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

Agenda I ntroduction Key Findings of Benefits Assessm ent Next Steps Detailed Benefits Analysis Description of Cost Categories Conclusions 2

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 3

Overview of the PacifiCorp and I SO System s ISO PacifiCorp  65,300 MW of net dependable  11,136 MW of net-owned power plant capacity generating plant capacity Pacific  50,270 MW record peak  12,685 MW record peak Power demand (July 24, 2006) demand (June 29, 2015)  26,000 circuit-miles of  16,400 circuit-miles of transmission lines transmission lines Rocky  30 million people served  1.8 million customers Mountain across six states ISO Power  235 million megawatt-hours  70 million megawatt-hours of electricity delivered annually of electricity delivered annually  27,500 market transactions per day 4

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 : Present value of savings ( in 2 0 1 5 $ Billions) Total Savings: Low High PacifiCorp $1.6 $2.3 $1.8 $6.8 I SO Savings are increm ental to benefits from EI M participation. 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 5

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 6

Key Study Results Annual Cost Savings (Million 2015$) ISO PacifiCorp 1,000 1,000 I SO Total: PacifiCorp $ 8 9 4 900 900 800 800 700 700 (Million 2015$) 600 600 500 500 6 9 1 400 400 Total: Total: Total: Total: Total: Total: Total: $ 6 2 $ 1 2 2 $ 1 9 9 $ 2 7 1 $ 9 2 $ 2 1 3 $ 2 0 3 300 300 5 4 200 200 1 2 1 1 3 8 1 3 8 1 3 8 1 3 8 2 8 100 100 3 1 3 1 3 1 2 5 1 7 2 5 3 1 4 6 5 4 6 1 6 1 6 5 6 5 3 6 3 1 0 0 Low High Low High Low High Low High Scenario Scenario Scenario Scenario Scenario Scenario Scenario Scenario 2024 2030 2024 2030 7

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 8

I SO Next Steps Stakeholder Policy Tim eline Planned start I nitiative to process 4 th Qtr 2015 Regional Transmission Access Charge Structure 4 th Qtr 2015 Resource Adequacy Rules 1 st Qtr 2016 Regional Integration - CA GHG Compliance 1 st Qtr 2016 Metering Rules Update 2 nd Qtr 2016 Full Network Model Enhancements • See Stakeholder I nitiative Catalog for 2 0 1 6 and Roadm ap • See also I SO Stakeholder Processes 9

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 1 0

Quantified Benefits

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 1 2

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. 1 3

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 Study Base case Study Region Savings Range Type includes SPP Projection EIS 1.6% to 3.5% MISO Historical Day 1 market 2.6% No regional Entergy-MISO Projection 2.0% to 3.6% markets 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 1 4

2 . Low er Peak Capacity Needs 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: 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 1 5

2 . Low er Peak Capacity Needs PacifiCorp 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) 1 6 [ Lim ited by transm ission transfer capability betw een system s and anticipated capacity additions needed for system peak]

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 overgeneration exported to PacifiCorp • I n 2 0 3 0 : 50% RPS in California, 1449 GWh of potential overgeneration exported Quantified Savings Results: Low Scenario High Scenario Annual Savings 2024 2030 2024 2030 PacifiCorp $31 $138 $31 $138 ISO $31 $138 $31 $138 Total Savings $62 $276 $62 $276 1 7