Regional Coordination in the West: Benefits of PacifiCorp and ISO - - PowerPoint PPT Presentation

Regional Coordination in the West: Benefits of PacifiCorp and ISO Integration

October 16, 2015

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Agenda

I ntroduction Key Findings of Benefits Assessm ent Next Steps Detailed Benefits Analysis Description of Cost Categories Conclusions

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Roadm ap to Study Report

The integration benefits study report is now available through the I SO and PacifiCorp w ebsites.

• Benefits Study Link

A separate technical appendix describes the m ethodology used to calculate each quantified benefit in the report and presented today.

• Technical Appendix Link

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Pacific Power Rocky Mountain Power

Overview of the PacifiCorp and I SO System s

PacifiCorp

• 11,136 MW of net-owned

generating plant capacity

• 12,685 MW record peak

demand (June 29, 2015)

• 16,400 circuit-miles of

transmission lines

• 1.8 million customers

across six states

• 70 million megawatt-hours
• f electricity delivered

annually

ISO

• 65,300 MW of net dependable

power plant capacity

• 50,270 MW record peak

demand (July 24, 2006)

• 26,000 circuit-miles of

transmission lines

• 30 million people served
• 235 million megawatt-hours
• f electricity delivered

annually

• 27,500 market transactions

per day

ISO

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I ntroduction

I ntegration of PacifiCorp and I SO system s results in significant benefits for both PacifiCorp and I SO custom ers over 2 0 year period of 2 0 2 0 -2 0 3 9 : This study quantifies benefits in four areas:

1 . More efficient dispatch and com m itm ent 2 . Low er peak capacity savings 3 . More efficient overgeneration m anagem ent 4 . Renew able procurem ent savings Total Savings: Low High PacifiCorp $1.6 $2.3 I SO $1.8 $6.8 Present value of savings ( in 2 0 1 5 $ Billions)

Savings are increm ental to benefits from EI M participation.

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Scenarios and Study Years

Range of savings for 2 0 -year present value produced by focusing on tw o years of analysis: 2 0 2 4 and 2 0 3 0 For each study year, used plausible assum ptions to create a low and high scenario Low scenario assum es:

• Low range of savings from recent studies on efficient dispatch and unit commitment

savings for PacifiCorp

• PacifiCorp IRP-based need year for capacity addition (in 2028)
• Includes more efficient management of overgeneration management

(limited to transmission capability of 776 MW)

• Excludes renewable procurement savings enabled by joint transmission planning

High scenario assum es:

• High range of savings from recent studies on efficient dispatch and unit commitment

savings for PacifiCorp

• Accelerated capacity addition needed for PacifiCorp (in 2024)
• Includes more efficient management of overgeneration management

(limited to transmission capability of 776 MW)

• Joint transmission planning enables development of WY wind and renewable procurement

savings for both PacifiCorp and ISO

7 100 200 300 400 500 600 700 800 900 1,000 Low Scenario High Scenario Low Scenario High Scenario 2024 2030

ISO

6 1

3 1

6 1

3 1

1 2 1 6 5 1 3 8 6 5 1 3 8 6 9 1

Total: $ 9 2 Total: $ 2 1 3 Total: $ 2 0 3 Total: $ 8 9 4

I SO

Key Study Results

100 200 300 400 500 600 700 800 900 1,000 Low Scenario High Scenario Low Scenario High Scenario 2024 2030

PacifiCorp

3 1 3 1 3 1

1 7 2 8 2 5 2 5 4 6 3 6 1 3 8 5 4 1 3 8 5 4

Total: $ 6 2 Total: $ 1 2 2 Total: $ 1 9 9 Total: $ 2 7 1

PacifiCorp

Annual Cost Savings (Million 2015$)

(Million 2015$)

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Additional Non-Quantified Benefits

I ntegration also brings additional potential benefits that have not been quantified as part of this study, including:

• Greenhouse gas emission reductions
• More effective coordination of regional transmission planning
• Centralized regulatory compliance
• Improved market pricing transparency & liquidity
• Lower frequency response procurement costs
• Enhanced reliability
• Lower flexible capacity needs
• Improved value from existing capacity

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I SO Next Steps

Stakeholder Policy Tim eline

• See Stakeholder I nitiative Catalog for 2 0 1 6 and Roadm ap
• See also I SO Stakeholder Processes

I nitiative Planned start to process

Regional Transmission Access Charge Structure 4th Qtr 2015 Resource Adequacy Rules 4th Qtr 2015 Regional Integration - CA GHG Compliance 1st Qtr 2016 Metering Rules Update 1st Qtr 2016 Full Network Model Enhancements 2nd Qtr 2016

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PacifiCorp Next Steps

PacifiCorp w ill be participating and supporting m ultiple I SO stakeholder initiatives PacifiCorp w ill also be w orking w ith its stakeholders to explore issues w hich directly im pact PacifiCorp and its custom ers

• PacifiCorp has already initiated educational outreach with its state regulator

stakeholders and will continue to do so

• Over the next month, PacifiCorp will be making additional outreach to its

state regulators to answer any questions on the benefits study

• PacifiCorp will also be coordinating with the ISO and PacifiCorp’s transmission

customers to conduct a public stakeholder meeting in January 2016 to review some of the changes that are likely to occur if PacifiCorp integrates its Balancing Authority Area into a regional ISO

Once the I SO develops its final schedule for stakeholder initiatives, PacifiCorp w ill develop a com plim entary schedule to address those issues specific to PacifiCorp’s states and its custom ers

Quantified Benefits

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Benefit Analysis Overview

Each category of savings quantified as low and high scenario for I SO and PacifiCorp

1 . More efficient dispatch and com m itm ent 2 . Low er peak capacity savings 3 . More efficient overgeneration m anagem ent 4 . Renew able procurem ent savings

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1 . More Efficient Unit Com m itm ent and Dispatch

Description: Lower generation cost from PacifiCorp’s participation in the ISO’s day-ahead market with optimal unit commitment, cooptimized energy and ancillary services, and day ahead nodal prices Approach: Quantified based on range of cost savings from dispatch efficiency gains realized from other regions when transitioning to full regional market – including SPP, MISO and Entergy

• Seeking to identify efficiency gains incremental to those achieved with EIM

Scenario Assum ptions:

• Low scenario: 2% of PacifiCorp forecasted annual production cost
• High scenario: 3% of PacifiCorp forecasted annual production cost

Quantified Savings Results: Low Scenario High Scenario Annual Savings 2024 2030 2024 2030 PacifiCorp $31 $36 $46 $54 ISO * * * * Total Savings $31 $36 $46 $54

* Expected to be greater than zero but conservatively not included here.

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1 . More Efficient Unit Com m itm ent and Dispatch

Savings range of 2 % to 3 % derived from savings results in other regions transitioning to full integration Efficiency percentage range applied to PacifiCorp’s forecasted annual production cost, including fuel costs and variable O&M, of $ 1 .5 billion in 2 0 2 4 and $ 1 .8 billion in 2 0 3 0 Study Region Study Type Base case includes Savings Range SPP Projection EIS 1.6% to 3.5% MISO Historical Day 1 market 2.6% Entergy-MISO Projection No regional markets 2.0% to 3.6%

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2 . Low er Peak Capacity Needs

Low Scenario High Scenario Annual Savings 2024 2030 2024 2030 PacifiCorp $ 0 $25 $17 $25 ISO $61 $65 $61 $65 Total Savings $61 $90 $78 $90

Description: Peak load diversity for PacifiCorp and ISO reduces the generation capacity needed for the combined system to meet reliability needs, enabling lower cost for capacity and deferral or avoidance of new capacity additions Approach:

• For ISO, valued savings of peak load diversity based on projected resource

adequacy costs, transitioning to cost of new entry for capacity in later years

• For PacifiCorp, valued based on IRP’s estimated cost of new thermal resource

needs that could be displaced, net of market revenue Scenario Assum ptions:

• Low scenario: PacifiCorp can displace capacity beginning in 2028
• High scenario: PacifiCorp can displace capacity beginning in 2024
• Both scenarios: ISO savings based on RA contract prices and CT cost of new entry

Quantified Savings Results:

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2 . Low er Peak Capacity Needs

Total peak capacity savings: I SO: 284 MW in 2024, 302 MW in 2030 (Both scenarios) PacifiCorp: 423 MW in 2024 (High scenario); 736 MW in 2030 (Both scenarios)

[ Lim ited by transm ission transfer capability betw een system s and anticipated capacity additions needed for system peak]

PacifiCorp

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3 . More Efficient Overgeneration Managem ent

Description: Full coordination will allow the combined system to respond more flexibly to renewable overgeneration, reducing need for curtailment Approach: Estimated savings based on projected quantity of overgeneration that can be exported to PacifiCorp, limited to 776 MW of exports in any hour

• Valued savings based on avoided production cost in PacifiCorp,

plus avoided renewable procurement cost in the ISO for avoiding the need to replace ovegeneration with additional renewable build

Scenario Assum ptions: savings driven by rising California RPS target

• I n 2 0 2 4 : 40% RPS in California, resulting in 467 GWh of potential
• vergeneration exported to PacifiCorp
• I n 2 0 3 0 : 50% RPS in California, 1449 GWh of potential overgeneration exported

Quantified Savings Results: Annual Savings Low Scenario High Scenario 2024 2030 2024 2030 PacifiCorp $31 $138 $31 $138 ISO $31 $138 $31 $138 Total Savings $62 $276 $62 $276

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3 . More Efficient Overgeneration Managem ent

I llustrative im pact of day -ahead export capability from I SO to PacifiCorp

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4 . Renew able Procurem ent Savings

Low Scenario High Scenario Annual Savings 2024 2030 2024 2030 PacifiCorp $0 $0 $28 $54 ISO $0 $0 $121 $691 Total Savings $0 $0 $149 $745 Description: Full coordination can facilitate lower cost procurement of renewable resources and joint procurement of new transmission across the combined footprint Approach: Estimated savings based on difference in resource and transmission cost in scenarios with and without Wyoming wind included as a low-cost procurement option.

• Valued savings: for ISO, based on California RPS Calculator; for PacifiCorp, based
• n relative cost of WY wind vs. other renewables available in PacifiCorp IRP

Scenario Assum ptions: In low scenario, saving category excluded to reflect uncertainties. Savings in high scenario driven by rising RPS target in California, and WY wind procurement level.

• For 2024: 863 MW for PacifiCorp, 2,012 MW for ISO
• For 2030: 1,091 MW for PacifiCorp, 2,546 MW for ISO

Quantified Savings Results:

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4 . Renew able Procurem ent Savings

I ntegration allow s com bination tw o local supply curves into expanded footprint, and opportunities to reduce overall portfolio cost for each entity

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Nam eplate capacity of I SO Portfolio ( MW ) in 2 0 3 0

Significant California resource build in both scenarios I ncluding W yom ing w ind option reduces portfolio cost of reaching 5 0 % RPS in RPS Calculator and reduces m arginal curtailm ent 33% 50% RPS Portfolio Incremental additions to reach 50% RPS Technology RPS Portfolio Without WY Wind With WY Wind Without WY Wind With WY Wind Biogas 150 206 150 +56 Biomass 657 669 669 +12 +12 Geothermal 1,517 2,925 2,576 +1,408 +1,059 Hydro 866 866 866 Solar PV 10,303 16,372 14,627 +6,069 +4,324 Solar Thermal 1,666 1,666 1,666 Wind (Non-Wyoming) 7,537 12,154 10,881 +4,617 +3,344 Wind (Wyoming) 2,546 +2,546 Total 22,696 34,858 33,981 +12,162 +11,285

Description of Cost Categories

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Description of Cost Categories

I m plem entation Costs

• One-time costs for PacifiCorp
• Would fully leverage applications implemented for EIM

On-going Costs

• Grid management charge (GMC)
• Transmission access charge (TAC)

Conclusions

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Conclusions

Quantified benefits for PacifiCorp and I SO custom ers are significant and grow ing over tim e Savings are sufficient to support continued progress tow ard PacifiCorp and I SO integration Over tim e, integration w ould provide PacifiCorp and I SO custom ers greater flexibility to respond to ongoing changes in state and federal environm ental policies, to develop renew able energy, and to reduce greenhouse gas em issions at a low er cost High-value, longer-term savings are linked to planning and investm ent decisions that require long lead tim es and clear guidance

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Additional Material

Additional I nform ation can be found on the I SO W ebsite.

• Media Release – W estern Grid I ntegration Could Produce

Significant Cost Savings, Environm ental Benefits

• FAQs – Benefits Study of PacifiCorp and I SO I ntegration

Questions can be sent to I SORC@caiso.com through close of business on Friday, October 3 0 , 2 0 1 5 .