bbrriigghhtt AAssssuurriinngg aa uuttuurree ff ffoorr oouurr ccuussttoommeerrss 2007 Integrated Resource Plan Appendices Pacific Power | Rocky Mountain Power | PacifiCorp Energy This 2007 Integrated Resource Plan (IRP) Report is based upon the best available information at the time of preparation. The IRP action plan will be implementedas described herein, but is subject to change as new information becomes available or as circumstances change. It is PacifiCorp’s intention to revisit and refresh the IRP action plan no less frequently than annually. Any refreshed IRP action plan will be submitted to the State Commissions for their information. For more information, contact: PacifiCorp IRP Resource Planning 825 N.E. Multnomah, Suite 600 Portland, Oregon 97232 (503) 813-5245 [email protected] http://www.PacifiCorp.com This report is printed on recycled paper Cover Photos (Left to Right): Wind: Foot Creek 1 Hydroelectric Generation: Yale Reservoir (Washington) Demand side management: Agricultural Irrigation Thermal-Gas: Currant Creek Power Plant Transmission: South Central Wyoming line PacifiCorp – 2007 IRP Table of Contents TABLE OF CONTENTS Table of Contents....................................................................................................................................i Index of Tables......................................................................................................................................iv Index of Figures......................................................................................................................................v Appendix A – Base Assumptions...............................................................................................................1 General Assumptions.............................................................................................................................1 Study Period......................................................................................................................................1 Inflation Curve...................................................................................................................................1 Planning Reserve Margin..................................................................................................................1 Load Forecast.........................................................................................................................................1 State Summaries................................................................................................................................1 Oregon..........................................................................................................................................1 Washington...................................................................................................................................2 California......................................................................................................................................3 Utah..............................................................................................................................................3 Idaho.............................................................................................................................................4 Wyoming......................................................................................................................................5 Class 2 DSM......................................................................................................................................5 Near Term Customer Class Sales Forecast Methods.........................................................................6 Residential, Commercial, Public Street and Highway Lighting, and Irrigation Customers.........6 Industrial Sales and Other Sales to Public Authorities.................................................................7 Long Term Customer Class Sales Forecast Methods........................................................................7 Economic and Demographic Sector.............................................................................................7 Residential Sector.........................................................................................................................8 Commercial Sector.......................................................................................................................9 Industrial Sector..........................................................................................................................10 Other Sales..................................................................................................................................10 Merging of the Near-Term and Long-Term Sales Forecasts...........................................................10 Total Load Forecasting Methods.....................................................................................................10 System Load Forecasts...............................................................................................................10 Hourly Load Forecasts................................................................................................................11 System Peak Forecasts................................................................................................................11 Treatment of State Economic Development Policies.................................................................11 Elasticity Studies.............................................................................................................................12 Total Class Analysis...................................................................................................................12 Analysis of Customers Who Called About Their Bills...............................................................12 Sub-group Analysis....................................................................................................................13 Commodity Prices................................................................................................................................13 Market Fundamental Forecasts........................................................................................................13 Gas Price Forecasts..........................................................................................................................16 Wholesale Electricity Price Forecasts.............................................................................................17 Post-2020 real growth rate sensitivity analysis..........................................................................18 Regional transmission project impact analysis...........................................................................18 Coal Prices.......................................................................................................................................18 Coal Prices – West Side IGCC...................................................................................................19 Emission Costs.....................................................................................................................................20 Carbon Dioxide...............................................................................................................................20 Sulfur Dioxide.................................................................................................................................20 Nitrogen Oxides...............................................................................................................................21 i PacifiCorp – 2007 IRP Table of Contents Mercury...........................................................................................................................................21 Renewable Assumptions......................................................................................................................22 Production Tax Credit.....................................................................................................................22 Renewable Energy Credits..............................................................................................................22 Existing Resources...............................................................................................................................22 Hydroelectric Generation................................................................................................................22 Hydroelectric Relicensing Impacts on Generation.....................................................................23 Generation Resources......................................................................................................................24 Demand-Side Management.............................................................................................................26 Class 1 Demand-Side Management............................................................................................26 Class 2 Demand-Side Management............................................................................................26 Class 3 Demand-Side Management............................................................................................29 Class 4 Demand-Side Management............................................................................................30 Transmission System.......................................................................................................................31 Topology.....................................................................................................................................31 Losses.........................................................................................................................................31 Congestion Charges....................................................................................................................31 Appendix B – Demand Side Management Proxy Supply Curve Report.............................................33 Appendix C – Detailed CEM Modeling Results.....................................................................................99 Alternative Future and Sensitivity analysis Scenario Results..............................................................99 Additional CEM Sensitivity Analysis Scenario Results.....................................................................107 Appendix D – Supplementary Portfolio Information..........................................................................117 Carbon Dioxide Emissions.................................................................................................................117 Portfolio PVRR Cost Component Comparison..................................................................................121 Appendix E – Stochastic Risk Analysis Methodology.........................................................................125 Overview............................................................................................................................................125 Stochastic Variables...........................................................................................................................125 The PaR Stochastic Model............................................................................................................125 Stochastic Output...............................................................................................................................126 Appendix F – Public Input Process.......................................................................................................133 Participant List...................................................................................................................................133 Commissions.................................................................................................................................133 Intervenors.....................................................................................................................................133 Others............................................................................................................................................134 Public Input Meetings........................................................................................................................134 2005 Public Process.......................................................................................................................135 May 18, 2005 – General Meeting.............................................................................................135 August 3, 2005 – General Meeting...........................................................................................135 October 5, 2005 – General Meeting.........................................................................................135 2006 Public Process.......................................................................................................................136 December 7, 2005 – General Meeting......................................................................................136 January 13, 2006 – Renewables Workshop..............................................................................136 January 24, 2006 – Load Forecasting Workshop.....................................................................136 February 10, 2006 – Demand-Side Management Workshop...................................................137 April 20, 2006 – General Meeting............................................................................................137 May 10, 2006 – General Meeting.............................................................................................137 June 7, 2006 – General Meeting...............................................................................................137 August 23, 2006 – General Meeting.........................................................................................137 October 31, 2006 – General Meeting.......................................................................................138 ii PacifiCorp – 2007 IRP Table of Contents 2007 Public Process.......................................................................................................................138 February 1, 2007 – General Meeting........................................................................................138 April 18, 2007 – General Meeting............................................................................................138 Parking Lot Issues..............................................................................................................................138 Public Review of IRP Draft Document..............................................................................................139 Portfolio Optimality.......................................................................................................................139 Planning Reserve Margin Selection and Resource Needs Assessment.........................................141 Relationship of PacifiCorp’s IRP with its Business Plan..............................................................141 The 2007 IRP Action Plan.............................................................................................................142 Demand-Side Management...........................................................................................................142 Market Reliance, Availability, and Price Risk..............................................................................143 Scope of Resource Analysis..........................................................................................................143 Load Forecast................................................................................................................................145 Carbon Dioxide Regulatory Risk Analysis...................................................................................146 Transmission..................................................................................................................................146 Miscellaneous................................................................................................................................147 Contact Information...........................................................................................................................148 Appendix G – Performance on 2004 IRP Action Plan.........................................................................149 Introduction........................................................................................................................................149 Appendix H – Deferral of Distribution Infrastructure with Customer-Based Combined Heat and Power Generation.........................................................................................................155 Introduction........................................................................................................................................155 Traditional Connection.......................................................................................................................155 Generation Connection.......................................................................................................................155 Conclusion..........................................................................................................................................156 Appendix I – IRP Regulatory Compliance...........................................................................................157 Background........................................................................................................................................157 General Compliance...........................................................................................................................157 California.......................................................................................................................................159 Idaho..............................................................................................................................................159 Oregon...........................................................................................................................................159 Utah...............................................................................................................................................159 Washington....................................................................................................................................160 Wyoming.......................................................................................................................................160 Appendix J – Wind Resource Methodology.........................................................................................189 Wind Integration Costs.......................................................................................................................189 Incremental Reserve Requirements...............................................................................................189 System Balancing Costs................................................................................................................193 Determination of Cost-Effective Wind Resources.............................................................................195 Wind Capacity Planning Contribution...............................................................................................197 Regional Studies.................................................................................................................................199 Effect oF Resource Addition Fuel Type on the Company's Cost to Integrate Wind Resources........200 iii PacifiCorp – 2007 IRP Index of Tables and Figures INDEX OF TABLES Table A.1 – Inflation.....................................................................................................................................1 Table A.2 – Historical and Forecasted Sales Growth in Oregon..................................................................2 Table A.3 – Historical and Forecasted Sales Growth in Washington...........................................................2 Table A.4 – Historical and Forecasted Sales Growth in California..............................................................3 Table A.5 – Historical and Forecasted Sales Growth in Utah......................................................................3 Table A.6 – Historical and Forecasted Sales Growth in Idaho.....................................................................4 Table A.7 – Historical and Forecasted Sales Growth in Wyoming..............................................................5 Table A.8 – Class 2 DSM Included in the System Load Forecast................................................................6 Table A.9 – CO cost adders used for Scenario Analysis...........................................................................20 2 Table A.10 – Hydroelectric Generation Facilities......................................................................................23 Table A.11 – Estimated Impact of FERC License Renewals on Hydroelectric Generation.......................23 Table A.12 – Thermal and Renewable Generation Facilities.....................................................................24 Table A.13 – Class 1 Demand-Side Management Programs......................................................................26 Table A.14 – Class 2 Demand-Side Management programs......................................................................27 Table A.15 – Class 2 Demand-Side Management Service Area Totals – All States, All Programs...........28 Table A.16 – Class 3 Demand-Side Management Programs......................................................................29 Table A.17 – Class 4 Demand-Side Management Programs......................................................................30 Table C.1 – Alternative Future Scenarios...................................................................................................99 Table C.2 – Sensitivity Analysis Scenarios................................................................................................99 Table C.3 – Aggregate Resource Additions..............................................................................................100 Table C.4 – Wind Resource Additions.....................................................................................................101 Table C.5 – Front Office Transactions......................................................................................................102 Table C.6 – Gas Additions, Including Combined Heat & Power.............................................................103 Table C.7 – IGCC Additions....................................................................................................................104 Table C.8 – Pulverized Coal Additions....................................................................................................105 Table C.9 – Demand Side Management Additions...................................................................................106 Table C.10 – Additional Sensitivity Scenarios for CEM Optimization....................................................107 Table C.11 – Present Value of Revenue Requirements Comparison ($ Billion)......................................108 Table C.12 – Total Resources Accrued by 2016 (Megawatts).................................................................108 Table C.13 – Wind Resources Accrued by 2016 (Nameplate Megawatts)...............................................108 Table C.14 – Gas Resources Accrued by 2016 (Megawatts)....................................................................109 Table C.15 – Pulverized Coal Resources Accrued by 2016 (Megawatts)................................................109 Table C.16 – IGCC Resources Accrued by 2016 (Megawatts)................................................................109 Table C.17 – CEM Results: Aggregate Resource Additions...................................................................110 Table C.18 – CEM Results: Wind Resource Additions...........................................................................111 Table C.19 – CEM Results: Front Office Transactions...........................................................................112 Table C.20 – CEM Results: Gas Additions, Including Combined Heat and Power................................113 Table C.21 – CEM Results: IGCC Additions..........................................................................................114 Table C.22 – CEM Results: Pulverized Coal Additions..........................................................................115 Table C.23 – CEM Results: Demand-side Management Additions........................................................116 Table D.1 – CO Emissions Attributable to Retail Sales by State............................................................117 2 Table D.2 – Unit Emission Costs for Group 2 Risk Analysis Portfolio Resources, 2016........................118 Table D.3 – Group 1: Portfolio PVRR Cost Components (Cap-and-Trade Strategy)..............................121 Table D.4 – Group 2: Portfolio PVRR Cost Components (CO Cap-and-Trade Compliance Strategy)..123 2 Table D.5 – Group 2: Portfolio PVRR Cost Components (CO Tax Compliance Strategy)....................124 2 Table G.1 – Status Update on 2004 IRP Action Plan...............................................................................150 Table I.1 – Integrated Resource Planning Standards and Guidelines Summary by State.........................161 Table I.2 – Handling of 2004 IRP Acknowledgement and Other IRP Requirements..............................164 iv PacifiCorp – 2007 IRP Index of Tables and Figures Table I.3 – Oregon Public Utility Commission IRP Standard and Guidelines.........................................172 Table I.4 – Utah Public Service Commission IRP Standard and Guidelines............................................181 Table J.1 – Incremental Capacity Contributions from Proxy Wind Resources........................................198 Table J.2 – Wind Integration Costs from Northwest Utility Studies .......................................................199 INDEX OF FIGURES Figure A.1 – Natural Gas and Wholesale Electric Price Curve Components.............................................16 Figure A.2 – Natural Gas Price Curve........................................................................................................17 Figure A.3 – Wholesale Electricity Price Forecast – Heavy Load Hours / Light Load Hours...................17 Figure A.4 – Average Annual Coal Prices for Resource Additions...........................................................19 Figure A.5 – Sulfur-Dioxide (SO ) Spot Price Forecast.............................................................................21 2 Figure A.6 – IRP Transmission System Topology.....................................................................................31 Figure D.1 – Annual CO Intensity, 2007-2016 ($8 CO Adder Case)....................................................119 2 2 Figure D.2 – Annual CO Intensity, 2007-2016 ($61 CO Adder Case)..................................................120 2 2 Figure E.1 – 2007 Frequency of Eastern (Palo Verde) Electricity Market Prices – 100 Iterations..........126 Figure E.2 – 2016 Frequency of Eastern (Palo Verde) Electricity Market Prices – 100 Iterations..........127 Figure E.3 – 2007 Frequency of Western (Mid C) Electricity Market Prices – 100 Iterations................127 Figure E.4 – 2016 Frequency of Western (Mid C) Electricity Market Prices – 100 Iterations................127 Figure E.5 – 2007 Frequency of Eastern Natural Gas Market Prices – 100 Iterations.............................128 Figure E.6 – 2016 Frequency of Eastern Natural Gas Market Prices – 100 Iterations.............................128 Figure E.7 – 2007 Frequency of Western Natural Gas Market Prices – 100 Iterations............................128 Figure E.8 – 2016 Frequency of Western Natural Gas Market Prices – 100 Iterations............................129 Figure E.9 – Goshen Loads.......................................................................................................................129 Figure E.10 – Utah Loads.........................................................................................................................130 Figure E.11 – Washington Loads..............................................................................................................130 Figure E.12 – West Main (California and Oregon) Loads........................................................................131 Figure E.13 – Wyoming Loads.................................................................................................................131 Figure E.14 – 2007 Hydroelectric Generation Percentile.........................................................................132 Figure E.15 – 2016 Hydroelectric Generation Percentile.........................................................................132 Figure J.1 – Load Following Reserve Requirement Illustration...............................................................191 Figure J.2 – Load Following Reserve Requirement for Load Net of Wind..............................................191 Figure J.3 – Incremental Reserve Cost Associated with Various Wind Capacity Amounts.....................192 Figure J.4 – Operating Cost of Incremental Load Following Reserves....................................................193 Figure J.5 – PacifiCorp System Balancing Cost.......................................................................................194 Figure J.6 – Renewables Capacity Additions for Alternative Future Scenarios.......................................196 Figure J.7 – Cumulative Capacity Contribution of Renewable Additions for the PTC Sensitivity Study197 v PacifiCorp – 2007 IRP Index of Tables and Figures vi PacifiCorp – 2007 IRP Appendix A – Base Assumptions APPENDIX A – BASE ASSUMPTIONS This appendix will cover the base assumptions used for both the Capacity Expansion Module and the Planning and Risk model used for portfolio analysis in the 2007 Integrated Resource Plan. GENERAL ASSUMPTIONS Study Period PacifiCorp currently uses a calendar year that begins on January 1 and ends December 31. The study period covers a 20-year period beginning January 1, 2007 through December 31, 2026. Inflation Curve Where price forecasts and associated escalation rates were not established by external sources, IRP simulations and price forecasts were performed with PacifiCorp’s inflation rate schedule (See Table A.1 below). Unless otherwise stated, prices or values in this appendix are expressed in nominal dollars. Table A.1 – Inflation Calendar Average Annual Years Rate (%) 2007-2013 1.86 2014-2020 1.80 2021-2026 1.88 Planning Reserve Margin PacifiCorp assumed both 12 and 15 percent planning margin for developing the load and re- source balance. Capacity Expansion Module scenario analysis used 12 percent as the low case, 15 percent as the medium case and 18 percent as a high case during the initial phase of analyses. To preserve planning flexibility, the company adopted a reserve margin range of 12 to 15 percent in recognition of uncertainties concerning the cost and reliability impact of evolving state re- source policies to foster renewable energy development and reduce utilities’ carbon footprints. LOAD FORECAST This load forecast section provides state-level forecasted retail sales summaries, load forecasting methodologies, and the elasticity studies. Chapter 4 provides the forecast information for each state and the system as a whole by year for 2007 through 2016. State Summaries Oregon Table A.2 summarizes Oregon state forecasted sales growth compared with historical growth by customer class. 1 PacifiCorp – 2007 IRP Appendix A – Base Assumptions Table A.2 – Historical and Forecasted Sales Growth in Oregon Residential Commercial Industrial Irrigation Other Total 2005 GWh 5,374 4,614 2,957 211 50 13,207 2006 GWh 5,554 4,843 3,238 237 41 13,912 Average Annual Growth Rate 1995-05 1.2% 2.0% -3.5% -3.1% 5.0% 0.1% 2007-16 0.7% 1.5% -0.9% 0.0% 0.9% 0.6% The forecast of residential sales is expected to have a slightly slower growth than has been ex- perienced historically. Population growth is expected to continue in the service area, which is driving some of the growth, while usage per customer in the residential class is expected to de- cline slightly due to conservation. Forecasted commercial class sales are projected to grow slightly more slowly over the forecast horizon compared to historical periods. Usage per customer is projected to remain flat due to increased equipment efficiency which offsets increased saturation of air conditioning. Forecasted industrial class sales are projected to decline more slowly over the forecast horizon compared to historical periods. In the later years of this historical period, two large industrial customers chose to leave PacifiCorp’s system. This, coupled with declines over the decade in the lumber and wood products industries, resulted in an overall decline in sales to this class. Over the forecast horizon, continuing growth is expected in food processing industries, specialty metals manufacturing industries, and niche lumber and wood businesses, along with continued diversi- fication in the manufacturing base in the state. The factors influencing the forecasted sales growth rates are also influencing the forecasted peak demand growth rates. Washington Table A.3 summarizes Washington state forecasted sales growth compared with historical growth by customer class. Table A.3 – Historical and Forecasted Sales Growth in Washington Residential Commercial Industrial Irrigation Other Total 2005 GWh 1,587 1,417 1,054 175 11 4,244 2006 GWh 1,596 1,415 990 155 10 4,166 Average Annual Growth Rate 1995-05 1.1% 2.1% 0.8% 3.1% 2.9% 1.4% 2007-16 1.1% 1.2% 2.0% 0.0% 0.1% 1.3% The growth in residential class sales is due to continuing population growth and household for- mation in this part of PacifiCorp’s service area. Usage per customer is expected to increase slightly due to increases in both real income and the residential square footage. 2