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Interim Wholesale Power Price Forecast
November 19, 2007 | document 2007-20
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Dear Interested Party:
The Council is seeking comments on its draft Interim Wholesale Power Price Forecast. The interim forecast is for lower wholesale electricity prices at the Mid-Columbia trading hub through 2026. The lower wholesale power prices (despite higher forecasts of fuel and capital costs) are the result of meeting renewable portfolio standards (RPS) in many western states, including Washington, Oregon, and Montana.
The Council's forecast for lower electricity prices is limited solely to the wholesale power market. The forecast does not address retail rates, which can be quite different from wholesale prices. The wholesale power price forecast normally provides an initial cost-effectiveness benchmark for assessing generating resources, and has also informed the representation of market prices in the Council's portfolio risk modeling. The Regional Technical Forum has used the forecast to assess the cost-effectiveness of conservation measures, and it has also provided a base case for the marginal carbon dioxide offset value of conservation. Finally, the Council's forecast of wholesale power prices is often used by other organizations in their own planning.
The draft paper indicates that during a period when new resources are being added to the system to achieve state RPS requirements, and not solely on the basis of long-term market supply and demand, forecasted wholesale power prices will no longer reflect the fully-allocated cost of the new incremental generating resource. This suggests that using the wholesale power price forecast as the sole basis for assessing the cost-effectiveness of conservation and demand response measures, as well as capacity or energy generating resources, may no longer be appropriate.
The Council seeks public comment on the assumptions and approach used to develop this forecast and how this forecast should be applied to assessing the cost-effectiveness of conservation and demand response measures, and capacity or energy generating resources (both RPS-qualifying and non-qualifying). The Council will also consider additional sensitivity analyses if useful, bearing in mind that this is an interim forecast that will be revised as further information becomes available during development of the Sixth Power Plan.
Send comments by Wednesday, December 19, 2007 to Mark Walker, Director of Public Affairs, Northwest Power and Conservation Council, 851 SW Sixth Avenue, Suite 1100, Portland, OR 97204, or comments@nwcouncil.org.
Thank you for your interest and comments on this issue.
Sincerely,
Steve Crow
Executive Director