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Bullish on Conservation Mark Ohrenschall Con.Web, May 28, 2004

Council Envisions Vital Role for Conservation, Even with Regional Power Surplus

The Northwest Power and Conservation Council's upcoming regional action plan is likely to include a central focus on sustained energy-saving efforts, even with the current power surplus that officials anticipate could last beyond 2010.

"Aggressive pursuit of conservation still has value to us," Michael Schilmoeller, Council senior power systems analyst, told Council members May 12 in Walla Walla, WA. "It also makes a large contribution toward reduction of costs and risks."

Although the action plan for 2005-2010 is still under final development as part of the overall regional plan, Council staffers have tentatively identified about 150 average megawatts of consistent annual regional acquisitions. About half these prospective target savings could come from "lost opportunity" energy savings, and a similar amount from so-called "schedulable" efficiencies.

That overall figure jibes with the Council's latest projection of 2,800 aMW of cost-effective, achievable conservation regionwide over the next 20 years ( see related story). It also exceeds the Council's call for 100 aMW of annual conservation from 2002 through 2004.

This targeted acquisition level could reduce regional power system costs by $500 million and lessen risk by a projected $1.5 billion, according to the Council.

The Council esteems conservation as a low-cost resource--the median future cost is 3.2 cents per kilowatt-hour for lost opportunities, and 1.4 cents/KWh for schedulable--capable of moderating future electric prices.

Council staffers think the region has sufficient total generating capacity until about 2011, under a medium-growth scenario. But they acknowledge some individual utilities have different timetables for resource additions.

When new power resources are needed, the Council believes a low-risk portfolio would consist of natural gas, coal and wind power. "We still see wind playing a very large role in what gets built out in the next decade," said Schilmoeller.

Background
This will be the Council's fifth regional plan, and Dick Watson, the agency's power division director, noted similarities between now and the first such regional blueprint in 1983.

Both follow a crisis (Washington Public Power Supply System then, the energy crisis of 2000-2001 now) that led to sharply higher retail electricity prices, with declining overall regional loads and excess power capacity. The Council now sees a current regional surplus of about 1,000 aMW.

"The reality is that we are still experiencing demand well below the level it would have been had the forecast in the Council's last plan continued," Watson told Council members. In addition, a substantial amount of new generating capacity--primarily natural gas-fired plants owned by independent power producers--started operating in recent years.

"Under medium growth, we're not getting down to a load-resource balance picture until somewhere out in 2011," Watson said, adding that faster or slower growth rates would change the scene.

He and Schilmoeller distinguished between this regional outlook and the circumstances for individual Northwest utilities, several of which are planning and soliciting new generating resources before 2011.

Nevertheless, Watson said, "The analysis currently suggests not a lot of [new] generation the next few years."

Action Planning: Conservation
Even with this expected abundance of power supplies, Council staff believes persistent conservation is an important regional strategy.

A preliminary draft describes "major thrusts" of the upcoming plan. First, "Acquire those low cost resources that provide a hedge against future fuel price, market and/or environmental risks. This means a focus on conservation with particular emphasis on 'Lost Opportunity' conservation."

Conservation is the top-priority resource under the Pacific Northwest Electric Power Planning and Conservation Act, the draft said. Conservation features "several unique characteristics relative to other resources," such as lack of operating costs and emissions, plus adaptability for development, "assuming the necessary programs and budgets are in place."

Energy savings can serve as an inexpensive reserve margin for the power system, "which reduces market exposure risk and may moderate wholesale price swings." according to a Schilmoeller slide presentation.

Consistent pursuit of conservation--even during times of low power prices and thus lower cost-effectiveness thresholds--is ultimately less expensive than the proverbial roller coaster, Schilmoeller told the Council.

"This approach of sustained, orderly development makes a lot of sense," he said.

The preliminary draft action plan lists myriad ways to achieve regional energy-saving goals, by Bonneville Power Administration, utilities, public-purposes funding administrators, regulators, state and local governments, and the Council. These include programs, budgets, planning, equipment standards, energy codes, evaluation and resource assessments.

Asked later about prospects for regional attainment of Council energy-saving targets, Watson acknowledged difficulties, especially with conservation's rate impacts on utilities and Bonneville Power Administration. "It's always been a tugging and a hauling to get it done," he said. "I'm sure it'll be that way again. I also think the benefits justify it."

In addition to conservation, the Council thinks demand-response options could be valuable during times of high power prices and/or limited supplies. But more understanding is needed on specific approaches, costs and resource potential.

And, despite the anticipated near-term power surplus, the Council's draft suggests "actions that will ensure the ability to develop additional generation resources when needed." These include voluntary resource adequacy standards and "effective planning, expansion, operation and management of the region's transmission system." Resolving hindrances to renewables development is another potential action.

Natural gas, coal and wind represent low-risk resource options for 2011 and beyond. A Council slide outlines construction starts for 1,000 MW of gas plants in 2011, 500 MW of coal in 2011 and again in 2019, and 500 MW of wind in 2013 and a whopping 3,500 MW of wind in 2017, although Watson later noted actual development would likely be phased.

As with conservation, wind could shrink power system costs by $500 million and shrink risk by $1.5 billion.

Related Pages:
NPCC Analyses Look at NW Power Supply Columbia Basin Bulletin, 3/5/4
2,800 aMW of Conservation Through 2025 by Mark Ohrenschall, Con.Web, 5/28/4