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-6

70 amw Section 4: Scenario & Planning Assumptions 1,300 1,200 1,100 1, Figure IRP Average Annual Load Forecast by Scenario before New Conservation (in amw) Low Climate Change Business As Usual High The near term load growth rate between Climate Change and the Low Growth cases are similar for different reasons. The Climate Change expectations expect that near-term weather will be closer to recently experienced milder winter weather, which reduces average annual loads. The Low Growth forecast includes lower population growth, disposable income, and economic activity, which has a similar scaled effect in the 2018 through 2025 period. The assumption for Low Growth, BAU and High Growth load forecasts reflect weather normalized for the period, resulting in colder normal winters than under the Climate Change forecast. Figure 4-3 shows the winter load forecast by scenario for the December On-Peak hours, before new conservation. The BAU and Climate Change forecasts share many of the same socio-economic assumptions, but use different expectations for weather. The weather assumption for the Climate Change scenario gradually reduces expected winter demand over the 2018 through the 2028 period, since winter heating demand is highly dependent on temperature. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-7

71 amw amw Section 4: Scenario & Planning Assumptions Figure 4-3 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1, IRP December On-Peak Load Forecast by Scenario before New Conservation (in amw) Climate Change Low Business As Usual High Electric Vehicle Adoption Electric vehicle (EV) adoption assumptions were built into each of the scenario load forecasts and reflect the PUD s expectation that EV s may become a significant component of future load growth. Figure 4-4 illustrates the adoption rates used in the Low, BAU and High scenarios: the EV share of total load growth by 2037 is 12%, 14% and 14% respectively, for these scenarios Figure 4-4 Electric Vehicle Adoption Rate Assumptions by Scenario (in amw) Low Business As Usual High 47 The estimates used for electric vehicle adoption (plug-in electric and battery electric technologies) in the PUD s service territory were derived from a 2017 joint study performed Energy and Environmental Economics (E3), Economic & Grid Impacts of Plug-In Electric Vehicle Adoption in Washington & Oregon, March 2017, sponsored by Snohomish PUD, Chelan County PUD, Puget Sound Energy, Tacoma Power, Avista Utilities and Seattle City Light. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-8

72 Load in amw Section 4: Scenario & Planning Assumptions The inflection point in the year 2020 reflects near-term EV market development through 2020, with divergent assumptions of light duty vehicle market share and vehicle sales thereafter. This assumption is intended to reflect anecdotal market development observations, such as Volvo s transition to offering only hybrid and electric light-duty vehicles by Cannabis Production and Growth The PUD has observed changes in this emerging industry since Washington voters approved Initiative 502 in November Staff monitor the Washington Liquor and Cannabis Board website for source data of approved and pending state permits of cannabis production facilities, and contemplated square footage for these facilities. The rates of growth included in the Low Growth, BAU and High Growth load forecasts are shown in Figure Figure 4-5 Indoor Agriculture (Cannabis) Load Growth by Scenario Low Business As Usual High Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-9

73 Section 4: Scenario & Planning Assumptions Planning Assumptions BPA Long Term Contract As described in Section 2 BPA Contract, the PUD contracts with BPA for the Block and Slice products under a long term power supply agreement. The Block product supplies the PUD with firm energy in flat monthly amounts based on the PUD s average monthly load shape. The Slice product provides the PUD with variable amounts of energy that depend upon the output of the Federal System. Under the Slice product, the PUD takes responsibility for managing its share of the output from the Federal Base System by month, day and hour, also assuming the inherent risks. If snowpack and water conditions are above average in the region, the energy output typically is also above average. If regional snowpack and water conditions are low, the amount of energy the PUD derives from the Slice product would also be reduced. For ratemaking purposes, BPA determines the total of its customers loads and the Federal System size in order to allocate costs over the two year rate period. This Rate Period High Water Mark process establishes the maximum amount of energy the PUD is eligible to purchase from the BPA at cost, or the Tier 1 rate. Since the new contract term began in October 2011, the size of the Tier 1 System has varied. Tier 1 System size variations occur due to changes in BPA s system obligations and hydro operations, and maintenance outages and refurbishments to the federal hydro system. Figure 4-6 shows the actual BPA Tier 1 System Size and Tier 1 contract allocation to the PUD for the 2012 through 2017 period: 48 Fiscal Year Figure 4-6 BPA Tier 1 System Size and Tier 1 Allocation to Snohomish PUD BPA Tier 1 System Size (in amw) Maximum Tier 1 Available to PUD Rate Period High Water Mark (in amw) Actual BPA Tier 1 Contract Allocation to Snohomish PUD (in amw) The BPA Slice product is allocated contractually based on the customer s Slice percentage with monthly output based on critical water; actual amounts will vary. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-10

74 Section 4: Scenario & Planning Assumptions The 2017 IRP assumed that the BPA Tier 1 System would decline from 6,944 in 2018 to 6,850 in This assumption is based on the BPA s most recent BP-18 rate case documentation and studies. Figure 4-7 shows the actual generation provided by the BPA Block/Slice contract by fiscal year, by monthly average for December on-peak, and for the average on-peak, 80 Peak Week Hours (Monday through Friday, on-peak hours of hour ending 0700 through hour ending 2200) for 2012 through 2017: Fiscal Year Figure 4-7 Snohomish PUD BPA Contract - Total Actual Generation (Block and Slice Combined) Annual amw December On-Peak amw December Peak Week (amw) ,076 1, ,016 1, ,032 1, ,076 1,141 With no other information available at this time as to the types of products or contract term length the BPA may offer in the post-2028 period, the 2017 IRP assumed that the Tier 1 System size would be allocated to customers in a similar fashion as today under a 10 year contract term. These assumptions result in the BPA Tier 1 System size held constant at ~ 6,850 amw for the 2028 through 2037 period, resulting in the maximum amount of energy the PUD could purchase from BPA at the Tier 1 rate of 775 amw for the 2028 through 2037 period. The distribution of the PUD s contract allocation between the Slice and Block products was assumed to remain similar to today s at ~48% Block and ~ 52% Slice, where BPA allocates a Slice contract amount based on the firm energy content it would yield under adverse water conditions. The result is Block amounts ranging from 353 amw in 2018 to 403 amw in Slice product deliveries were simulated thousands of times using a 66 year regulated Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-11

75 Section 4: Scenario & Planning Assumptions hydro study for the water years 1950 through The combination of the Block and Slice products results in a total BPA contract allocation of 733 amw in 2018, growing to 775 amw in Natural Gas Natural gas price assumptions varied by scenario and served as both an input to the forecast of wholesale electricity prices modeled at the Mid-Columbia trading hub, and to the underlying fuel costs associated with certain supply side resource options. The 2017 IRP analysis used natural gas price forecasts derived from AURORA XMP, the Council s Seventh Power Plan, and the Energy Information Administration s Annual Energy Outlook for September 2016 and January 2017 as follows: Low Growth: Based on Council s Seventh Power Plan s Low Case natural gas price forecast, ranging from $2.89 in 2018 to $5.80/MMBtu in Business as Usual (BAU): Based on the average of the AURORA XMP 2016 base assumption and the January 2017 Annual Energy Outlook, ranging from $3.25 in 2018 to $6.64/MMBtu in High Growth: Based on the September 2016 Annual Energy Outlook ranging from $3.83 in 2018 to $10.56/MMBtu in Hydro regulation data reflects operating constraints for the 2016 Water Year, informed by the 2014 Biological Opinion for fish and wildlife. See Appendix A for more on Probabilistic Load Resource Balance. 50 The PUD s existing BPA power contract does not preclude other bilateral commercial arrangements the PUD could make with BPA for different or future products. Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-12

76 $/MMBTu Section 4: Scenario & Planning Assumptions $12 Figure IRP Range of Natural Gas Prices by Scenario (without carbon policy effects) $10 $8 $6 $4 $2 $0 Low Case Business As Usual High Case Carbon Costs Carbon cost assumptions were applied to the fuel costs for supply-side resources that may use natural gas, and to the forecast of wholesale electricity prices. This created increased costs for the dispatch of some supply side resources within the AURORA XMP model for the Western Electricity Coordinating Council (WECC). Increased dispatch costs within the simulated WECC impacted the cost of wholesale electricity relative to the natural gas forecast and carbon policy forecast, depending on the scenario. Figure 4-9 represents the range of carbon costs considered in the 2017 IRP analysis: Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-13

77 $/Ton of CO2 Section 4: Scenario & Planning Assumptions Figure IRP Range of Carbon Prices by Scenario $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Low Load Growth Business as Usual w / No Carbon High Load Growth Business As Usual w/ CA Carbon Forecast Market Electricity Prices Staff modified inputs in the AURORA XMP model to reflect natural gas and carbon cost assumptions for each scenario with carbon costs applied to all generators in the WECC region. To guide resource build decisions in the future, staff incorporated California, Washington and Oregon renewable portfolio standards (RPS) and applied them to new generating resources so sufficient energy would be available from the resources being built to meet the states increasing RPS targets. At the time of modeling in early 2017, future retirements were assumed to occur in 2018 for coal plants Colstrip 1 and 2. Load growth was also modified to reflect scenario assumptions. These inputs were used to run a long-term capacity study WECC-wide. The diagram of AURORA modeling and forecast electricity market prices for the Mid-Columbia trading hub are shown in Figures 4-10 and 11: Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-14

78 $/MWh Section 4: Scenario & Planning Assumptions Figure 4-10 Diagram of AURORA XMP Modeling Natural gas prices Emissions prices RPS constraints Coal retirements Regional load INPUTS AuroraXMP Long-Term Capacity Expansion study Mid-C Power Prices Forecast Market Prices $180 Figure IRP Wholesale Market Price Forecast by Scenario $160 $140 $120 $100 $80 $60 $40 $20 $0 Business As Usual Low Case Business As Usual w/ CA carbon High Case Snohomish PUD DRAFT 2017 Integrated Resource Plan 4-15

79 5 ANALYTICAL FRAMEWORK The development of an Integrated Resource Plan (IRP) involves six broad steps: 1. Creating a range of scenarios, a range of load forecasts and other planning assumptions 2. Identifying resource needs and establishing planning standards 3. Evaluating resources to meet those needs 4. Developing integrated portfolios that combine demand and supply side resources 5. Evaluating the costs and benefits of the candidate portfolios 6. Recommending and documenting a long term resource strategy Scenarios, load forecasts and other key planning assumptions are described in Section 4. This section addresses the analytical framework used to identify the PUD s forecast resource need for each scenario and established planning standards; how new conservation and energy efficiency measures, demand response and supply side resource options were evaluated; and how candidate resource portfolios were modeled. Section 6 discusses the resulting candidate resource portfolios and selection of the preferred or long term resource strategy. Identifying Future Resource Need A significant effort in the long term resource planning process is for the utility to assess how long it can meet its customers future needs with its existing energy and capacity resources, and when it will need to plan for new resource additions. The timing of when this future need will occur depends on the future the PUD may face slow, moderate or more robust load growth than the past and the characteristics of the utility s existing resource portfolio, including any existing or new regulatory requirements. A utility also considers and incorporates other criteria to mitigate portfolio risk, such as low generation years (typically due to poor hydro conditions) and exposure to short-term market and price volatility and other uncertainties. The PUD s existing power supply portfolio is predominantly comprised of hydroelectric generation, with over 80% of its energy provided via a long term power supply contract with the Bonneville Power Administration (BPA). BPA is the balancing authority area that the Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-1

80 amw Section 5: Analytical Framework PUD resides in, and as such, the PUD contracts with BPA for the needed reliability and ancillary services so it can provide reliable electric service to its customers. 51 The most significant portfolio risk the PUD faces in meeting its customer needs is the impact of low hydro conditions. Probabilistic Analysis of Existing Load Resource Balance In order to understand the risks associated with low hydro conditions, the 2017 IRP analysis incorporated a probabilistic approach to assessing the variability of its existing and committed resources against the load forecast for each scenario. The probabilistic approach considered the range of possible combinations generation from the PUD s existing and committed resources and the scenario s load forecast, and simulated them together in an inhouse model 52 that identified the timing, scale, and likelihood of the sufficiency of the PUD s existing portfolio to meet customer need across the planning horizon. Probabilistic View of Annual Average Customer Demand (Load) Figure 5-1 illustrates the probabilistic range of the PUD s average annual customer demand or load for the BAU scenario, where the yellow line represents the mean of the distribution, and the lower green band denotes that the average customer load is expected to exceed this level 95 percent of the time, before new conservation. Figure 5-1 Probabilistic View of Snohomish PUD s Average Annual Load Forecast % - 95% +/- 1 Std. Dev. Mean 51 Since the PUD contracts with BPA for the required balancing, reliability and ancillary services associated with grid reliability, the PUD includes no reserve margins as part of its overall resource planning process. 52 The Probabilistic Load Resource Balance Model is more fully described in Appendix A. Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-2

81 Section 5: Analytical Framework Probabilistic View of Annual Average Existing/Committed Resources Figure 5-2 illustrates the probabilistic range of average annual generation produced by the PUD s existing and committed resources, used to meet average annual customer load. The yellow line shows the average annual portfolio production, for the 2018 through 2037 period. The lower green band on the chart indicates that 95 percent of the time the PUD s existing resources will exceed this average annual production level, while the level denoted by the upper green band will exceed this upper level of average annual production only 5 percent of the time. The illustration depicts the decline in annual resource production over time as a result of wind and other renewable contracts expiring, denoted by the black vertical lines shown for years 2024, 2027, 2028 and The BPA Block/Slice allocations are associated with the load growth in the BAU scenario. Figure 5-2 Probabilistic View of Snohomish PUD s Existing/Committed Resources 53 The 2017 IRP analysis assumed that the PUD s long-term power supply contract with BPA continues post Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-3

82 Section 5: Analytical Framework Probabilistic Load Resource Balance Combining the PUD s probabilistic range of annual customer load with its existing and committed resources results in a net annual load resource balance or net position. Figure 5-3 shows the net position under the BAU scenario before the acquisition of any new conservation over the 20 year study period. The short and long positions shown on the left side of the figure indicate that the PUD s available resource position becomes deficit or short when it trends below zero, and hence is not able to meet customer need on a planning basis. The net position is said to be long when it exceeds zero, meaning the PUD can meet its customers annual energy needs and may have some level of surplus to sell after meeting these needs on a planning basis. The yellow line is the mean of the distribution. The lower green band represents the P5 value for the annual net position; 95% of the time (19 out of 20 times), the PUD s load resource balance will exceed this level. The upper green band is the P95 value, indicating that the PUD s net position is expected 95% of the time, and will only exceed this level 5% of the time. Figure 5-3 Probabilistic Average Annual Load Resource Balance before New Conservation Business as Usual Scenario Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-4

83 Total RECs in MWh Section 5: Analytical Framework Forecast Renewables Requirement under the EIA To comply with the state s EIA annual renewables target, measured as a percentage of customer load, the PUD s portfolio must have sufficient eligible renewable resources, renewable energy credits (RECs), or the combination of both. Figure 5-4 shows the PUD is forecast to meet its renewables target with its existing resources through 2020 when the requirement increases to 15%, and is deficit thereafter. Satisfying the annual renewables requirement has been incorporated into the portfolio development model through an established planning standard (see below). Figure 5-4 Forecast Renewables Compliance Requirements 1,400,000 1,200, Renewables Target 15% of Total Retail Load 1,000, , ,000 9% 400, ,000 - Existing REC Bank Existing Portfolio RECs Annual EIA Target Planning Standards Prior IRPs established planning standards or guidelines to ensure future customer load growth would be met on an annual and winter on-peak basis. These previous planning standards relied on static, arithmetic metrics for determining annual hydro production. These limited metrics tended to overstate future annual energy need and did not accurately reflect the potential range of seasonal impacts to the PUD s existing portfolio under poor hydro conditions. The probabilistic approach to the PUD s load resource balance 54 provided the 54 The PUD s in-house Probabilistic Load Resource Balance Model is more fully described in Appendix B. Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-5

84 Section 5: Analytical Framework platform upon which to establish new planning standards for the 2017 IRP analysis. In this way adequate resources would be available on a planning basis to meet annual, monthly and weekly customer demand across the IRP study period. A planning standard to measure compliance with the annual renewables requirements prescribed under the EIA was also included in this framework. The four planning standards established in the 2017 IRP analysis to provide for an objective comparison of the impacts of various scenario assumptions on future resource need are: 1. The Annual Energy Planning Standard measures the ability of the PUD to meet average annual energy demand across the entire year. The PUD is deemed to have an energy need if average annual load exceeds average annual resource production. 2. The Monthly On-Peak Planning Standard measures the ability of the PUD to meet monthly on-peak demand, 19 out of 20 times, with its existing and committed resources. Given the PUD s existing portfolio is predominantly hydro based, the Monthly On-Peak standard is reflective of exposure to the combination of high load and poor or adverse water hydro conditions. This planning standard also limits the quantity of on-peak energy/capacity purchased from the short-term wholesale energy market to no more than 100 amw in a given month to satisfy portfolio deficits. 3. The Peak Week Planning Standard measures the ability of the PUD to reliably meet its highest on-peak demand during the most deficit week of the month, 19 out of 20 times, with its existing and committed resources. The highest on-peak demand has historically occurred during December. Given the PUD s existing portfolio is predominantly hydro based, the Monthly Peak Week standard for on peak hours is reflective of exposure to the combination of high load and poor or adverse water hydro conditions. This planning standard limits the quantity of on-peak energy/capacity purchased from the short-term wholesale energy market to no more than 200 amw in a given month to satisfy portfolio deficits. 4. The Regulatory Compliance Standard measures the portfolio s compliance with the provisions for determining cost effective conservation and annual renewables target set forth under the Washington state Energy Independence Act (EIA). Other regulatory requirements including consideration of overgeneration and renewable and nonrenewable resources are also addressed through this planning standard: RCW Chapter details conservation and renewables compliance requirements and RCW Section addresses developing a resource plan and considering overgeneration events. Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-6

85 Section 5: Analytical Framework Resource Options It is important to understand the differences among resource options available to serve future energy and capacity needs and meet the objective of providing reliable, lowest reasonable cost electric service to the PUD s customers under a variety of futures. In many cases, renewable resources have a lesser impact on the environment while non-renewable resources are considered to be more reliable and cost-effective. The 2017 IRP evaluated the relative costs and benefits of different types, sizes and time constraints of commercially available resources. Supply side and demand side resources were evaluated using the same measurements: their potential contributions to capacity, energy, and satisfying annual renewable compliance requirements. In this way, the PUD was able to use an integrated portfolio approach for each scenario, creating candidate portfolios that combined the best mix of demand and supply side resources to meet future need, based on least cost criterion. Demand Side Resource Options Conservation The PUD contracted for a utility-specific analysis with the CADMUS Group, who conducted a 2017 Conservation Potential Assessment (CPA) study. The CPA identified all technically achievable conservation within the PUD s service territory over the 20 year study period. 56 The CPA was informed by: the PUD s past conservation achievements; the preliminary regional 2016 Residential Building Stock Assessment (RBSA); a preliminary oversampling of the PUD s service territory for certain RBSA conservation measures; and measures identified in the Northwest Power & Conservation Council s (Council s) Seventh Power Plan. The CPA informs the amount, type, and availability of conservation measures, their associated savings, and costs. The CPA assessed each technically achievable conservation measure, and sorted the measures into eight different bundles by levelized cost. These bundles were then used to 56 A full description of the conservation resources available to the PUD can be found in the CPA which is attached as Appendix E. Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-7

86 amw Section 5: Analytical Framework determine the amount of conservation that is cost-effective, alongside supply side resource options, using an integrated portfolio approach for each scenario. 57 Figure 5-5 illustrates the 2017 CPA s conservation supply curve, separated by bundle. This supply curve facilitates comparison of demand-side resources to supply-side resources. Each bar in the chart below represents the amount of technical achievable conservation potential (annual and winter as measured during December On-Peak Hours based on end use profiles) and a demand side resource option available for selection in the IRP analysis. Bundle 1 represents the conservation measures identified at a levelized cost of $45/MWh that have a total of technical achievable potential of 88 amw in annual energy savings over 20 years, and 117 amw of winter on-peak benefit over 20 years. The stacked bars in Figure 4-5 show bundles of conservation that are cumulative, so the last bar represents a cumulative ~220 amw of conservation, or the maximum amount of technical achievable conservation in annual amw that could be achieved over 20 years, or by the end of Figure Year Conservation Supply Curve Technical Achievable Potential Annual amw December HLH amw Bundle 1 Bundle 2 Bundle 3 Bundle 4 Bundle 5 Bundle 6 Bundle 7 Bundle 8 57 The integrated portfolio analysis and portfolio optimization process is described in Appendix I Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-8

87 Section 5: Analytical Framework The residential sector accounts for approximately 68% and the commercial and industrial sectors account for 23% and 6% of achievable technical conservation potential, respectively. Figure 5-8 shows cumulative achievable technical potential in 2037, distributed by sector: Figure Year Technical Achievable Potential by Sector The primary measures for the various sectors are listed below by sector. The PUD s 2017 Conservation Potential Assessment Report, conducted by CADMUS, can be referenced in Appendix E. In the PUD s 2017 CPA, incremental achievable potential was determined for each year of the study s planning horizon by measure turnover rates and measure-specific ramp rates. Chart 5-1 shows cumulative 10-year and 20-year achievable technical potential by sector: Sector Chart 5-1. Achievable Technical Potential by Sector 10 Year ( ) Achievable Technical Potential (amw) 20-Year ( ) Achievable Technical Potential (amw) Residential Commercial Industrial Agriculture 0 0 DEI Total Distribution Efficiency investment (DEI) measures improve the efficiency of utility distribution systems by operating in the lower end of the acceptable voltage range (126 to 144 volts). Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-9

88 Section 5: Analytical Framework Chart 5-2 and 5-3 show cumulative and incremental achievable technical potential by sector, over the study s 20-year horizon. Chart 5-2. Cumulative Achievable Technical Potential Chart 5-3 Incremental Achievable Technical Potential The study indicates approximately 32% of the 20-year achievable potential would be acquired in the first five years, and 69% of 20-year achievable potential would be acquired in the first 10 years. Both measure turnover and ramp rates drive acquisition rates. CADMUS applied an even, 10-year ramp rate for all discretionary measures, resulting in most savings occurring within the first 10 years. Incremental achievable potential from 2028 through 2037 is driven by interactions between ramp rates for lost opportunity measures and their natural turnover rates (determined by measure lives). Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-10

89 Section 5: Analytical Framework Conservation offers a low-cost resource, with roughly 89 amw of achievable technical potential at a cost of less than $45/MWh levelized. This represents nearly 40% of total cumulative 20-year achievable technical potential. The conservation supply curve in Chart 5-4 shows cumulative achievable potential in each of the District s levelized cost bundles. Chart 5-4 Supply Curve Achievable Technical Potential (All Sectors) Residential Sector Residential customers in the District s service territory account for 55% of total baseline sales. The sector, divided into single-family, multifamily, and manufactured homes, provides a variety of potential savings sources, including equipment efficiency upgrades (e.g., water heaters, appliances), improvements to building shells (e.g., windows, insulation, air sealing), and increases in lighting efficiency. Chart 5-5. Residential Achievable Technical and Achievable Technical Potential by Segment Segment Technical Potential Achievable Technical 2037 Cumulative 2037 Potential Cumulative 2037 Baseline Percentage of Percentage of Sales amw amw Baseline Sales Baseline Sales Single Family % % Multifamily High Rise % 3 29% Multifamily Mid Rise % 16 33% Multifamily Low Rise % 17 28% Manufactured % 8 22% Total % % Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-11

90 Section 5: Analytical Framework Within the residential sector, central heating accounts for approximately one-third (50 amw) of the total cumulative achievable technical potential by end use, followed by appliances (29 amw) and water heating (29 amw). Chart 5-6 shows the cumulative and incremental residential achievable technical potential across the study period. Chart 5-6 Residential Incremental Achievable Technical Potential Chart 5-7 provides the top 10 residential energy-conservation measures. Together, these measures account for roughly 70% of the total residential conservation potential. Tier 3 clothes dryers the highest energy-saving residential measure has a weighted, average levelized cost of approximately $130/MWh. Efficient windows also produce substantial savings, costing, on average, $70/MWh. Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-12

91 Section 5: Analytical Framework Chart 5-7. Top 10 Residential Measures Measure Name Achievable Technical Percent of Total Potential amw (20-Year) 10-year 20-Year Clothes Dryers Any Residential BPA Tier % Windows Multifamily - Existing Window Single Pane Base to 0.22 Window Any Electric Heat % WINDOW Low-E Storm Window - Single Pane Base_Any Electric Heat % Clothes Washers Any Residential CEE Tier 3 Any Water Heater/Any Dryer % Home Energy Reports % Windows Multifamily - Existing Window Single Pane Base to 0.30 Window Any Electric Heat % Fixtures Linear Fluorescent Fixture Hard-wired % Windows Multifamily - Existing Window Double Pane Base to 0.22 Window Any Electric Heat % Heat Pump Water Heaters Tier % Ductless Heat Pump % Commercial Sector The District s commercial sector accounts for 31% of baseline sales in 2037 and 23% of total achievable technical potential. Chart 5-8 summarizes the distribution of achievable technical potential by commercial segment. Chart 5-8. Commercial Achievable Technical Potential by Segment Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-13

92 Section 5: Analytical Framework Collectively, small and large offices account for 26% of commercial achievable technical potential. The miscellaneous commercial segment accounts for 12% of commercial achievable technical potential, and grocery segments account for 18% (combined). Lighting accounts for the highest portion of total achievable technical potential. Chart 5-9 shows 20-year cumulative commercial potential by end use, Chart 5-9. Commercial Achievable Technical and Economic Potential by End Use Technical Potential Achievable Technical Cumulative 2037 Potential Cumulative 2037 Segment Baseline Sales Percentage of Percentage of amw amw Baseline Sales Baseline Sales Cooking % 3 35% Cooling % 6 21% Data Center % 5 31% Heat Pump 8 0 5% 0 4% Heating % 2 6% Lighting % 24 22% Miscellaneous % 2 6% Refrigeration % 5 24% Ventilation % 1 2% Water Heat % 1 4% Total % 50 16% Chart 5-10 shows cumulative and incremental, achievable technical potential for the commercial sector. Chart Commercial Cumulative Achievable Technical Potential Chart 5-11 summarizes the top 10 commercial conservation measures, sorted by 20-year achievable technical potential. Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-14

93 Section 5: Analytical Framework Chart Top Commercial Conservation Measures Measure Name 10-Year Achievable Technical Potential (amw) 20-Year Achievable Technical Potential (amw) Percentage of Total (20-Year) LED Linear % Exterior Lighting: Façade LED % Advanced Rooftop Controller % Server Virtualization/Consolidation % LED Recessed Can % Electric Commercial Steam Cookers Weighted Average of Pan Capacities % Grocery Retrocommisioning % TLED Over Ballast on SP32WT % VRF % Parking Garage Bi-Level LED % Distribution Efficiency Investment (DEI) DEI measures improve the efficiency of utility distribution systems by operating in the lower end of the acceptable voltage range (126 to 144 volts). Chart 5-12 shows the distribution system efficiency potential based on the Council s Seventh Power Plan measures. Chart Cumulative Achievable Technical Potential DEI Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-15

94 Section 5: Analytical Framework Industrial Sector CADMUS estimated conservation potential for the industrial sector using the Council s Seventh Power Plan measures and selections from BPA s UES measure list. The study assessed potential for 15 industrial segments within the PUD s service territory, based on allocations developed from the PUD s nonresidential database. Chart 5-13 shows the industrial achievable technical potential by end use and Chart 5-14 details the cumulative and incremental, achievable technical potential for the industrial sector. Chart Industrial Achievable Technical Potential by End Use Chart Industrial Cumulative Achievable Technical Potential Snohomish PUD DRAFT 2017 Integrated Resource Plan 5-16