Letter from the Chair
Dear Interested Party:
In its 5th Northwest Power Plan, the Council recognized the importance of developing a resource adequacy framework and standard for the region. To achieve these goals, the Council and the Bonneville Power Administration initiated the Pacific Northwest Resource Adequacy Forum (Forum) and asked it to develop a standard for the region.
The Forum has completed the initial phase of its work, which was to develop a voluntary regional energy metric and target. The Council released an issue paper outlining this proposed regional standard on February 22, 2006. Comments were taken through April 14, 2006. On May 10, 2006, the Council adopted the standard.
In response to comments, the Council continues to emphasize that the regional standard is voluntary and does not imply regulatory oversight. Its success as a regional early warning system depends on individual entities providing the information necessary for accurate regional assessments. Some commentors expressed apprehension about locking into a particular standard at this time. However, the Council commits to review the standard at least once a year and to make revisions as necessary. Thus, there will be opportunities to revise and improve the regional standard over time.
The Forum is pursuing other issues raised in the comments. For example, several commentors expressed an interest in developing an additional “economic” standard that would complement the newly adopted “physical” standard. The Forum is responding to this request by developing proposals for an economic standard. The Forum also will work toward developing a method for individual utilities to calculate their own energy adequacy in a manner consistent with the regional energy metric. The Council intends to make this method available to utilities that wish to apply the regional standard to their own resource planning.
By fall of this year, the Forum is scheduled to complete work on three new proposals: a regional capacity metric and target, a resource-counting and data-reporting protocol, and an overall implementation mechanism.
We appreciate the voluntary participation of Forum members and others who provided comments as we tackle these important and challenging issues.
Sincerely,
Tom Karier, Chair
Introduction
The Pacific Northwest Resource Adequacy Forum (Forum) has developed a regional standard to be used for guidance in long-term resource planning. The Council adopts this standard for its own planning process and recommends that other entities in the region incorporate it into their planning efforts. The Council also recommends that this regional standard be submitted to the Western Electricity Coordinating Council (WECC) for inclusion in its development of West-wide adequacy standards.
The term “standard” in this context does not mean mandatory compliance nor does it imply an enforcement mechanism. Rather, it is meant to be a gauge used to assess whether the Northwest power supply is adequate in a physical sense, that is, in terms of “keeping the lights on.” It can be thought of as the minimum threshold for resource acquisition. However, the Council encourages utility planners to think beyond this minimum (as the Council did in its 5th Power Plan) and consider strategies that also protect against potentially bad economic outcomes.
The regional standard consists of a metric (something that can be measured) and a target (an acceptable value for that metric) for both energy and capacity capabilities of the system. One of these targets will be the limiting constraint for a region or sub-region in the West. For the Northwest, the energy target is most likely the limiting factor.
There remain a number of important and still unresolved issues regarding the capacity metric and target. For this reason, the Council is not considering a regional capacity standard at this time. The Forum continues to make progress in this area and is expected to complete its work later this year. At that time the Council will consider adopting the Forum’s proposal.
The Council believes that the form of the energy metric and the value of the energy target presented in this paper are appropriate. As new information becomes available, underlying assumptions for this regional energy standard will be updated. In fact, the intent is for this process to be dynamic, and the Council recommends that an assessment of the region’s resource adequacy be made at least once per year. Details regarding the counting of resources and loads will be completed by the Forum and presented to the Council at a later date.