Tough Task

Use the Council's methodology to determine when new power plants are needed, not an arbitrary standard, departing Chair urges.

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Henry Lorenzen

On his last day as Chair of the Northwest Power and Conservation Council, Henry Lorenzen, a Pendleton rancher and attorney with a long history in regional energy and environmental issues, warned that decisions about future regional energy supplies are being made with more attention to meeting goals or targets than whether the energy actually is needed.

“We, the Council, exist because the region committed a major error with regard to resources to be acquired, WPPSS 1 through 5, and it had a dramatic impact and it continues to have a dramatic impact upon ratepayers and the Bonneville Power Administration’s competitiveness,” Lorenzen said, referring to the 1970s decision to build five nuclear power plants, only one of which was completed. The debt for three of those plants continues as a Bonneville obligation, amounting to nearly $300 million in 2017. Lorenzen's verbatim remarks follow this post.

In response, Lorenzen said, the Council developed “a more rigorous methodology with regard to planning resources.” With this methodology, the Council “determines the least-cost, least-financial-risk resources in order to meet needs based on probabilistic modeling, taking into account a wide range of variables.”

The Council’s Seventh Northwest Power Plan, completed in 2015, included a careful analysis of the best mix of future power supplies that would meet anticipated demand and keep electricity affordable and the supply reliable far into the future. Resources in the plan were, in priority order, energy efficiency, demand response, and a limited number of new natural gas fired plants. The plan called for developing renewable resources to the extent required by state standards. The power plan is implemented by Bonneville and is used by electric utilities as a guide in their own least-cost planning.

Lorenzen said this careful approach to minimize risk, including the financial risk of paying for power plants that are not needed, is not being used in political decisions to set renewable energy goals.

“Very shortly after the release of our Power Plan, decisions were made to substantially increase our renewable energy resources within the Northwest, and that was done by the legislature and other political activities,” he said. “And as a result I’m not certain whether our methodologies we’ve developed are in fact being taken into account to the extent they should be when resource decisions are being made.”

Lorenzen said the challenge for the future is “to make certain to the best we can that the methodologies that we have developed also are taken into consideration by those entities, those persons who are making those decisions, whether it be the traditional utility managers or the legislators.”

He said it will be “a tough task” because the issues are complicated. He predicted it will be necessary to bring the same rigor to decisions about environmental protection, including carbon reduction.

“By doing so we marshal our resources and we achieve a greater good, I believe, ultimately with regard to these matters that are so critically important,” Lorenzen said.

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January 10, 2018 

Remarks of Chair Henry Lorenzen

Northwest Power and Conservation Council Meeting

January 10, 2018 – Portland, Oregon

Now I’m going to have the opportunity to talk before we go. I still control the gavel and I control it for however long I’m willing to talk and people are willing to listen.

I want to mention just a couple of things I perceive as trends that I think have a significant impact upon what the Council does and its work in the future.  Going back to 1980, we are here and we exist as a Council and the Act was passed because the region had made a major error, committed a major error in decisions with regard to resources to be acquired.  WPPSS Plants 1 through 5.  It had a dramatic impact and it continues to have a dramatic impact upon ratepayers and the Bonneville Power Administration’s competitiveness.  The Act anticipated that we would exist and we would have a staff and a mission to develop a more rigorous methodology with regard to planning resources for the area. Over the last many years our staff, an incredibly capable staff, has developed a state-of-the-art methodology by which to anticipate and determine the least-cost, least financial risk resources in order to meet needs based upon probabilistic modeling, taking into account a wide variety and wide range of variables.

My concern is that as we’ve moved forward and we have developed these very rigorous models that have been recognized as state of the art, the traditional people and entities making decisions with regard to acquisition of resources are no longer doing so.  As a result, I’m not certain whether the methodologies we’ve developed are in fact being taken into account to the extent they should be when resource decisions are being made.  If you look back at our Power Plan, the 7th Power Plan, the conclusion was very stark with regard to additional renewable resources necessary in order to meet the Obama Clean Power Plan regionally.  But very shortly after the release of our Power Plan, decisions were made to substantially increase renewables that were to be developed within the Northwest. That was done by the legislature and through other political activities. 

Our challenge, I believe, is to make certain in the future, to the best we can, that the methodologies that we have developed also are taken into consideration by those entities, those persons who are making those decisions, whether it be the traditional utility managers or the legislators. 

That’s a tough task because this is a complicated area. These are complicated matters. On the surface it sounds as if many of us are not concerned about carbon. I am one who is very concerned about environmental issues, very concerned about carbon. But we have to bring the same methodology that we used in planning for generating resources into the area of environmental protection, including carbon reduction.  By doing so we marshal our resources and we achieve a greater good, I believe, ultimately with regard to these matters that are so critically important. 

Another thing, just a tangential matter, has to do with carbon reduction.  I was very struck by Steve Wright’s presentation to us when he complimented us, which is always nice to have a compliment from somebody like Steve Wright, on the methodology used for developing the resource acquisition analysis in the 7th Power Plan. But he then lamented the fact that we were not using the same rigor in looking at how to go about reducing carbon. Our Council staff has methodologies, used in the 7th Power Plan, available to assist those who are making resource and carbon-related decisions.  The question is how do we go about making the inter-connect with those people that are doing the decision making? 

That’s my caution, my look forward.  I hope that the Council can determine how to be successful in promoting and also making our tools available and used by the whole range of people who make those decisions with regard to power planning as well as carbon reduction.

So, with that, my parting shot, I will now soon give up the gavel.