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Characteristics of a system to carry out BPA's responsibilities for
conservation and renewables under the joint customer proposal
August 14, 2002
Representatives of customer utilities of BPA and of regional
environmental organizations and conservation and renewable resource
advocates have been meeting to develop a proposal for how conservation and
renewable resource development would proceed under the joint customer
proposal for the future role of BPA. Council staff have been sitting
in on some of these discussions. However, these discussions have not
yet reached a conclusion.
The Council wants to ensure that regional investments in energy
conservation and renewable resources remain a priority for the
region. The Council believes that while discussions between the
parties are still on going, it would be helpful if the parties had an
indication of what the Council will be looking for when it reviews the
final proposal.
Toward that end, the Council has approved the attached characteristics
that it believes would be desirable for any system intended to carry out
BPA's current responsibilities for conservation and renewables under the
joint customer proposal. They can be thought of as the
characteristics that the Council believes are important to achieving a
successful evolution of Bonneville's conservation and renewables
responsibilities. However, the Council will reserve judgment on any
specific proposal until it can evaluate the characteristics of the
proposal as a package.
Dick Watson, Director, Power Division
Introduction
A group of customer utilities have developed a proposal that would
result in a change in the way BPA markets power and a long-term (20 years)
allocation of power from the Federal Columbia River Power System (FCRPS).
This proposal would minimize Bonneville's role in power markets both as
a seller or purchaser of power and in acquiring new resources to meet load
growth in the region. As the customers entered into the development
of this proposal, Bonneville provided a set of broad principles that they
believed any proposal must satisfy.
As part the proposal, much of Bonneville's current responsibilities
for developing conservation and renewable resources would be carried out
by customer utilities. However, the details of how this would be
accomplished were not spelled out. These details are the subject of
discussions ongoing between BPA's utility customers and conservation and
renewables advocates. Council staff is sitting in on these
discussions.
The following characteristics have been developed for the purpose of
giving an indication to the participants in these discussions of how the
Council is likely to view a proposal for conservation and renewables.
They can be thought of as the characteristics that the Council believes
are important to achieving a successful evolution of Bonneville's
conservation and renewables responsibilities. However, the Council
will reserve judgment on any specific proposal until it can evaluate the
characteristics of the proposal as a package.
The basis for the characteristics
Least-cost planning and implementation, ensuring that the lowest cost
resources are identified and acquired as needed, make good sense.
Those concepts are embedded in the Northwest Power Act[i],
made sense when the Act was passed, and they make sense regardless of what
entities develop new resources or the disposition of federal power.
The characteristics of the system for conservation and renewables
development under any revised federal power marketing approach should
reflect the intent to ensure that least-cost planning and implementation
continue to be carried forward region wide.
The Region has done a lot and learned a lot since least-cost planning
and implementation was first practiced. In particular, the
leadership role that has been played by the Bonneville should not be
minimized. There have been periods, for example, the late 1990s,
when Bonneville as well as many retail utilities reduced their commitment
to conservation below cost-effective levels. Nonetheless, the
characteristics should build on the legacy that Bonneville and the region
have established as leaders in conservation and renewables while taking
into account changes in market structure and regulation that impact
incentives for utilities to pursue conservation and renewables. The
lowest common denominator should not be the standard. The
characteristics should build on the experience of the last two decades of
planning and implementing conservation, renewable and high-efficiency
resources to ensure effective and efficient development of these
resources.
The characteristics
- The goal is to develop all cost-effective conservation and
cost-effective renewables needed to ensure an adequate, efficient,
economic and reliable power system for the region.[1]
Proposals should be consistent with this goal.
- Conservation and renewable targets for the region should be
established through periodic regional integrated resource planning,
providing a regional framework for local planning. The approach
must accommodate the need to adapt targets over the twenty-year period
of the agreement, taking into account factors like: changing
technology performance and costs; changing loads and load shapes;
changing values of energy and capacity and their seasonal and daily
variations; costs of alternatives; value of risk mitigation;
environmental costs and benefits; adoption of codes and standards;
market-induced resource development; the need for reasonable
year-to-year predictability of targets; and so on. The planning
should provide for the participation of important stakeholders (e.g.,
utilities, states, tribes, consumers and so on)
- Funding should be adequate to accomplish the targets, sufficiently
stable to ensure predictability and efficient implementation, and
sufficiently flexible to adapt to changing circumstances. The
commitment to such funding must be consistent with the duration of the
?deal.? Attention should be paid to avoid cost shifts among
customers and rate pools.
- The spectrum of activities required for effective development of
conservation and renewables should be adequately supported (e.g.,
development and demonstration of promising technologies, market
research, consumer education, program design, program delivery, market
transformation, codes and standards, program oversight, measurement
and evaluation).
- Implementation approaches used should be adaptable over time to
incorporate new information and changes in best practices.
- Conservation and renewable resource activities should be carried out
at the level appropriate for the activity. Many activities are
most effectively carried out at the local level where local knowledge
and customer contact are essential. Others are more effectively
carried out at a state or regional level where economies of scale,
market scope or jurisdictional factors are important.
- Roles, responsibilities of all the parties should be clear and
unambiguous. The conservation and renewables elements of the proposal
should be generally compatible with the design and implementation of
the overall power marketing proposal while ensuring that
cost-effective conservation and renewable resource development is
accomplished.
- Accountability for results must be assured at whatever level
implementation takes place while not being overly burdensome.
This requires adequate attention to and support for objective and
unbiased measurement and evaluation and a workable system for dispute
resolution. Accountability includes fiscal accountability to
ensure that funds are spent appropriately; and performance
accountability to ensure that the region captures intended benefits
and learns from its efforts so as to be able to refine and improve
future activities.
- The mechanism must incorporate an adequate and timely ?backstop?
provision to ensure that regional conservation and renewables targets
are met if it is found that some entities are unable or unwilling to
carry out the necessary activities.
- Mechanisms should be structured to provide incentives for
aggressive, effective and efficient planning and implementation while
ensuring net benefits to the region.[2]
- Mechanisms should allow crediting of conservation and renewable
activities funded under measures like the Oregon and Montana systems
benefit charges, provided the activities meet similar fiscal and
performance accountability standards.
- Conservation and renewable programs should be accessible to all
sectors of the regional economy and all areas of the region consistent
with the goal of cost-effectiveness.
[1] Developing ?all
cost-effective conservation and renewables? has never meant do nothing
but conservation and renewables. It has meant develop the portfolio
of resources, including conservation and renewables, that results in least
cost over the planning horizon while assuring an adequate and reliable
power system.
[2] This is
nothing more than saying that the payment that the utility receives for
implementing conservation should not be so generous that the conservation
ends up costing as much as the avoided resource would have cost.
[i] For example, the
purposes of the Act call for encouraging, ?through the unique
opportunity provided by the Federal Columbia River Power System -
(a) conservation and efficiency in the use of electric power, and
(b) the development of renewable resources within the Pacific
Northwest?;
(c) and ?to provide for the participation and consultation of the
Pacific Northwest States, local governments, consumers, customers, users
of the Columbia River System (including Federal and State fish and
wildlife agencies and appropriate Indian tribes), and the public at
large within the region in the development of regional plans and
programs related to energy conservation, renewable resources, other
resources, and protecting, mitigating and enhancing fish and wildlife
resources.? (Title 16, Chapter 12, Section 839 USC).
The priorities of the Act establish cost-effective conservation,
renewable resources, and high efficiency resources as the top priority
resources in that order, and require that the Council periodically develop
a plan to identify the priority resources available to meet the
administrator's loads. It also calls for the establishment of
model conservation standards that apply to utility, customer and
governmental conservation programs. (Title 16, Chapter 12, Section
839B (e) USC).
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