Power Loads and Resources Study - BP-14 Final Rate Proposal

Power Loads and Resources Study - BP-14 Final Rate Proposal

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N BP-14 Final Rate Proposal Power Loads and Resources Study BP-14-FS-BPA-03 July 2013

BP-14-FS-BPA-03 Page i TABLE OF CONTENTS Page COMMONLY USED ACRONYMS AND SHORT FORMS . iii 1. INTRODUCTION AND OVERVIEW . . 1 1.1 Introduction . . 1 1.2 Overview of Methodology . . 2 2. FEDERAL SYSTEM LOAD OBLIGATION FORECAST . . 5 2.1 Overview . . 5 2.2 Public Agencies’ Total Retail Load and Firm Requirement PSC Obligation Forecasts . . 5 2.2.1 Load Following PSC Obligation Forecasts .

. 6 2.2.2 Block PSC Obligation Forecasts . . 7 2.2.3 Slice/Block PSC Obligation Forecasts . . 8 2.2.4 Sum of Load Following, Slice/Block, and Block PSC Obligation Forecasts . . 9 2.3 Investor-Owned Utilities Sales Forecast . . 10 2.4 Direct Service Industry Sales Forecast . . 10 2.5 USBR Irrigation District Obligations . . 11 2.6 Other BPA Contract Obligations . . 12 3. RESOURCE FORECAST . . 13 3.1 Federal System Resource Forecast . . 13 3.1.1 Overview . . 13 3.1.2 Federal System Hydro Generation . . 13 Regulated Hydro Generation Forecast . . 14 Independent Hydro Generation Forecast .

. 25 3.1.3 Other Federal System Generation . . 26 3.1.4 Federal System Contract Purchases . . 27 3.1.5 Federal System Transmission Losses . . 29 3.2 Regional Hydro Resources . . 30 3.2.1 Overview . . 30 3.2.2 PNW Regional 80 Water Year Hydro Generation . . 30 3.3 4(h)(10)(C) Credits . . 30 3.3.1 Overview . . 30 3.3.2 Forecast of Power Purchases Eligible for 4(h)(10)(C) Credits . . 31 3.4 Use of Tier 1 System Firm Critical Output Calculation . . 33 4. FEDERAL SYSTEM LOAD-RESOURCE BALANCE . . 35 4.1 Overview . . 35 4.2 Federal System Energy Load-Resource Balance . . 35 SUMMARY TABLES . . 37

BP-14-FS-BPA-03 Page ii SUMMARY TABLES Table 1 Regional Dialogue Preference Load Obligations Forecast By Product Annual Energy in aMW . 39 Table 2 Loads and Resources – Federal System Summary Annual Energy in aMW . 39 Table 3 Loads and Resources – Federal System Components Annual Energy in aMW . 40

BP-14-FS-BPA-03 Page iii COMMONLY USED ACRONYMS AND SHORT FORMS AAC Anticipated Accumulation of Cash AGC Automatic Generation Control ALF Agency Load Forecast (computer model) aMW average megawatt(s) AMNR Accumulated Modified Net Revenues ANR Accumulated Net Revenues ASC Average System Cost BiOp Biological Opinion BPA Bonneville Power Administration Btu British thermal unit CDD cooling degree day(s) CDQ Contract Demand Quantity CGS Columbia Generating Station CHWM Contract High Water Mark COE, Corps, or USACE U.S.

Army Corps of Engineers Commission Federal Energy Regulatory Commission Corps, COE, or USACE U.S. Army Corps of Engineers COSA Cost of Service Analysis COU consumer-owned utility Council or NPCC Northwest Power and Conservation Council CP Coincidental Peak CRAC Cost Recovery Adjustment Clause CSP Customer System Peak CT combustion turbine CY calendar year (January through December) DDC Dividend Distribution Clause dec decrease, decrement, or decremental DERBS Dispatchable Energy Resource Balancing Service DFS Diurnal Flattening Service DOE Department of Energy DSI direct-service industrial customer or direct-service industry DSO Dispatcher Standing Order EIA Energy Information Administration EIS Environmental Impact Statement EN Energy Northwest, Inc.

EPP Environmentally Preferred Power ESA Endangered Species Act e-Tag electronic interchange transaction information FBS Federal base system FCRPS Federal Columbia River Power System FCRTS Federal Columbia River Transmission System FELCC firm energy load carrying capability FHFO Funds Held for Others

BP-14-FS-BPA-03 Page iv FORS Forced Outage Reserve Service FPS Firm Power Products and Services (rate) FY fiscal year (October through September) GARD Generation and Reserves Dispatch (computer model) GEP Green Energy Premium GRSPs General Rate Schedule Provisions GTA General Transfer Agreement GWh gigawatthour HDD heating degree day(s) HLH Heavy Load Hour(s) HOSS Hourly Operating and Scheduling Simulator (computer model) HYDSIM Hydrosystem Simulator (computer model) ICE Intercontinental Exchange inc increase, increment, or incremental IOU investor-owned utility IP Industrial Firm Power (rate) IPR Integrated Program Review IRD Irrigation Rate Discount IRM Irrigation Rate Mitigation IRMP Irrigation Rate Mitigation Product JOE Joint Operating Entity kW kilowatt (1000 watts) kWh kilowatthour LDD Low Density Discount LLH Light Load Hour(s) LRA Load Reduction Agreement Maf million acre-feet Mid-C Mid-Columbia MMBtu million British thermal units MNR Modified Net Revenues MRNR Minimum Required Net Revenue MW megawatt (1 million watts) MWh megawatthour NCP Non-Coincidental Peak NEPA National Environmental Policy Act NERC North American Electric Reliability Corporation NFB National Marine Fisheries Service (NMFS) Federal Columbia River Power System (FCRPS) Biological Opinion (BiOp) NLSL New Large Single Load NMFS National Marine Fisheries Service NOAA Fisheries National Oceanographic and Atmospheric Administration Fisheries NORM Non-Operating Risk Model (computer model) Northwest Power Act Pacific Northwest Electric Power Planning and Conservation Act

BP-14-FS-BPA-03 Page v NPCC or Council Pacific Northwest Electric Power and Conservation Planning Council NPV net present value NR New Resource Firm Power (rate) NT Network Transmission NTSA Non-Treaty Storage Agreement NUG non-utility generation NWPP Northwest Power Pool OATT Open Access Transmission Tariff O&M operation and maintenance OATI Open Access Technology International, Inc. OMB Office of Management and Budget OY operating year (August through July) PF Priority Firm Power (rate) PFp Priority Firm Public (rate) PFx Priority Firm Exchange (rate) PNCA Pacific Northwest Coordination Agreement PNRR Planned Net Revenues for Risk PNW Pacific Northwest POD Point of Delivery POI Point of Integration or Point of Interconnection POM Point of Metering POR Point of Receipt Project Act Bonneville Project Act PRS Power Rates Study PS BPA Power Services PSW Pacific Southwest PTP Point to Point Transmission (rate) PUD public or people’s utility district RAM Rate Analysis Model (computer model) RAS Remedial Action Scheme RD Regional Dialogue REC Renewable Energy Certificate Reclamation or USBR U.S.

Bureau of Reclamation REP Residential Exchange Program RevSim Revenue Simulation Model (component of RiskMod) RFA Revenue Forecast Application (database) RHWM Rate Period High Water Mark RiskMod Risk Analysis Model (computer model) RiskSim Risk Simulation Model (component of RiskMod) ROD Record of Decision RPSA Residential Purchase and Sale Agreement RR Resource Replacement (rate) RRS Resource Remarketing Service RSS Resource Support Services RT1SC RHWM Tier 1 System Capability

BP-14-FS-BPA-03 Page vi RTO Regional Transmission Operator SCADA Supervisory Control and Data Acquisition SCS Secondary Crediting Service Slice Slice of the System (product) T1SFCO Tier 1 System Firm Critical Output TCMS Transmission Curtailment Management Service TOCA Tier 1 Cost Allocator TPP Treasury Payment Probability TRAM Transmission Risk Analysis Model Transmission System Act Federal Columbia River Transmission System Act TRL Total Retail Load TRM Tiered Rate Methodology TS BPA Transmission Services TSS Transmission Scheduling Service UAI Unauthorized Increase ULS Unanticipated Load Service USACE, Corps, or COE U.S.

Army Corps of Engineers USBR or Reclamation U.S. Bureau of Reclamation USFWS U.S. Fish and Wildlife Service VERBS Variable Energy Resources Balancing Service (rate) VOR Value of Reserves VR1-2014 First Vintage rate of the BP-14 rate period WECC Western Electricity Coordinating Council (formerly WSCC) WIT Wind Integration Team WSPP Western Systems Power Pool

BP-14-FS-BPA-03 Page 1 1. INTRODUCTION AND OVERVIEW 1 2 1.1 Introduction 3 The Power Loads and Resources Study (Study) contains the load and resource data used to 4 develop Bonneville Power Administration’s (BPA’s) wholesale power rates. This Study 5 illustrates how each component of the loads and resources analysis is completed, how the 6 components relate to each other, and how they fit into the rate development process. The Power 7 Loads and Resources Study Documentation (Documentation), BP-14-FS-BPA-03A, contains 8 details and results supporting this Study. 9 10 This Study has two primary purposes: (1) to determine BPA’s load and resource balance 11 (load-resource balance); and (2) to calculate various inputs that are used in other studies and 12 calculations within the rate case.

The purpose of BPA’s load-resource balance analysis is to 13 determine whether BPA’s resources meet, are less than, or are greater than BPA’s load for the 14 rate period, fiscal years (FY) 2014–2015. If BPA’s resources are less than the amount of load 15 forecast for the rate period, some amount of system augmentation is required to achieve 16 load-resource balance. 17 18 This Study provides inputs into various other studies and calculations in the ratemaking process. 19 The results of this Study provide data to (1) the Power Revenue Requirement Study, 20 BP-14-FS-BPA-02; (2) the Power Rates Study (PRS), BP-14-FS-BPA-01; and (3) the Power 21 Risk and Market Price Study, BP-14-FS-BPA-04.

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BP-14-FS-BPA-03 Page 2 1.2 Overview of Methodology 1 This Study includes three main components: (1) load data, including a forecast of the Federal 2 system load and contract obligations; (2) resource data, including Federal system resource and 3 contract purchase estimates, total Pacific Northwest (PNW) regional hydro resource estimates, 4 and the estimated amount of power purchases that are eligible for section 4(h)(10)(C) credits; 5 and (3) the Federal system load-resource balance, which compares Federal system sales, loads, 6 and contract obligations to the Federal system generating resources and contract purchases.

7 8 The first component of the Study, the Federal system load obligation forecast, estimates the firm 9 energy that BPA expects to serve during FY 2014–2015 under firm requirements contract 10 obligations and other BPA contract obligations. The load estimates are discussed in section 2 of 11 this Study and are detailed in the Documentation. 12 13 The second component of the Study is the resource component, which includes the forecast of 14 (1) Federal system resources; (2) PNW regional hydro resources; and (3) power purchases 15 eligible for 4(h)(10)(C) credits. The Federal system resource forecast includes hydro and 16 non-hydro generation estimates plus power deliveries from BPA contract purchases.

The 17 Federal system resource estimates are discussed in section 3.1 of this Study and are detailed in 18 the Documentation. The PNW regional hydro resources include all hydro resources in the 19 Pacific Northwest, whether federally or non-federally owned. Energy generation estimates of the 20 PNW regional hydro resources are used in the forecast of electricity market prices in the Power 21 Risk and Market Price Study, BP-14-FS-BPA-04. The regional hydro estimates are discussed in 22 section 3.2 of this Study and are detailed in the Documentation. The resource estimates used to 23 calculate the 4(h)(10)(C) credits are discussed in section 3.3 of this Study, and the estimated 24 power purchases eligible for 4(h)(10)(C) credits are detailed in the Documentation.

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BP-14-FS-BPA-03 Page 3 4(h)(10)(C) credits are taken by BPA to offset the non-power share of fish and wildlife costs 1 incurred as mitigation for the impact of the Federal hydro system. See section 3.3.1. 2 3 The third component of this Study is the Federal system load-resource balance, which completes 4 BPA’s load and resource picture by comparing total Federal system load obligations to Federal 5 system resource output for FY 2014–2015. Federal system resources under critical water 6 conditions minus loads yields BPA’s estimated Federal system monthly and annual firm energy 7 surplus or deficit.

If there is a forecast annual average firm energy deficit, system augmentation 8 is added to Federal system resources to balance loads and resources. The load-resource balance 9 is discussed in section 4 of this Study and is detailed in the Documentation. 10 11 Throughout the Study and Documentation, the load and resource forecasts are shown using three 12 different measurements. The first, energy in average megawatts (aMW), is the average amount 13 of energy produced or consumed over a given time period, in most cases a month. The second 14 measurement, heavy load hour energy in megawatthours (MWh), is the total MWh generated or 15 consumed over heavy load hours.

Heavy load hours (referred to as either Heavy or HLH) can 16 vary by contract but generally are hours 6 a.m. to 10 p.m. (or Hour Ending (HE) 0007 to 17 HE 2200), Monday through Saturday, excluding North American Electric Reliability 18 Corporation (NERC) holidays. The third measurement, light load hour energy in MWh, is the 19 total MWh generated or consumed over light load hours. Light load hours (referred to as either 20 Light or LLH) can vary by contract but generally are hours 10 p.m. to 6 a.m. (or HE 2300 to 21 HE 0006), Monday through Saturday, all day Sunday, and holidays defined by NERC.

These 22 measurements are used to ensure that BPA will have adequate resources to meet the variability 23 of loads. 24

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BP-14-FS-BPA-03 Page 5 2. FEDERAL SYSTEM LOAD OBLIGATION FORECAST 1 2 2.1 Overview 3 The Federal System Load Obligation forecast includes: (1) BPA’s projected firm requirements 4 power sales contract (PSC) obligations to consumer-owned utilities (COUs) and Federal 5 agencies (together, for purposes of this Study, called Public Agencies or Public Agency 6 Customers); (2) PSC obligations to investor-owned utilities (IOUs); (3) PSC obligations to 7 direct-service industries (DSIs); (4) contract obligations to the U.S. Bureau of Reclamation 8 (USBR); and (5) other BPA contract obligations, including contract obligations outside the 9 Pacific Northwest region (Exports) and contract obligations within the Pacific Northwest region 10 (Intra-Regional Transfers (Out)).

Summaries of BPA’s forecasts of these obligations follow in 11 this section. 12 13 2.2 Public Agencies’ Total Retail Load and Firm Requirement PSC Obligation 14 Forecasts 15 In December 2008, BPA executed power sales contracts with Public Agencies under which BPA 16 is obligated to provide power deliveries from October 1, 2011, through September 30, 2028. 17 These contracts are referred to as Contract High Water Mark (CHWM) contracts. Three types of 18 CHWM contracts were offered to customers: Load-Following, Slice/Block, and Block (with or 19 without Shaping Capacity). For the rate period, 118 Public Agency customers signed Load 20 Following contracts; 16 signed Slice/Block contracts; and one signed the Block contract, which 21 is scheduled to begin deliveries October 1, 2013.

22 23 Under these CHWM contracts, customers must make elections to serve some of their load by 24 (1) adding new non-Federal resources; (2) buying power from sources other than BPA; and/or 25

BP-14-FS-BPA-03 Page 6 (3) requesting BPA to supply power. The quantities of these elections factor into the forecasting 1 process to determine the total amount of energy BPA will be obligated to serve under each 2 customer’s PSC. 3 4 2.2.1 Load Following PSC Obligation Forecasts 5 The Load Following product provides firm power to meet the customer’s total retail load, less 6 the firm power from the customer’s non-Federal resource generation amounts and purchases 7 from other suppliers used to serve the customer’s total retail load. 8 9 The total monthly firm energy requirements PSC obligation forecast for Public Agency 10 customers that purchase the Load Following product is based on the sum of the utility-specific 11 firm requirements PSC obligation forecasts, which are customarily produced by BPA analysts.

12 The method used for preparing the firm requirements PSC obligation forecasts is as follows. 13 14 First, utility-specific forecasts of total retail load are produced using least-squares 15 regression-based models on historical monthly energy loads. These models may include several 16 independent variables, such as a time trend, heating degree days, cooling degree days, and 17 monthly indicator variables. Heating and cooling degree days are measures of temperature 18 effects to account for changes in electricity usage related to temperature changes. Heating 19 degree days are calculated when the temperature is below a base temperature, such as 20 65 degrees; similarly, cooling degree days are calculated when the temperature is above the base 21 temperature.

The results from these computations are utility-specific monthly forecasts of total 22 retail energy load. The total retail energy load is split into HLH and LLH time periods using 23 recent historical relationships. 24 25