The Northwest Power Act of 1980, the federal law that authorized the states of Idaho, Montana, Oregon, and Washington to form the Northwest Power and Conservation Council, directs the Council and the Bonneville Power Administration to treat energy conservation --improved efficiency of electricity use -- as a resource equal to electricity generation when planning to meet future demand for power. The Act requires Bonneville to acquire all cost-effective conservation first before acquiring new power from generating resources.
The Act also directs the Council to prepare, and to periodically review, a regional electric power plan to assure an adequate, efficient, economical, and reliable electricity supply in the Pacific Northwest. The administrator of Bonneville is required by the Act to make resource acquisition decisions that are consistent with the Council’s power plan. Consistent with the Power Act, energy conservation is the highest-priority resource in the Council’s power plan.
To assist the Council in determining the cost-effectiveness of generating and conservation resources that are included in the power plan, the Act establishes three criteria. A cost-effective resource or measure is one that is forecast by the Council to be 1) reliable, 2) available when it is needed, and 3) no more expensive than the least-cost alternative resource.
From this instruction, the Council developed a methodology to identify all of the technically feasible potential conservation measures in the region and any timing constraints to their implementation. With this methodology, the Council forecasts the rate of annual deployment of conservation measures and the maximum achievable potential of the measures over the 20-year horizon of the power plan (the Act requires the Council to plan 20 years into the future and to review the plan every five years).
The Council divides conservation measures into two categories: those that can be acquired at any time, such installing low-flow shower heads (these are called non-lost opportunity measures), and those that can only be acquired under specific conditions or at a specific time, such as wall insulation in buildings that are under construction (these are called lost-opportunity measures -- if they aren’t implemented, the opportunity is lost). For planning purposes, the Council sets penetration limits, with respect to time, for both types of conservation.
In its planning, the Council assumes that the upper limit of conservation (this is called “penetration”) that can reasonably be acquired by all mechanisms available. These mechanisms include more than utility programs alone. The mechanisms include incentive payments from utility and system benefit charge programs, improved state and local building codes, federal and state appliance standards, market transformation programs, marketing efforts, voluntary programs, electricity pricing mechanisms and other tools. The Council’s assumptions estimate achievable penetration rates without respect to what fraction will be acquired by utility programs versus other mechanisms such as market transformation, codes, standards, or electricity price effects.
Over the twenty-year planning horizon the long-term cumulative upper limit of market penetration in the region is 85 percent of the economically (i.e., cost-effective) and technically achievable potential for non-lost opportunity measures and about 65 percent for lost-opportunity measures over a 20 year period. In addition to long-term penetration limits, the Council sets annual near-term limits on how much conservation can reasonably be developed. These annual limits are a more critical assumption for regional planning and implementation than the long-term penetration limits.
The annual limit for non-lost-opportunity measures is 120 average megawatts per year. The annual limit for lost-opportunity measures gradually increase from 15 percent to 85 percent of annually available and cost-effective lost-opportunity measures over the first twelve years of plan implementation. These annual limits have the effect of reducing the near-term achievable potential significantly. For example, in the first ten years of plan implementation, the resultant cumulative limit of achievable potential is 62 percent of the 20-year economically and technically available potential for non-lost opportunities and 21 percent for lost-opportunity resources. In aggregate, across both non-lost opportunity and lost-opportunity resources, the Council’s 5th Plan limits achievable potential to about 44 percent of the 20-year technical and economic potential over the first ten years.
There is ample historic evidence to support retaining these near-term and long-term planning assumptions, as both are supported by actual experience during the last 20 years. There are many examples of better than 85 percent penetration for lost-opportunity measures. For example, before the end of 1992 -- not quite 10 years after the Council issued its first power plan -- Washington and Oregon, the two most populous states in the region, already had met the energy-savings goals in the plan set forth for new residential and commercial construction. By 2002 all four Northwest states had met the goals of the plan for conservation in new residential construction and also exceeded the goals for conservation in new commercial buildings by at least 10 percent.
Examples of historic penetration rates for non-lost-opportunity measures are more difficult to analyze on a retrospective basis by measure because of data limitations and a lack of sustained efforts for many measures. The Hood River Weatherization Project demonstrated over 85 percent penetration in just two years with a 100 percent incentive and a large marketing effort. Recent data shows over 32 percent penetration in just six years for residential compact fluorescent lighting. Furthermore, there are two episodes of high region-wide acquisition rates in the early 1990s and 2000s that demonstrate the capability to acquire over 100 average megawatts per year through utility programs alone.
It is more relevant today to reliably predict the pace at which conservation programs can be “ramped up” and maintained over the near-term than it is to plan 20 years into the future. The 20-year timeframe stipulated in the Act for the Council’s power and conservation planning is less important for conservation than the near-term acquisition rates for two reasons. In 1980, new generating plants took up to 15 years to site, license, and build. Today, new generating facilities and transmission system expansions can be brought on line in three to five years. Second, the Council develops a new power plan every five years or so. Conservation potential is reassessed in each plan which allows a fresh look at accomplishments as well as what exists for future potential.
