Power Planning Council Suggests Need for 350 MW of New Generation by 2017

December 14, 2012

The most recent projections from the Northwest Power & Conservation Council ("NPCC") suggest that electric demand in the Pacific Northwest is finally recovering from effects of the Great Recession, and that new generation will be needed to meet peak needs by 2017. The NPCC's Northwest Resource Adequacy Forum, a committee of experts from utility planning staffs, state agencies and other interested parties, presented its most recent report at the NPCC's December meeting. The report predicts that the region will need to build 350 MW of new generation, after accounting for energy conservation, in order to meet peak demands in 2017.

The Resource Adequacy Forum uses a model which aims to keep the likelihood of an energy shortfall at 5 percent or less. The Forum now predicts that, without additional capacity, the likelihood of a shortage will grow to 6.25% by 2017. The largest driver, according to the Forum, is projected drop of 1,500 MW of capacity from California, with availability from California estimated to fall from 3,200 MW to 1,700 MW, primarily due to retirements of coastal water-cooled thermal plants. In addition, the Forum projects within-region demand, net of energy efficiency savings, will grow by about 300 MW from 2015 to 2017. The overall result is an unacceptably high risk for resource adequacy, especially for peaking power in the months of January, February, and August. The Forum did not analyze demand response programs, but suggested such programs might be one mechanism to reduce peak demands and bring supply projections back within acceptable limits.

The Forum's report also highlights the importance of both independent energy producers and the California market for the Pacific Northwest. The Forum notes that independent power producers now operate about 3,450 MW of generation capacity in the Northwest. The Forum assumes that much of this generation will be available to meet winter peaks, but in the summer, it is mostly committed to the California market.
Further, much of the uncertainty in the Forum's projections is attributable to uncertainties about the California market. For example, under an extreme scenario assuming high load growth and no resources from California, the risk of inadequacy jumps to 16.8% in 2017. On the other hand, with low load growth in the Northwest and no loss of generation availability from California, the probability of resource inadequacy falls to 3.2%.

If you have any questions about the NPCC report, energy development, or other utility-related matters, please contact a member of GTH's Energy, Telecommunications and Utilities practice group practice group. We have years of experience in energy regulation, the Northwest's energy industry, complex administrative matters, appellate litigation, and related fields and we are regularly recognized as one of the best energy and natural resources practices in both the region and the nation.