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Resource Diversity Jude Noland Con.Web, December 20, 2002

PacifiCorp Draft Integrated Resource Plan Relies More on Renewables

PacifiCorp's draft integrated resource plan relies more on renewable energy than previous such blueprints, although thermal-based resources still play a big role.

Customer demand is expected to increase by about 4,000 megawatts in the next 10 years, and PacifiCorp will need to develop a diversified resource portfolio that includes a mix of demand-side management, renewables and traditional resources, concludes the draft IRP. It calls for acquiring up to 450 average megawatts of DSM and 1,146 aMW of renewables, predominantly wind energy.

The investor-owned utility is fine-tuning its plan for delivery to state regulatory agencies by early 2003.

Meanwhile, renewables advocates are praising PacifiCorp's draft IRP for its substantial inclusion of non-fossil-fueled resources.

Background
PacifiCorp and many other of the region's investor-owned utilities are developing updated integrated resource plans to guide resource acquisition choices for meeting future load growth. The plans--also referred to as least-cost plans--first gained importance in the 1980s, when utilities added energy efficiency strategies to their resource mixes. They fell out of favor as the competitive electricity marketplace evolved, but are now resurgent.

PacifiCorp is required to develop an updated, 20-year integrated resource plan every two years. The utility started working on this plan about a year ago, said spokeswoman Shannon Shoul. Initial meetings were held on a state-by-state, stakeholder-by-stakeholder basis, she said, with the first group meeting in February. Work groups subsequently met monthly until the draft plan was completed in November and distributed to about 30 parties for additional input and comment.

The plan predicts customer demand will grow by 2.2 percent annually on the east side of PacifiCorp's system--Utah, Idaho and Wyoming--and about 2 percent per year on the west side of the system--California, Washington and Oregon. At the same time, output from the utility's existing resources is expected to diminish, owing to lost capacity at aging power plants, environmental or fish mitigation constraints on output, and potential increased regulatory requirements for supply reserves. As a result, the utility will need about 4,000 additional megawatts between 2004 and 2014.

Results
PacifiCorp used extensive modeling and risk analysis to develop the plan, formulating a variety of resource portfolios, simulating the operation of each portfolio, analyzing costs and screening the portfolios to select those with the most promising performance. From there, the company conducted various risk scenarios and stress tests.

The results suggested a number of different potential paths, Shoul said. These include a diversified gas-coal approach, with several variations; a diversified coal-gas approach, also with several variations; all natural gas; PacifiCorp build; a renewables portfolio; and a transmission portfolio.

Demand-side management, supply-side strategies and renewables were built into each of the portfolios, Shoul said. "We looked at these as resources," she said. The draft plan calls for acquiring up to 450 aMW of DSM and 1,146 aMW of renewables--primarily wind, but possibly geothermal--"consistent with anticipated state and federal portfolio standards." The plan may call for more aggressive procurement of renewables, depending on results of further evaluation of such issues as transmission integration costs associated with wind and the number of sites at which additional large wind projects can be developed. Shoul described the DSM and renewables numbers as "aspirations ... ambitious goals."

In the short term, the utility proposes securing between 300 MW and 700 MW of power through shaped products and power purchase agreements to cover initial load growth, until physical assets can be built. Also needed are 2,200 MW of base-load resources--which could include new power purchase agreements, both to replace expiring contracts and to cover load growth. The utility expects it will need 1,000 MW for system peaks, and looks to transmission upgrades and additions to "further optimize the use of the network, provide greater access to market and support the addition of new assets."

One transmission option identified in the plan is construction of a new direct current (DC) line to connect the utility's east and west control areas. PacifiCorp modeled both 1,000 MW and 2,000 MW additions, said Janet Morrison, director of commercial business. Such an addition would be expensive, she said, but might reduce the need to build new plants. "Transmission is kind of like peaker [plants], with high value some of the time," Morrison said. "If more companies participate, it can be sized better, while sharing costs and benefits." That's a possible scenario if plans for a regional transmission organization move forward.

Thermal options have good prospects for siting and licensing generation, the plan indicates, since several of PacifiCorp's existing coal facilities have room for expansion. Adding another unit at the Jim Bridger plant in Wyoming or the Hunter facility in Utah would also allow the utility to use existing transmission corridors. "We have transmission capacity available in southern Utah," Morrison said, "although we would still need some upgrades."

PacifiCorp is not biased in favor of any one particular option, or any particular fuel, said Bob Klein, PacifiCorp's senior vice president for commercial building. "Our objective is not to push or avoid building [new plants]," he said. "We want the least-cost solution to the things that could happen" in the future.

While PacifiCorp's IRP puts more emphasis on renewables than any past plans, the utility doesn't put a lot of weight on new technologies such as distributed generation. "The problem for a load-serving entity developing an IRP is that we have an obligation to always keep the lights on," Klein said. "So we have to make a plan to deliver that obligation. The first thing is to build a reliable, economic system." Energy technologies still under development or in a pilot phase would receive higher priority after they've been proven, he said. "Our objective is long-run, least-cost. If new technologies can bid their way into the dispatch stack, they're in."

Positive Reviews
PacifiCorp's draft plan has received positive reviews. "This is one of the most impressive integrated resource plans I've seen," said Phil Carver of the Oregon Office of Energy. The utility has done a good job of integrating wind modeling, he said. OOE would like PacifiCorp to put less emphasis on new coal development and more on renewables, but Carver still gives the plan "mostly kudos." He also would like PacifiCorp to examine real-time and critical peak pricing as demand response tools.

"Clean energy advocates have long been trying to persuade electric utilities that renewable power sources such as wind and geothermal energy are a cheaper long-term investment than fossil-fuel plants," wrote Steve Weiss of the Northwest Energy Coalition in a PacifiCorp IRP summary. "At last, a utility has put that notion to a fair test--and found that renewables are indeed a winner."

Ralph Cavanagh of the Natural Resources Defense Council applauded the plan's conclusion that renewables are cost-effective on a large scale. He called it "the most sophisticated and most consequential IRP that has been prepared in the region in the last five to 10 years." Still, the utility's draft plan continues to significantly understate opportunities to acquire cost-effective energy efficiency, NRDC said in joint comments filed with NWEC. The two environmental groups also have "profound concerns about any additions of coal-fired generation to a portfolio that is already grossly top-heavy with coal."

Cavanagh said it's important that the electric resource portfolio management function of utilities be restored, and said PacifiCorp's draft IRP is a potential watershed in this process.

"It is a good faith effort to assume the responsibilities [of resource planning] and conduct them in the right way," he said.