System Analysis Advisory Committee Meeting Notes
November 22, 2002 - 8:30 a.m. - 12:00 p.m.
NORTHWEST POWER PLANNING COUNCIL OFFICES
PORTLAND, OREGON
DRAFT
I. Greetings, Introductions and Review of the Agenda.
The
November 22, 2002 System Analysis Advisory Committee meeting, held at the
Northwest Power Planning Council's offices in Portland, Oregon, was
chaired by Michael Schilmoeller of the Council staff.
The
following is a distillation (not a verbatim transcript) of items discussed
during the call, together with actions taken on those items. Please
note that some enclosures referenced in the body of the text may be too
lengthy to attach; all enclosures referenced are available upon request
from Schilmoeller at 503/820-2314.
Schilmoeller welcomed everyone to today's meeting, led a round of
introductions, and then reviewed today's agenda. Schilmoeller noted that
copies of his presentation are available via the NWPPC website.
Please refer to this document for full details, including graphs and
charts.
2. Approval of October 24 SAAC Meeting Notes.
No
comments were offered on the minutes from the October 24 SAAC meeting, and
they were designated as final.
3. Review and Questions from the Last Meeting.
Using the projector, Schilmoeller reviewed the main topics covered at the
last meeting of this group, including representation of dispatchables, a
review of results, the price duration curve, hourly dispatch modeling and
plan issues. There were a few technical questions and comments, which
Schilmoeller answered.
4. Representations In the Portfolio Model.
Schilmoeller went through a series of slides representing various aspects
of representations in the portfolio model, including price responsive
demand.
Stephan Brown commented on the second slide under ?Price responsive
demand.? Say your tariff rate is $60 ? that gives you $20 net payoff,
in which no one was willing to participate, said Brown ? for that
reason, I find your 1,433 MW figure fairly unbelievable. This is trying to
get at some idea of what the potential might be ? it is an edifice built
on some assumptions, Ken Corum replied. Demand exchange is a demand
response program, but these levels of response wouldn't follow from the
demand exchange experience we've had, he said -- what we're doing here
is applying it to the whole load, and saying it is passed through to the
customer undiluted. So it's a Georgia Power-type model? Brown asked.
Correct, Corum replied.
Given that this is a policy investigation for the Council to look at ?
how much would setting up a demand response system be worth to the region
? I'm wondering whether this is an appropriate thing to include in the
model, because it doesn't represent real-world conditions, said another
participant. We shouldn't be using it in the model for the next couple
of years, Terry Morlan agreed, but it could have value over the longer
term. So the value of this is looking at policy questions? Schilmoeller
asked. You wouldn't want to use it in doing a reliability analysis, John
Fazio replied. It will be part of an issue paper that will be going out
for public comment, Fazio added. Have we made any attempt to measure the
impacts of voluntary conservation programs, such as we saw during the 2001
energy crisis? David Engberg asked. We'll be talking about that later
today, Schilmoeller replied.
The
discussion turned to load shifting; Schilmoeller asked the other SAAC
participants to describe their experience with this tool. It would be
interesting to represent these various situations, and trying to determine
their impacts, from a systems standpoint, he said. Pure shifting from
on-peak to off-peak is an energy savings, Corum noted. Maybe it just
applies to the DSIs, but if some industries can make more money by taking
their loads off the system, irrespective of whether it's on-peak or
off-peak, they would be incented to do so, Schilmoeller said. that's a
very complicated issue, however, Pete Swartz observed ? it goes deeply
into customer relations and other sensitive areas. The group also briefly
discussed the Georgia Power model, as well as the California ISO
experience with offering to pay loads to hold reserves. Ultimately,
Schilmoeller asked that any additional comments on this topic be
communicated to him following today's meeting.
The
next topic in Schilmoeller's presentation was ?Conservation and
Renewables:?
?
Represent as non-dispatchable energy
?
Supply curve for conservation developed by Tom Eckman
?
Renewables cost and operating characteristics developed by Jeff King.
Schilmoeller touched on some of the risks and weaknesses associated with
conservation and renewables, as well as C&R strengths. The group
debated the relative lead time of conservation and renewables resources
vs. conventional resources, with one participant noting that it may be a
misconception that C&R resources have a shorter lead time than
conventional resources ? you can get a small natural gas turbine or a
diesel generating farm up and running in three to six months, he said.
Next, Schilmoeller described some of the key features of the Council's
analysis of conservation and renewables resources in the Plan, including
the concept of Sustained Orderly Development (SOD). Schilmoeller
discussed how SOD would manifest itself in the analysis underlying the
plan's development, including the broad application of real options to
the electric power industry.
Schilmoeller moved on to some of the working hypotheses he has developed
to look at conservation and renewables resources, including the concept
that some participants will find the risk attributes of C&R more
attractive than others. He posited a series of conceptual questions
associated with C&R.
Schilmoeller then moved on to the hydrogeneration portion of his
presentation, first describing some of the basic tools, attributes and
assumptions underlying this portion of the analysis. He noted that the
Excel add-on he has developed for hydro is available via the Council
website ( Schilmoeller then spent a few minutes demonstrating this
calculator.
In
response to a request from Eric Hiaasen, Schilmoeller described how the
sustained peaking function works within his analysis of hydrogeneration,
noting that this calculation is only an estimate, and is not carved in
stone. We also need to know what the off-peak energy is that will be
associated with that estimate, Hiaasen observed. The group devoted a few
minutes of discussion to this question, and to how Schilmoeller's
sustained peaking calculation works. Michael Schilmoeller and Mike
McCoy pointed out that the on-peak energy calculation takes into account
the number of hours at generation levels that are not at sustained
peak. Consequently, the calculation should be about right.
Another related question that arose was whether the sustained peak
estimate needed to be recalculated for a 16-hour period.
Schilmoeller pointed out that the capacity level is about a linear
function of the sustained peaking period. If this relationship
holds, then by averaging in hours at non-sustained peak levels, the
on-peak estimate should be right. Mike McCoy concurred.
Next, Schilmoeller moved on to the ?Loads? section of the agenda. He
described some of the assumptions he used regarding both DSI and non-DSI
loads. The group discussed the source and vintage of the load
information available for this analysis. Schilmoeller touched on some of
the short- and long-term uncertainties regarding the DSI and non-DSI
load forecasts; the group discussed their experience in evaluating these
factors, then devoted considerable discussion to what the ?Non-DSI
Loads? graph developed by Terry Morlan actually shows and why (Slide
71).
Phil Sher and Dave Engberg have both brought up the issue of the
sensitivity of non-DSI loads to condition, Schilmoeller said ? is that
something we can capture in our model? By ?condition? you mean...?
Morlan asked. The market price of electricity, for example, Schilmoeller
said. Probably ? it should be in one of the volatilities, Morlan
replied.
The discussion then moved on to DSI loads, with and without an assumed
BPA allocation at an assumed price. Any feedback from the DSIs on this
analysis? one participant asked. Not from the DSIs themselves, but they
have suggested a person for me to talk to, Morlan replied ? at some
point I do plan to show it to them and solicit their feedback.
The final item on today's agenda was ?Natural Gas Prices;?
Schilmoeller said he has not yet had time to complete this portion of
his analysis. We'll be discussing natural gas prices at our next
meeting, together with electricity prices, he said; in the interim, here
are some of the questions I'll be looking at (Slide 80) ? data from
gas daily, other questions.
You can bring a lot of different methods to bear and get different
answers, said Sher, but I think you?re always going to be wrong ?
whatever conclusions you draw from the portfolio model, you need to ask
what gas prices would have to do for you to change your conclusions ?
I would strongly recommend that you include that kind of threshold
analysis, he said. Schilmoeller agreed.
5. Next SAAC Meeting Date.
The next meeting of the System Analysis Advisory Committee was set for
9:30 Thursday, December 19. The main topics to be addressed at this
meeting include natural gas prices and electricity prices. Meeting
summary prepared by Jeff Kuechle, NWPPC contractor.
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