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Planning Reserve Margin

Dan Egolf

Senior Manager, Power Supply & Planning

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Resource Adequacy Requirements

• Planning Reserve Margin (PRM): power supply buffer that allows a utility to reliably serve customers

• Three primary drivers:

• Dependent on resource portfolio and is utility-specific

• Industry standard is Loss-Of-Load-Expectation (LOLE) of 1 day in 10 years

Resource forced outages

Increased demand due to

weather

Higher than expected load

growth

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What is Planning Reserve Margin (PRM)?

• Extra capacity

• Not having enough won’t get the job done

• Having too much is costly

• Shown in MW or percentage

• Lots of different ways of measuring it

• No “one size fits all” solution

• Are additional resources required?

• Our study is based on 2012 Load Forecast and information

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So What’s the Problem?• A basic assumption is that enough resources exist to meet the load

• Do we really need PRM?

- Load Uncertainty

A. Short-term weather-related

B. Long-term load growth

- Resource Uncertainty

A. Generation risk

B. Contract risk

C. Market risk

• With perfect knowledge far enough in advance, PRM wouldn’t be needed

• Every utility’s situation is different

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How do we evaluate PRM?• This requires two steps:

1. Measurement Options:

- Loss of Load Expectation (LOLE, in days per year)

- Loss of Load Hours (LOLH, in hours per year)

- Expected Unserved Energy (EUE, in MWh per year)

- Loss of Load Probability (LOLP, in %)

2. Methodology Approaches:

- Older rule-based

- Modern probabilistic Monte Carlo based

• FBC is using LOLE of 1 day in 10 years, or 0.1 day per year using a Monte Carlo simulation

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Risk Assumptions• Load uncertainty

- Long-term load uncertainty is covered as part of the load forecast

- Short-term weather has a significant impact on loads and the timing of the peak load is particularly risky

• Generation Risk

- Required operating reserves are part of PRM

- Unit Forced Outage Rate (FOR) based on historical data or reasonable assumptions

• Contract Risk: PPA assumed to have no risk

• Market Risk (Short-Term)

- Market access of 150 MW is assumed

- Transmission Forced Outage Rate of 0.74%

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Results: LOLE in the Base Case

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec AnnualWinter

PRM

%

2014 0.000 0.000 0.002 0.000 0.000 0.001 0.002 0.004 0.000 0.000 0.002 0.005 0.016 27%

2015 0.002 0.000 0.015 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.006 0.024 26%

2016 0.002 0.000 0.001 0.000 0.000 0.002 0.002 0.000 0.000 0.000 0.000 0.009 0.016 26%

2017 0.002 0.000 0.001 0.000 0.000 0.001 0.000 0.000 0.000 0.000 0.000 0.005 0.009 26%

2018 0.000 0.001 0.000 0.000 0.006 0.006 0.001 0.000 0.000 0.000 0.000 0.002 0.016 25%

2019 0.002 0.000 0.000 0.000 0.003 0.005 0.003 0.000 0.000 0.000 0.000 0.007 0.020 25%

2020 0.001 0.000 0.000 0.001 0.001 0.004 0.002 0.000 0.000 0.000 0.000 0.006 0.015 25%

2025 0.000 0.001 0.001 0.001 0.000 0.012 0.003 0.000 0.000 0.000 0.000 0.003 0.021 24%

2030 0.000 0.002 0.000 0.000 0.000 0.007 0.001 0.000 0.000 0.000 0.000 0.014 0.024 23%

2033 0.001 0.002 0.000 0.000 0.000 0.003 0.001 0.000 0.000 0.000 0.000 0.023 0.030 23%

• LOLE 0.1 day per year met in all years

• PRM is about 25%

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Results: Cases for Sensitivity AnalysisCase Description Meet LOLE Target?

Load Sensitivity Analysis

Case 1 1-in-10 economic drivers

Case 2 Industrial self-generating demand of 40 MW

Case 3 Time of seasonal peaks

Resource Sensitivity Analysis

Case 4 WAX FOR

Case 5 Double FOR

Case 6 No WAX surplus taken into account for PRM requirements

Case 7 No additional capacity planned for gaps expected gaps must be met

Market Sensitivity Analysis

Case 8 Market sizes at the base case FOR

Case 9 No market access alternative capacity needed

Case 10 Market FOR at 150 MW

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Next Steps

• We can present a detailed ½ day technical workshop on PRM if there is interest

• Our PRM Report will be updated and included as part of the 2016 Long Term Electric Resource Plan

• Questions?