• The goal of the analysis (Determine whether there is a net economic value to the region's power system that could result from stabilizing the annual level of conservation resource acquisition; identify and evaluate conservation deployment strategies that provide the best net economic value to the regional power system considering practical limitations on program ramp rates and market volatility.)

• Regional utility program conservation acquisitions, 1978-2001

• Regional utility conservation resource acquisition investments, 1991-2001

• Regional utility conservation acquisitions vs. Council Plan targets, 1997-2001 (the targets were not met)

• The Fourth Power Plan's conservation acquisition schedule, 2000-2015

• A summary of the problem (Past plans have called for stable annual conservation acquisitions; utility investments in conservation have varied widely in response to short-run market and industry regulatory conditions; question: how does the cyclical investment in conservation impact its economic value to the region?)

• Possible analytical approaches (Use the AURORA model to compare two portfolio-management strategies ? ?dollar-cost averaging? and ?market timer.?)

• Analytical issues ? required data and assumptions.

• Question ? is there a relationship between market prices and the annual level of conservation acquisition? (graph)

• Question ? is there a relationship between ramp rate and the total resource cost of conservation acquisitions?

• Question: is there a relationship between ramp rate and the utility cost of conservation acquisitions? (graph)

• Question: what is the rate at which conservation acquisitions can be ramped up and ramped down, in a MW and % (graphs).

• Question: what is the conservation hedge worth, May 1996-August 2001? (graph)

• Question: what will be the amplitude and frequency of wholesale market price spikes, given various scenario assumptions re capacity shortages, droughts and boom/bust cycles January 2001-January 2020? (graphs)

            Various meeting participants offered clarifying questions and comments. One participant asked whether it would be possible to analyze what the economic impacts would have been for the region and its power system if the conservation acquisition targets called for in the fourth Power Plan would have been met; Eckman replied that it should be possible to produce such an analysis, adding that, in his opinion, the impact would be large.

            The group devoted a few minutes of discussion to the data and assumptions to be used in Eckman's proposed analytical approach, in particular, the question of the impact of ramp rates on the cost of conservation acquisition, as well as how the frequency and amplitude of future price spikes is to be analyzed. They discussed the relative impact of market price vs. retail price, as well as what the experiences of the past year have taught the region's utilities about the value of conservation during periods of extreme price volatility.

            One important fact to mention, with respect to our assumptions about the amplitude and frequency of wholesale market price spikes, Eckman said: wholesale market prices fluctuate in response to over/under building, extreme weather events, hydrosystem availability and short-run economic/business cycles. There is no question that it is impossible to accurately predict any of these factors, Eckman said; that means the best we're going to be able to do is run a Monte Carlo simulation and randomize the forecast. Essentially, he said, what we need to decide is, how much insurance does the region need to buy to cover an uncertain future, and what is a reasonable premium to pay?

            Eckman closed with a description of the kinds of questions the Council would like this committee to answer with respect to this analysis:

• Does the proposed analytical approach make sense?

• Is it objective and unbiased?

• Do we have sufficient data to support it?

• Are the required data and assumptions reasonable and realistic?

• Are there other issues that need to be taken into consideration?

            In response to a question from one participant, Eckman said information on transmission and distribution benefits and costs will be factored into this analysis; however, he said, that is too complex a topic to discuss in detail at today's meeting.

3. Role of Committee in Reviewing Conservation Resource Assessment and Regional Technical Forum (RTF).

            Charlie Grist of the Council staff led this presentation, titled ?Regional Conservation Resource Supply Assessment: Who Wants It and Why; How We Propose to Do It; Who Is to Blame If We Fail.? He began by noting that the Council's conservation resource data is now somewhat dated; while the Council realizes that this type of analysis can be difficult and expensive, it is nevertheless important information to have. Grist worked from a series of overheads, and touched on the following major topic areas:

• Who wants this analysis and why (utilities, energy trust, Bonneville, regulatory commissions, energy offices, public interest groups, the private sector, for establishing value to the region, program planning, determining level of effort and business planning for efficiency vendors)

• Which audiences and purposes are most critical now?

• What is the shelf-life of the results?

• How Council staff proposes to accomplish this analysis ? major steps (conduct technology assessment, bless what's good enough, toss duds, develop critical new measures, estimate baseline efficiency and energy use, estimate cost/unit for improving efficiency, estimate the number of applicable units, estimate realistically-achievable market penetration rates)

• Who will be to blame if we fail

• Specific areas where assistance is needed ? shelf-life of the results, cost and savings data from recent program or project evaluations, end-use energy consumption data by type, emerging end-uses with efficiency potential, industrial potential etc.

• Incremental conservation resource potential in the medium forecast by end-use sector

Eugene Rosalie observed that there is now much larger conservation resource potential in the irrigated agriculture sector than Council staff assumed for the purposes of the fourth Power Plan. Another participant noted that there are many, many household electric devices that are not captured on the current list. The group also discussed the question of whether or not to include the DSIs in the ?Incremental Conservation Resource Potential? matrix; there was general agreement that the potential inclusion of the DSIs merits further consideration and analysis. Next steps will be to break this list apart and take your input about which parts need to be fixed, Grist said.

            Eckman also described and demonstrated the Council's new conservation and renewable resource rate discount program tracking and reporting system, and the Council's new public comment site for conservation resource assessment ( He noted that there is a place on the C&RD website for interested parties to submit new measures they think the Regional Technical Forum should review.

4. Status Report on Regional Utility Conservation and Renewable Resources Program.

            Ken Corum distributed a graph, titled ?1991-2001 Cost (in millions of dollars) and Energy Savings (in aMW).? The source of this information is a survey sent out by the Council on behalf of the Regional Technical Forum to all of the utilities in the region, Corum explained; we're still waiting for all of the results to come in, so this information is not yet complete. As you can see, Corum said, energy savings were flat from 1997-2000, but there was a nice uptick in savings in 2001. Corum said Council staff will be re-contacting non-responding utilities in an effort to increase participation in the survey; the quality of the responses received to date is mixed, he said, but basically we're taking the utilities? word for the savings they report. Corum asked that any comments about how the survey is being conducted be provided directly to him.

5. Conservation Issues for the Fifth Power Plan.

            The discussion then moved on to the final presentation of the day, titled ?Conservation Resource Advisory Committee ? Draft Work Plan and Tentative Schedule.? Eckman spent a few minutes going through this presentation, using a series of overheads; he noted that the Council's goal is to complete the Fifth Power Plan by April, 2003. Eckman touched on the following major points:

?                     Major work plan elements (conservation resource assessments, model conservation standards and surcharge policy, mechanisms for stabilizing conservation investments, Bonneville's future role in conservation acquisitions, and other issues identified by the Committee

?                     Conservation resource assessment ? primary tasks (estimate cost and savings/unit, estimate applicable units, estimate realizable potential) and tentative schedule (residential sector ? August; irrigated agriculture ? September; Industrial ? October; commercial ? November)

?                     Model conservation standards (MCS) and surcharge policy ? primary tasks (estimate cost effectiveness and economic feasibility of residential and commercial efficiency measures beyond current state codes and federal standards, review the need for surcharge to encourage adoption of MCS) and tentative schedule (residential ? September; commercial ? November)

?                     Value to the region of stabilized conservation investments ? primary tasks (develop analytical framework and assumptions, build and test model, conduct analysis) and tentative schedule (complete model development ? May; conduct analysis ? Late May, early June; committee review ? mid-June).

?                     Mechanisms for stabilizing conservation investments ? primary tasks (estimate benefits of stabilized investments, develop options for providing stable investments, analyze practical and political feasibility of options) and tentative schedule (estimate benefits ? July; develop and analyze options ? October/November)

?                     Bonneville's future role in conservation acquisitions ? primary tasks (establish policy criteria/objectives; review proposals for future allocations of federal power vis-a-vis policy criteria/objectives; develop recommendation) and tentative schedule (establish objectives ? September; review proposals ? October/November; develop recommendation ? December/January)

?                     Other issues identified by the committee (low-income tool kit, emerging technologies).

            One participant suggested that, at some point in the Power Plan development process, the analysis needs to incorporate a scan or overview of new technologies, such as direct application of fuel cells, which have the potential to significantly impact loads in the Northwest.

            Nancy Hirsh commented that, given the events of the past year in the West Coast power market, the need for effective strategic power planning has never been greater, and the pressure to produce a workable plan has never been higher. To that end, said Eckman, it's obviously crucial that we get the best numbers we can, particularly in the conservation arena.  Todd Currier observed that the single most useful thing, to him, is to update the conservation resource assessment ? the more effectively we can do that, he said, the easier it will be to argue for the acquisition of conservation in the future. that's a task that will be a joint responsibility of everyone at this table, Dick Watson said.

6. Next CRAC Meeting Date.

            Eckman noted that his intent is to convene the Conservatin Resources Advisory Committee every two months. The next meeting of CRAC was set for June 19; another meeting was set for July 24. Meeting summary prepared by Jeff Kuechle, NWPPC contractor.