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Commentaries and editorials

Energy Efficiency Brings
Good Things to Life

by Staff
Transformer, May 22, 2010

Over the next 20 years the region's power system can meet regional load growth, reduce its coal use by 40%
and replace the power generated by the four lower Snake River dams ... all the while reducing customers' bills.

The new official power and conservation plan for the Northwest confirms that more than enough inexpensive energy efficiency is availability to meet most new electricity needs.


The region's official power planning agency recently finalized the Sixth Northwest Power and Conservation Plan, which charts an exciting new course for the region. The Northwest Power and Conservation Council says the region can meet all new electricity needs over the next 20 years with energy efficiency and renewables, building almost no new fossil-fueled generating plants.

The Council, created by federal law in 1980 and overseen by two governor-appointed members from each of the four Northwest states, must produce a detailed 20-year power and conservation plan for the region every five years. All Council plans carry great weight, directly, indirectly and symbolically.

Federal law requires the Bonneville Power Administration to follow Council plans when choosing power and energy efficiency resources. About half the region's electricity customers are served by public utilities and cooperatives that purchase most of their power from BPA. Washington state's clean energy Initiative (I-937) requires the state's larger utilities to follow Council methodology when determining their own energy efficiency targets.

Utility executives, including those not tied to Bonneville, as well as regulatory agencies, state legislators and other decision-makers rely upon the high-quality analyses behind the plans.

This Transformer, the first in a 2-part series on this critical step on the road to our clean and affordable future, presents the Council's final recommendations and its conclusion that cheap energy efficiency can and should meet most of the region's new power needs. Part II will compare the findings of the Sixth Northwest Power and Conservation Plan to the NW Energy Coalition's Bright Future analysis.

If there's just one take-away ...

The Sixth Northwest Power and Conservation Plan presents an extraordinarily powerful vision of a clean energy future. It rests on one fundamental conclusion: We have enough inexpensive energy efficiency (conservation) opportunities to meet practically all of our new electricity needs for the foreseeable future.

The Council foresees region-wide population rising about 1.2% a year through 2030, plus new and bigger TVs and other electronics and expanded air conditioning use pushing up per-person use 0.2% per year. As a result, the region will need another 7,000 average megawatts (aMW) of electricity -- fully one-third of total current use. The plan calls for meeting 85% of those growing power needs by using less of it ... by switching to more efficient lights, appliances, motors, computers, heat pumps, etc. The Council estimates that acquiring the energy efficiency in the plan will create 47,000 new jobs for the region.

Renewable portfolio standard (RPS) laws in Oregon, Washington and Montana mandate enough new renewable energy resources to cover the remaining 15%. Some new natural gas generation will be needed toward the end of the period to help integrate the (mainly wind) renewables and in some scenarios to substitute for coal-fired generation.

The Council expects that this combination of cheap efficiency and RPS renewables will continue and even increase the region's current power surplus, allowing us to affordably move away from coal-fired generation and salmon-endangering lower Snake River hydropower without having to build much new conventional generation. (See Chapter 14 of the Sixth Plan, figures 14-1 through 14-3)

Efficiency first

Council staff conducted a broad and deep analysis of the region's conservation potential. Staff looked at literally thousands of energy efficiency measures, considering such issues as:

Staff then ranked all the measures by cost per kilowatt-hour saved. Ranking least expensive were things such as better showerheads and TV screens. Higher-cost measures included new efficient furnaces, air conditioners and solar panels. (The Council considers a customer's on-site solar generation "efficiency" because it reduces the need for utility generation.)

Projecting 20 years out, the Council found about 4,500 aMW of efficiency costing less than 5 cents per kilowatt-hour (kWh) -- about half the cost of new natural-gas or wind generation -- and another 1,500 aMW competitive with new generation at less than 11 cents/kWh.

Besides the straightforward cost savings compared to new generation resources, the Council found that conservation reduces the risk of high-cost events such as the energy crisis of 2001, droughts that reduce the region's hydro output and the imposition of carbon penalties. These risk-reduction benefits add another few cents/kWh to the value of conservation.

The analysis led the Council to its precedent-setting recommendation that 85% of our load growth through 2030 be met with available energy efficiency with an average cost of about 3.6 cents/kWh. The 5,900 aMW of new conservation is roughly half again as much as the Fifth Plan's target.

The Council's model

Exhaustive and rigorous analyses done for the Sixth Plan provide the regional database for making decisions about the Northwest's energy future.

The Council had to make many best-guess assumptions to reach its conclusions and calculate future bills and rates. These included the costs of new generating resources; the cost of the natural gas used in many power plants; population and load growth; and the likelihood and fiscal impacts of future carbon dioxide regulation to combat climate change.

Staff developed a model that tests thousands of possible resource acquisition strategies, each tested against 750 different futures. The least costly strategies became candidates for the Council's preferred strategy.

The final plan includes discussion of nine of these scenarios. Each represents the least-cost, least-risk strategy for serving the region under specific conditions or actions such as passage of various climate policies (modeled as CO2 prices) or removal of the four Lower Snake River dams. Council members then chose a 5-year Action Plan -- basically a collection of recommendations for the region's utilities and decision-makers.

The Sixth Plan does not advocate for dam removal and recommends no particular carbon reduction policy, though many of the final scenarios assume carbon penalties averaging $47/ton by 2029. By itself, the plan would do no more than stabilize power system carbon emissions at 2005 levels -- which still is farther than any previous plan has gone.

Regarding both climate policy and dam removal, the analysis reflects a conscious effort to position the region to react once goals are set through state and/or Congressional action. It does so in two ways:

  1. By setting strong energy efficiency targets, since analysis shows conservation saves money regardless of future climate or salmon policy.

  2. By providing a regional blueprint for reducing carbon emissions and/or replacing the power from the four lower Snake River dams, should their removal be deemed necessary, and calculating the costs, rate and bill impacts of such actions.
What will all this cost?

We start with the bottom line: the scenario model used by the Northwest Power and Conservation Council in developing the Sixth Plan calculates that over the next 20 years the region's power system can meet regional load growth, reduce its coal use by 40% and replace the power generated by the four lower Snake River dams ... all the while reducing customers' bills.

How can that be possible? Again, it's all about the energy efficiency. Of the additional 7,000 aMW of new electricity needed by 2030, 5,900 aMW of energy efficiency improvements are available at an average of about 3.6 cents per kilowatt-hour -- about a third the cost of alternative resources. State RPS requirements will result in new renewables, mostly wind, to cover most of the remaining need.

Phasing out significant amounts of coal-fired generation (about a 40% reduction in usage) and removing the four lower Snake River dams would require some additional resources -- 600-1,000 aMW or so of natural gas-fired turbines, according to Council analysis.

Once the 5,900 aMW of conservation are subtracted, the region's load growth is reduced to only about 0.3% per year, which is far less than the population growth rate of 1.2% per year. On average, each household and business will be using less generated electricity, and total system costs, though rising somewhat, will be spread over a wider population base. Therefore, average bills will fall across the region. (Customers of different utilities would see somewhat different bill impacts, of course.)

Four scenarios

Four scenarios -- business as usual (current policy), no conservation, coal phase-out and coal phase-out plus dam removal -- analyzed by the Council provide an interesting window into the next 20 years.

In Chapter 10, "Resource Strategy," and Appendix O, "Calculations of Revenue Requirements and Customer Bills," the Sixth Plan presents the rate and bill impacts, climate emissions, coal power reductions and need for new natural-gas resources associated with each scenario.

The following chart summarizes the results of the Council's calculations. The gas and CO2 emissions figures come from Figure 10-19. The average rate and bill figures come from Tables O-2 and O-4 (we use the average rate and bill impacts in year 2029 for each scenario). The average bills and rates shown in Figure 10-19 are levelized over 20 years to indicate their impact at the end of the period.

Sixth Plan Scenario Analysis

  Today for
Current policy
(Business as usual)
No conservation Carbon risk
(Phase out coal)
Phase out coal plus
remove four lower
Snake River dams
    No carbon policy; state renewable standards remain in place; Plan's conservation targets met CO2 price averages $47/ton, causing less use of coal; no additional conservation beyond current codes CO2 price averages $47/ton, causing less use of coal; Plan's conservation targets met Four lower Snake dams removed; CO2 price averages $47/ton causing less use of coal; Plan's conservation targets met
All amounts refer to year 2030
Additional gas resources
needed to be built
  299 MW CCCT1
236 MW SCCT2
4,024 MW CCCT
Existing coal generation
phased out3
4,084 aMW None
(coal use increases by 74 aMW)
1,048 aMW 1,622 aMW 1,472 aMW
CO2 emissions4 in
millions of tons/year
~ 57 million tons per year 56.3 57.0 39.7 42.7
Average residential rate
per kWh
today's average is
6.7 cents per kWh
6.91 cents 7.30 cents 7.17 cents 7.36 cents
Average residential bill
($ per month)
today's average is
$82.20 per month
$69.84 $92.72 $71.34 $72.81
1 CCCT means gas-fired combined cycle combustion turbines -- used as baseload or load following.
2 SCCT means gas-fired single cycle combustion turbines -- generally used only as peakers.
3 The Council's coal reduction runs can be found here (cells F87 through Y87).
4 The Council's CO2 emissions reported here are "generator-based" -- which includes Northwest coal plant emissions from "generation within, or committed on a long-term basis to the region." This includes emissions from some out-of-region coal plants whose electricity is used in the region.
In each case, the bill and rate impacts are averages spread to all residential ratepayers in the region and reflect carbon emissions prices (taxes or other policy instruments) that ramp up to $47/ton, with revenues returned to ratepayers as dividends, tax rebates or subsidies. Thus the Council deems the carbon revenues "transfer payments" rather than costs. The increases and decreases in emissions, generation and customer bills are all in the year 2030 compared to current levels in 2010. For example, the Council uses current (2005) carbon emissions for the Northwest electric sector at 57 million tons/year (Chapter 10, pp. 10-22).

Let's take a closer look at the scenarios themselves:


The Council's scenario models confirm that we can reduce our reliance on coal, serve growing loads, replace the power from the four lower Snake River dams, and still save money.

Now it's time for the region's utilities, decision-makers and all energy consumers to embrace the Sixth Northwest Power and Conservation Plan and its critical supporting studies. We can affordably develop our abundant clean energy resources and revitalize our economy in the process.


Our 2-part series of Transformers on the Sixth Northwest Power and Conservation Plan will conclude with a comparison of the plan and its relevant studies with our Bright Future investigation of "how to keep the Northwest's lights on, jobs growing, goods moving and salmon swimming in the era of climate change."

Energy Efficiency Brings Good Things to Life
Transformer, May 22, 2010

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