11

WECC Regional Planning Pacific Northwest/Canada to Northern California

Transmission Project

Stakeholder Meeting of August 2, 2007

Economic Analysis Committee Update

Manho Yeung

2

Topics Covered

Economic Analysis Committee Overview

Economic AnalysisScreening ToolReference Case (starting point) and Ranges of Economic Input DataStudy Plan

Sample Analysis Output

Upcoming Work/Schedule

3

Economic Analysis Committee – Purpose

Assess benefits and costs of Pacific Northwest/Canada-Northern California Line possibilities.

Analytical objectives:Identify the critical few variables that really matter.Identify potential interactions that drive results.Identify range of possible conditions.

4

Economic Analysis Committee – ProcessRegular scheduled web conference calls.Information exchange via email.Members:

Avista Corporation: Dave DeFeliceBCTC Rohan SoulsbyFlynn RCI: Pushkar WagleNorthern Lights: Bill HosiePacifiCorp: Kurt GranatPG&E: Curt Hatton, Robert Jenkins, Tom Miller, Todd Strauss, Manho YeungSierra Pacific: Jim McMorranPowerex: Gordon Dobson-MackTANC: Patrick MealoyTollhouse Energy: Thom FischerTrans-Elect: Jerry Vannetti

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FEAST Screening ToolModified the FEAST screening tool for use by the Economic Committee.

An Excel spreadsheet.Quickly calculates economic results.Facilitates quick evaluation of what-if scenarios.Allows drop-in data from existing studies or stakeholder specified assumptions.

Not a production cost tool.Spreadsheet tool is intended for a first-step screening study.

The screening tool is a simple tool for sophisticated users.

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Screening Analysis Work Plan

Evaluate the economic attractiveness of displacing resources at the sink location by resources at the source location assuming a particular transmission line alternative.

Evaluate different resource scenarios or cases.

Test sensitivities on key variables.

To simply the screening analysis, British Columbia is used as the source, and Northern California as the sink.

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Screening Analysis ScenariosScenarios or cases.

New Resources in BC No. Wind Hydro Biomass N. CA Resources to be Displaced A 3000 MW

or 1500 MW

1. Combined Cycle (CC) 2. Wind 3. Solar 4. Renewable Mix

B 3000 MW or

1500 MW

1. Combined Cycle (CC) 2. Wind 3. Solar 4. Renewable Mix

C 3000 MW or

1500 MW

1. Combined Cycle (CC) 2. Wind 3. Solar 4. Renewable Mix

D 1000 MW or

500 MW

1000 MW or

500 MW

1000 MW or

500 MW

1. Combined Cycle (CC) 2. Wind 3. Solar 4. Renewable Mix

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Transmission OptionsInformation from the Technical Committee.

Assumes 2015 In-Service Date and in 2006 US$.

CombinationsCapacity

(MW)Transmission

Type

Estimated Installation

Cost (in $Million)

1 Canada 500 kV AC Double Circuit Tower Line 3000 500 kV AC 2,5502 1500 MW from Canada and 1500 MW from PNW 3000 500 kV AC 2,3003 1500 MW from Canada and 1500 MW from E. Nevada 3000 500 kV AC 2,8504 1500 MW from Canada and 1500 MW from E. Nevada 3000 765 kV AC 4,2505 PNW 500 kV AC Double Circuit Tower Line 3000 500 kV AC 1,7506 Canada 500 kV AC Two Single Circuit Tower Lines 3000 500 kV AC 3,2507 Canada 765 kV AC Single Circuit 3000 765 kV AC 3,0508 Canada 500 kV AC Single Circuit 1500 500 kV AC 1,700

10 1600 MW HVDC from C/PNW to San Francisco 1600 500 kV DC 2,15011 3000 MW HVDC from Canada (Overland route) 3000 500 kV DC 2,20012 1500 MW HVDC from Canada (Overland route) 1500 500 kV DC 2,20013 3000 MW Bi Pole HVDC from Selkirk to Ravens 3000 500 kV AC&DC 2,850

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Generation ResourcesReference Case (starting point) generation data.

Assumes 2015 In-Service Date and in 2006 US$.

Starting Point Data

Installed Cost ($/kW)

Capacity Factor (%)

Local Transmission

($/kW)

Calculated Power Cost

($/MWh)BC Biomass 2200 90 200 76BC Small Hydro 2000 44 200 69BC Wind 1700 48 200 57BC BC Mix (33/33/33) - - - 69

CA Combined Cycle 1000 78 0 73CA Geothermal 3600 95 0 74CA Solar (CSP) 3150 40 0 126CA Wind 1700 36 200 75CA RPS Mix (50/35/15) - - - 100

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Natural Gas Price and Greenhouse Gas Cost

Natural Gas Price:Range: $4.50 to $10.00/MMBtuReference Case: $7.00/MMBtu

Greenhouse Gas Cost:Range: $10 to $90/TonReference Case: $20/Ton

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Seasonal ExchangePeak electric demand in British Columbia occurs during winter months.

A new British Columbia-California transmission line could allow reliability firming from CA to BC during winter months.

Modified FEAST to add an option to account for this potential benefit.

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Screening Analysis

A Sample Case

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Case A4: BC Wind vs. CA Renewable Mix

Source: BC WindInstalled capacity = 3,000 MW, Capacity Factor = 48%

Sink: CA Renewable MixSolar = 1,790 MW, Wind = 1,400 MW, Geo = 231 MW

Financing

Installed Capacity

MWEnergy GWh

Wind - California Merchant 1,400 4,355Geothermal - CA Merchant 231 1,922Solar Concen. - CA Merchant 1,790 6,336

Wind - BC Wind Merchant 3,000 12,614

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Case A4: BC Wind vs. CA Renewable MixTOTAL SYSTEMTrans Option No. 1 Installed Cost ($Million) 4,050

Capacity (MW) 3,000

Description Canada 500 kV AC Double Circuit Tower LineLine Utilization 48%

Regional Difference Annual AnnualSource Sink Diff Benefits Cost

($/MWh) ($/MWh) ($/MWh) ($/MWh) ($Million) ($Million)Line Cost 31.7 400

Power Cost 56.6 100.6 44.0 554GHG Adder 0.0 0.0 0.0 0CO2 for EOR 0.0 0.0 0.0 0Renewable Credit 0.0 0.0 0.0 0System Integration 3.0 1.0 -2.0 -25Prod Tax Credit 0.0 0.0 0.0 0Losses 4.6 -4.6 -59Grid Eff 0.0 0.0 0Dependable Cap Value -4.6 -4.6 -58 *Winter Cap Return Value 0.0 0.0 0 **TOTAL 64.3 97.0 32.7 413 400Benefit to Cost Ratio 1.03

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Case A4: BC Wind vs. CA Renewable Mix

Benefit Cost Ratio Break-Even Curve

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Line Utilization Factor

Reg

ion

Cos

t Diff

eren

ce ($

/MW

h)

BCR > 1

BCR < 1

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Case A4 Sensitivity: Transmission CostTransmission line cost changing from $4.05 Billion to $2.55 Billion (BCR = 1.61)

Benefit Cost Ratio Break-Even Curve

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Line Utilization Factor

Reg

ion

Cos

t Diff

eren

ce ($

/MW

h) BCR > 1

BCR < 1

original blue curve

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Case A4 Sensitivity: Transmission CostEffect of Transmission Line Cost on Benefit to Cost Ratio

Case A4: BC Wind vs. CA Renewable Mix - Transmission Line Cost Sensitivity

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2000 2300 2600 2900 3200 3500 3800 4100 4400 4700 5000 5300Transmission Line Installed Cost ($Million)

B/C

Rat

io

Line Capacity = 3,000 MWTransmission Option

B/C = 1

Varying Transmission Line Installed Cost

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Case A4 Sensitivity: BC Wind CapacityOverbuilding BC Wind installed capacity to 4400 MW. (BCR = 1.5)

Benefit Cost Ratio Break-Even Curve

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Line Utilization Factor

Reg

ion

Cos

t Diff

eren

ce ($

/MW

h) BCR > 1

BCR < 1

original red dot

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Case A4 Sensitivity: BC Wind CapacityEffect of building BC Wind Capacity above the new Transmission Line

Case A4: BC Wind vs. CA Renewable Mix - BC Wind Installed Capacity Sensitivity

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

3000 3200 3400 3600 3800 4000 4200 4400 4600 4800 5000 5200BC Wind Installed Capacity (MW)

B/C

Rat

io

Line Capacity = 3,000 MWTransmission Option

B/C = 1

Varying BC Wind Installed Capacity Above Transmission Capacity

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Case A4 Sensitivity: BC Wind Installation CostIf BC Wind installed cost is $1400/kW. (BCR = 1.3)

Benefit Cost Ratio Break-Even Curve

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Line Utilization Factor

Reg

ion

Cos

t Diff

eren

ce ($

/MW

h) BCR > 1

BCR < 1original red dot

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Case A4 Sensitivity: BC Wind Installation CostEffect of BC Wind Cost on Benefit to Cost Ratio

Case A4: BC Wind vs. CA Renewable Mix - BC Wind Installed Cost Sensitivity

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1400 1500 1600 1700 1800 1900 2000 2100 2200 2300 2400 2500BC Wind Installed Cost ($/kW)

B/C

Rat

io

Line Capacity = 3,000 MWTransmission Option

B/C = 1

Varying BC Wind Installed Cost

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Case A4 Sensitivity: BC Wind Capacity FactorIf BC Wind capacity factor is at 40%. (BCR = 0.6)

Benefit Cost Ratio Break-Even Curve

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Line Utilization Factor

Reg

ion

Cos

t Diff

eren

ce ($

/MW

h) BCR > 1

BCR < 1

original red dot

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Case A4 Sensitivity: BC Wind Capacity FactorEffect of BC Wind Capacity Factor on Benefit to Cost Ratio

Case A4: BC Wind vs. CA Renewable Mix - BC Wind Capacity Factor Sensitivity

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

36 37 38 39 40 41 42 43 44 45 46 47 48BC Wind Capacity Factor (%)

B/C

Rat

io

Line Capacity = 3,000 MWTransmission Option

B/C = 1

Varying BC Wind Capacity Factor

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Case A4 Sensitivity: CA Renewable MixEffect of CA Renewable Mix on Benefit to Cost Ratio

Case A4: BC Wind vs. CA Renewable Mix - % Solar Mix Sensitivity

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

40% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%% of Solar Renewable Mix (%)

B/C

Rat

io

Line Capacity = 3,000 MWTransmission Option

B/C = 1

Varying % of Solar in Renewable Mix

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Case A4 Sensitivity: CA Solar Installed CostEffect of CA Solar Installed Cost on Benefit to Cost Ratio

Case A4: BC Wind vs. CA Renewable Mix - CA Solar Installed Cost Sensitivity

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2750 2800 2850 2900 2950 3000 3050 3100 3150 3200 3250 3300CA Solar Installed Cost ($/kW)

B/C

Rat

io

Line Capacity = 3,000 MWTransmission Option

B/C = 1

Varying CA Solar Installed Cost(Solar at 50% Mix)

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Case A4 Sensitivity: Grid Efficiency/ExchangeEffect of Grid Efficiency and Seasonable Exchange Benefits

Case A4: BC Wind vs. CA Renewable Mix - Grid Efficiency & Seasonable Exchange

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

0 20 40 60 80 100 120 140 160 180 200Grid Efficiency & Seasonal Exchange Benefits ($M/Year)

B/C

Rat

io

Line Capacity = 3,000 MWTransmission Option

B/C = 1

Varying Grid Efficiency & Seasonable Exchange Benefits

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Case A4 Sensitivity: Two VariablesBC Wind Capacity Factor vs. Grid Efficiency & Seasonal Exchange

Benefit Cost Ratio Break-Even Curve

0

20

40

60

80

100

120

140

160

180

200

40 41 42 43 44 45 46 47 48BC Wind Capacity Factor (%)

Grid

Effi

cien

cy &

Sea

sona

ble

Exch

ange

B

enef

its ($

M/Y

ear)

BCR > 1

BCR < 1

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Case A4 Sensitivity: Two VariablesBC Wind Capacity Factor vs. CA Solar Installed Cost (100% Solar Mix)

Benefit Cost Ratio Break-Even Curve

2000

2100

2200

2300

2400

2500

2600

2700

2800

2900

3000

3100

3200

40 41 42 43 44 45 46 47 48BC Wind Capacity Factor (%)

CA

Sol

ar In

stal

led

Cos

t ($/

kW)

BCR > 1

BCR < 1

BCR=1.7

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Next StepsValidate, coordinate and cross-check reference case starting point assumptions with:

The Economic Analysis Committee members, The Loads & Resources Committee, and The Technical Analysis Committee.

Draft and complete economic screening analysis report.

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Opportunity!

Still time for interested parties to join the Economic Committee.

Contact Manho Yeung of PG&E at:MXY6@PGE.Com