EWEB Board of Commissioners — November 15, 2022

0:03 probably November 15 2022 work seven elected quarter order first agenda item is the agenda check does anybody have any issues with the agenda any recommendations uh then we'll jump right into goal number five IRP filing uh reference modeling and uh Megan Capper is going to take us through a nice discussion thank you very much good evening Commissioners uh so I'm Megan copper energy resources manager and I'm here with Ben Ulrich he's pretty much the architect I've been the architect of the educator resource plan and then we have John Kreider at the table with us who's been driving the models uh first of all just thank you so much for dedicating tonight to discuss the integrated resource plan uh as you will recall this is the first IRP in many years and we're focusing on creating a foundation from which to

0:49 develop the tools and internal skills to make important future resource decisions so tonight is when we're going to take the information presented to date the customer load characteristics and shapes and the resource options and their characteristics and we're going to put them together and see where the gaps exist what resource options are chosen and at what cost given specific criteria we're calling this the calculated reference case this reference case represents the calculated results from an initial set of assumptions it serves as a comparison case for our work in early 2023 when we will plant to vary the key input assumptions to see how sensitive the results are to changes the plan this evening is to for us for

1:35 you to get to really know and understand these results their inputs and their assumptions we will also like to spend some time to discuss your thoughts on what assumptions you would like to see varied and the impacts on those assumptions on the results so let's look at the first timeline uh in a couple weeks at the December board meeting we're going to be back in front of you with the public draft IRP to discuss our public invade engagement plan and next steps and then let's take a quick moment look at early 2023s there we go we have a February Town Hall that we're planning to engage the public and then we'll be back in the month of March board meeting to share inner results from the future exploration of

2:21 the calculated reference case and to seek direction from the board around action items and next steps the final IRP will be published in June and then shortly thereafter staff are going to begin building off of this foundational IRP updating assumptions and preparing for our 2024 IRP so I will hand it off to John Greiner thanks Megan good evening Commissioners my name is John Kreider Megan has said I'm an analyst in the Clinton section along with Ben and uh Eric Bush my job in the section is to run the Aurora simulator to keep it keep it maintained and make sure it produces the correct results that we're looking for and produces involving results that we're going to see tonight I'd like to talk to you tonight about the modeling process

3:06 and some of the assumptions that go into the work and give you some context so that you'll be able to understand better how this calculated reference case modeling result is actually used so uh where does this reference case come from when we're talking about power planning uses a software called Aurora that simulates the hourly operation of both Electric System and the wet light system the latter part allows to simulate interacting with the Department so there's lots of variables that go into the simulation and the last study I looked at had something like 1.3 million variables in it we have to make some assumptions about some of them not all of them but some of them so tonight we're going to talk about some of those

3:52 key assumptions that we have that go into the model because they really drive the models and uh one of the things we want to be talking about is how much some of these assumptions might drive the results of legal on those results some are going to be more important than others so we picked out a couple that we think are really key to look at so we think these assumptions um and we put them how do we get the calculated reference case we basically take our assumptions on cost demand constraints and availability of resources we put them into the Aurora machine and essentially return the crank and the reward gives us something in three days we'll be calling that the calculated we it's a calculated optimal portfolio which in this case we're calling the calculated reference

4:43 so uh let's talk about what the calculated reference case is not first so um it's not a recommendation for doing it it's not a recommendation for procuring these resources even though it is a list of resources it's a portfolio that uh is going to lead the demand that we put in advance and assumption cost on optimal cost basis it's not been evaluated for anything other than the opposed assumption so it might not have as good a performance or cost profile as it does under the assumptions so we're going to be testing those assumptions over the course a few months and two years actually to see the calculated reference case is however a computed portfolio of resources that's

5:29 going to need the assumed demand is the direct output all results and they're chosen basically a cost so it becomes a starting Benchmark for us to use this as a comparison against other types of sensitivities that we may run or other portfolios that you might want us to run over the replay and see what they look like so next let's go back to the beginning of that and talk about some of those assumptions that go into the award um so the reason that we're going to talk about the assumptions this is probably the key Takeaway on the subject is that these are assumptions that staff management have decided on as reasonable

6:15 and they're solidly supported by data but of course they're subject to better understanding as we do as we get more information and we want more analysis so we do expect that this new information is going to go into the modeling and we'll be able to optimize that portfolio this is a good starting Place For Us based on the assumptions that we do know about in the information that we do have at hand so as a general philosophy um it's been Our intention to choose assumed values when we have to that reflect generally a median or an average approach an expected view of the people for example if a resource has a cost that has a range from a minimum to a maximum our tendency if there's no other compelling reasons to pick something in the middle so you can think of all of

7:01 these assumptions and the reference case as sort of a median or average our idea in the sense was business as usual what would what would be an expected kind of preference case um so I'm going to talk now about some of these uh key assumptions in more detail and why we're interested in that so transmission uh the first one on the list here in our model we've assumed that uh there's uh existing transmission available to us for these resources and that they are priced at the uh currently excuse me at the prices that are currently reached to our term because we've also included some reasonable cost estimates and we've included some reasonable cost estimates for existing transmission

7:47 tariffs but we've also uh uh we also um are interested in this one area of transmission because there's a lot of uncertainty in when new transmission is going to be built and how much it's going to cost and how much excuse me when it may be available to how much so Transmission in this case is especially important because as you as you'll see when Ben starts to go through the portfolio slides there's a lot of material Reliance on Wyoming and uh Wyoming and cyber Oregon northeast Oregon wind resources and wine Wyoming resources as time progresses we'll be able to better understand the true availability and the cost of the transmission as we get better information and we may adjust our

8:33 analysis so in demand the calculator reference case portfolio uses the base case for demand that was in the electrification study that you all have seen and this also assumes unmanaged EV charging that adds to our system keys so I point out that the forecast really starts to uptick in demand starting about 2032 this demand assumption because we've chosen the medium mode cases that the main assumption it also means that there's a possibility that being higher or lower if that's the case it's going to stress our portfolio in different ways so that's another that's another sensitivity we would like to look at at staff as that demand changes how much does it

9:18 change what we reference the third uh the third assumption we're talking about tonight is called a planning standard the planning standard uh is essentially a measure of how much Reserve generation we're going to include in our portfolio so that we avoid going to Market in those times that we need to have energy so our reference case chooses to meet the highest Loadout each year and this is known as a one and two planning standard that means that we have we will we will meet the uh we'll leave that Peak load half the time that's a 50 50 one two planning standard but that also

10:03 means that we have no zero excuse me we have zero reserved or no extra cushion um before going to Market we have an energy the extra capacity cushion that we're talking about is usually expressed as a percentage of peak capacity for instance 15 that would be building our portfolio inside that portfolio is going to be 15 capacity that we're sort of holding back in reserve and that would be that's why it's called a margin that's the PRM planning reserved margin um so think of that as extra capacity and so if we do build to a higher than one and two standard we're going to be expanding that portfolio and finally the fourth uh the key assumptions we look at is water that you're going to see from

10:49 bed slides the reference portfolio puts a lot of the weight on the northwest hydro system in the studies just as in today most of the load is assumed to be filled by BPA which we know is all Hydro we're almost all hydro and that means our portfolio performance and costs are also going to be dependent on the water our assumption for the reference cases again as in the case of other assumptions kind of a typical middle of the road water here and what we want to do is be able to stress the results of different water years and this is part of our planned risk analysis so we can see what the as we change the water heaters from bad

11:34 water heater to better water here how that changes uh yeah excuse me what what resources may make up so uh I now went through this pretty fast and we had a lot of input assumptions in this model we've attempted to identify most the most important ones in your memo um so but I want you to keep these assumptions in mind as we review the calculated reference case portfolio next and then it's going to go through this slide so before we talk about what resources might be part of our best fit portfolio in the future I thought it'd be good to kind of recap where our portfolio is at today so the chart on the right shows our name plate capacity of our current portfolio which is the maximum amount of

12:19 generation that our current portfolio could hypothetically produce however we know the actual energy production is always much less than your name plate generated or is always less than your nameplate generator because there's some type of operating constraint so like for hydro we're concerned about the water here you can't always produce at Max at all hours the system planners we're concerned about the nameplate capacity of our generators but also their ability to help us meet our system Peaks so I'm going to cover provide some context here to this portfolio by overlaying some of the things we've talked about this year so recall that eweb's average annual load is about 275 average megawatts and back in April we discussed that our typical system Peak is about 465 megawatts so that's a one

13:05 and two type event this represents the highest hour of load that we would expect in that typical year and for each of these resources our team calculated Peak capacity values based on historical performance of the resource and wherever possible we informed our assumptions based on the western resource adequacy program which is still under development using this methodology we were able to calculate an initial Peak capacity value of our portfolio of 509 megawatts and you'll see that it's actually higher than our single hour Peak today this implies that we have an initial Reserve margin today of nine percent but as John stated earlier our planning standard right now that we're using the reference case is just a one and two

13:50 event we're not planning for extra cushion or an additional planning Reserve margin that's an assumption we can test as the Western resource adequacy program might require us to carry additional reserves in the future so that's something we can look into as part of the sensitivity analysis so now that we've kind of covered where we're at today I can show you how that resource mix is expected to change over time so start with our starting point here on the left you'll see that Peak capacity of 509 megawatts today in 2022 and the various resources that contribute to that P capacity and you'll note that our Hydro portfolio really doesn't change over the study period this is one of the first key takeaways from a reference case that continuing BPA block and slice is one of uab's

14:35 least cost portfolio options we know that there's still more analysis to do on future BPA product choices so we plan to do a deeper dive on that as part of our 2024 IRP the other key finding you can see on the slide is that 2026 is the first time that the modeling results show new resource editions our existing thermal contracts for IP and Seneca are assumed to expire in 2025 and in 2026 the model begins to select new resources to meet our Peak capacity needs which are shown in that dotted line so now we can talk about uh those best fit resources that the modeling selected model primaries primarily selected four hour Lithium-ion batteries which are

15:22 shown in teal wind which is in light green demand response in purple and conservation in Black batteries are one of the least cost resources for capacity and offer flexibility to move energy around on a daily basis this means that batteries can often are have opportunities to charge during off-peak and discharge during the peak to either reduce system costs or generate Revenue this ability to generate Revenue can lower the net carrying cost of ownership and make batteries an appealing resource to meet our capacity needs there are also large amounts of new wind that were selected by the model wind has a low cost of energy but also provides some winter peaking capacity so as the model looked for resources that produce low-cost carbon-free energy it

16:08 likely favored winds ability to help win meet our winter system Peaks the model selected some but not all of the demand response programs that it was offered model primarily selected residential programs which are assumed to have lower implementation costs these programs include time of use rates critical Peak pricing and space and water direct direct load control programs like smart thermostats the model also did select a very small amount of commercial and Industrial curtailment programs less than less than one megawatt further study through demand demand response potential assessment could help us better understand these uh these costs and energy profiles and potential demand response programs in the future the model also selected affordable

16:54 conservation programs that were that had a levelized cost below fifteen dollars per megawatt hour this added the model was selecting approximately one megawatt of peak conservation each year which is roughly half the amount of conservation that eweb eweb programs currently Target today as you can see the model continues to add that same mix of batteries wind demand response and conservation throughout the study period until that very last year we can see that tiny sliver of red in 2042 where the model selects a small modular nuclear reactor small modular reactors do benefit from the inflation reduction act so that may be a contributing factor here we found it interesting that the model broke from the pattern of selecting new wind and

17:39 batteries and instead shows a clean dispatchable resource in this final year of the study it implies that there's likely a rule for dispatchable resources as part of eweb's future portfolio so as we do future sensitivity analysis we want to see how often dispatchable resources are considered part of our lease cost portfolio mix class charts which is um from megawatts and we when we switch over to dollars it shows that estimated costs in thousands of dollars for the reference case portfolio overall our modeling results show that ux portfolio would grow at an average annual rate of four percent however this includes the impacts of a two and a half percent assumed inflation assumed inflation rate and it also shows that

18:25 our Peak load is expected to grow at two percent per year as a result of electrification when caveat I'll I'll share about this chart is that it does not include the cost future spending costs for Liebert this this only assumes that Liebert returns to service and is assuming just historical cost of operations historical generation we plan to update this assumption based on the as the board makes decisions about Weaver using the triple bottom line framework overall these reference case in reference case results imply that future resource costs May remain relatively flat to where they are compared today after you adjust for inflation and energy growth however supply chain issues around batteries and the need for transmission expansion are two key risks that we want to consider when we look at

19:11 when we look at these results an additional thing I'd like to call out on this chart is this portfolio's relationship with the market it does occasionally import energy which is shown in the market purchases which is orange at the top of the bars but primarily um similar to our portfolio today this reference case is long on average because it meets most of our Peak needs with hydro and renewable resources and these resources are dispatched by the weather and they'll produce energy even when you don't necessarily need it it's not bad to be long on average in fact it can be a great way to reduce your total portfolio cost by selling that Surplus energy into the market but we know that this exposes eweb to the risk of falling Energy prices so as we look to do our

19:56 sensitivity results and and do risk analysis we plan to bring back more insights into this in the coming months so as we mentioned we know that the board we have some analysis that the board will want to see these individual sensitivities listed here could be combined together to create scenarios and generate new portfolios that we could then compare to the reference case for example there's a pre-meeting question about climate change scenarios and we could combine multiple assumptions together to make that scenario and look at the results we plan to do some work around that hydro and natural gas risk analysis to understand how volatility can impact your portfolio we plan to analyze transmission risk and look at how increasing the assumed cost of transmission might impact the model

20:43 selecting different resources we've also heard the board's curiosity about load growth low low or high low growth scenarios in addition to that we discussed a planning Reserve margin Potential from the Western resource adequacy program that might be imposed on eweb in the future um as Megan mentioned in the timeline slides at the beginning of the presentation we'll be doing a formal public Outreach in the next few months we plan to listen to the board and public feedback to generate additional areas for sensitivity analysis so with that we can open it up for the board discussion and feedback we're curious your thoughts about the reference case results and some of the next steps that we would post thank you thank you very much okay we just took a drink out of the

21:28 classroom capture some of uh questions and comments so I'll open up with you um I've got quite a few questions some of them are abroad and some of them are are focused so I'm like the Seneca and the IP contracts going away in 2025. it's not like a carbon free or is that it's not carbon free can you tell me the definition of how that is it's renewable but not considered renewable by the

22:13 state standards so it does generate renewable energy credits okay however it does have some carbon content because it is a combusted process okay um and was there a reason why we didn't continue that into the into the model past 2025. model did have the option to select a new biomass facility I would characterize that facility as an affordable biomass facility it did not choose to do it in the reference case run so it chose to build batteries and wind instead of that option okay so the batteries are a good transition into my second question so we're talking about batteries is that something that is

22:58 local or is that a contracted thing I mean do we build the batteries and have them sitting up uh in our back lot here or is that something that uh we just somebody else builds the batteries and then transmission is is the we did not assume any transmission build costs for the batteries so either the batteries are assumed to be cited either next to a renewable generator or would be cited locally so there wouldn't be any marginal cost of transmission so that's that's kind of how we treated it in the model okay and then did the model take into effect the so if we've got batteries that can store four hours worth of it 10 megawatts is that or 100 megawatts any any megawatt

23:44 yeah yeah so I'm not a peak time we could use that as a income right because we could we can fill it up and then sell it off on on a daily Market as was that put into that and that's how it brought the cost down or is that it is um and then I guess the there's two other ones I'll do one more and then I'll do a second round of the second one because it's an easier one the Western Regional planning thing and our need for PRM

24:30 why do you think the scenario of that is and how much is that I mean are they saying we're going to have to have 10 more for them to use that we have to we have to contract and plan for 10 or 15 percent more energy than we need because Montana might need it if we join this thing can you Somebody explain this to him I'll defer that one to you okay so um the idea of the resource uh the West was called the wrap Western resource advocacy program is that if you were to as an individual utility go through the process you would you would say that to hedge my bets in this I need 10 percent or whatever you picked is your safety margin the goal of the program is for people to have a lesser amount and share it so it may not be ten percent I might

25:17 be five I don't know what it's going to be but it's enough that you can share across and leverage across the region now we as an individual utility uh are not what's called a balancing Authority but we are part of bonneville's balancing Authority and they would whatever the program ends up being they will impose on their utilities so if or they'll say don't worry about it but we will charge you for it um so if if you need it or if you violate your requirement you would it would be a financial penalty so and we haven't baked those financial obligations into it because we don't know what those are yet um but it could be better to have a five percent or a ten percent uh of your own

26:02 than to pay for somebody else to do it for you but we we haven't made that comparison because we don't know that detail yet and Now's the Time for the crystal ball how how long and how practical is it to think that this Western this rap is going to happen I I it's going to happen one way or the other so it will either happen as independent effort like it is now or when you hear about organized markets developing a resource adequacy requirement is always part of a market so it's going to happen one way or the other it's a matter of when does that become an obligation for eweb there's some discussions around the

26:48 Bonneville contract and whether that would be part of the new contract that launches in 2025 to 2028 that's probably the expectation that we would see but if resource adequacy is is a utility requirement in almost any future condition okay thanks so on the wrap that you were just talking about on the excess requirement how does that work for utilities that don't do any generation I still have to have excess for variance right they can't just rely entirely on you know Bonneville let's say right they're they're balancing Authority would take care of that and they would charge their activities

27:34 accordingly okay um does Farmville have more capacity if some of these other options don't go off I mean when I'm looking up there and I see you know 2025 Seneca is dropping off um do we have the ability to fill that in that quickly that's only a couple of years away the initial so I can answer that that um one of our core assumptions in this model was that we assumed that Bonneville would not be able to grow with us that's just an assumption it doesn't mean that Bonneville can't grow to meet our loads but we wanted to kind of hold that as a fixed option so that we could see what other resources the model might start selecting to supplement Bonneville

28:21 as our loads start to grow okay so its recommendation is kind of artificially held so these other items come in it's not necessarily that it wouldn't recommend that we just went with Bonneville and that might be the least announced option okay all right um what is the timeline for the IRP for some reason I was thinking it was a shorter timeline but now we're looking at 20 years and it was interesting to see the the nuclear piece pop in there at the end so what is the it's a long Horizon okay John you might know John formally worked at the puc so he got to see everyone's irps but I want to say that 20 years is the standard does that feel about right because well it's a it's a 20-year Lookout and

29:07 usually utility has something like a five-year protection trying to do things but the video the advantage of taking the long look to sort of get yourself ready even though there's a lot of things that are unknown say 15 years out by the time you do the next one they're only 10 years out so you sort of narrow yourself down so I think that's a reason to start for such a long there's a pointless you're trying to get down to that period which is something of five to ten years and if transmission is involved Maybe okay so that was part of my next question so if it's five to ten years how are we feeling that Gap in two years well this is a calculated result right it's we we fixed our assumptions so we

29:53 limited our Bonneville um we're assuming that just the contracts expire with IP and Seneca so it goes back to the reference case it's just a calculator result based on our assumptions and so I don't want to get any more to recognize so that the First Resource that we need isn't until 2026. and so we we have time I mean we're 2022 the first time we actually need to go out and get to get a resource is um is 2026 and we're looking at this on a planning basis and so we still are looking out and looking at the market is that something that we can do well we'll what what will happen is once we come back to you in March we'll talk to you a little bit about what might be some of our next step action items um and that will be that will be around

30:38 maybe doing some research to help us prepare for that 2026 time period okay because 20 is 26 facility it's tomorrow I would point out that it's really causing commissioner Carlson when an organization goes through an IRP they develop their action plan and sometimes their action plan is to look at immediate actions in the next two year or two or three as well as some of the longer term Horizons but it might be that it would it would be uh behoove us to continue a

31:24 contract with one of these local resources especially if we test you know that the sensitivities help us answer questions and one of the one of the examples is if we want to do a determine the value of localness we'll we'll put in sensitivities around transmission so how much is that transmission really at risk how much is it going to cost and so we can determine the value for example of a local resource and see if it's it gets selected at some level of transmission risk okay that kind of covers well it touches on two of the other topics but I do see that out of time so yeah refer to others and I'll look back around on those two specifically

32:11 um so on the the ba topic question about that um so what you're saying is you artificially assume that we weren't going to buy any more from EPA right but in reality because we're going to be making a decision how do we know like you know is BPA developing energy sources what like what is the state of I can I I can ask that well I'm right now um we are we're starting a nintendent negotiation and I think you've heard um about the contract I think you've heard Frank say in the past that you know looking at the at the hydro and all over the United States Hydro uh whether it's

32:56 climate change whether it's um uh fish and wildlife or uh if you have to see a decrease in it so it really is an assumption that we are assuming that we probably won't be able to get any more uh Bonneville what you have right now is you have all the utilities in the Northwest looking at a potential electrification load and so as we go and we start the conversation with bottle about the contract we have to look at what is the system size and then how do we allocate that system and then does Bonneville actually augment or not those discussions are all being talked about now and it's um and and I it would it would surprise me if we were to get a significant amount of other uh of other um

33:43 I guess allocation is that is that fair yeah it's also fair that to recognize Bonneville is the marketing agency for the federal resources which is mostly Hydro but also includes the the Nuclear Station in Washington um they they have an obligation to serve the utilities like eweb in the Northwest and if we were to decide that we needed more from Bonneville then they would ask for a commitment from eweb so that they could go out and procure additional resource to help fill that um so it's it's not totally off the table that we could do more with Bonneville it would not be at the tier one price we get today if they have to augment their

34:28 system to support us then that would cost something and we we can't model that right now because it's not defined yet from from one of them but there there is more than there's a number of options that we can look at relative to our relationship with Bonneville that's a good that's a good point um the tier one is what we get at cost and so I was assuming you're saying can we get more at Cost uh but there's this also this tier two that we're talking that is actually more of an instead of market price yeah one I have more questions but um just quickly about the Lieber assumptions in the in the model that we have starting now do you have Liebert operating at Peak capacity even though we're not

35:15 operating it in that assignment yeah so the the assumes that Levert will just magically come back online or costs and just operate like it has historically it was kind of a starting 2036 so we we chose not to zoom in on Liebert for the IRP we're trying to kind of separate those conversations and draw some more thematic results okay I have more questions but my time is up so you know if you want to keep going go ahead we're going to run another round so if you're on a roll if you got more written down I have one other question then it's about the climate change scenario so you said that when we kind of take this out to the public or we can get feedback from us

36:00 you can tweak things and I guess my question is about like a climate change scenario like isn't that just climate now or you know like shouldn't have to be is that like our Baseline assumption is that whatever we're predicting for climate change like it's here now there's no other yeah I I attended some recent load forecasting and people are really struggling with you know what data sets do I grab and what forecast do I assume going forward so switching from history may not be the future and so load forecasters are really struggling with how do I predict where the climate's going to head in my community and so I

36:45 guess what I'm what I'd say is in an emerging field um and and choosing data sets that you can say this is this is the trajectory but I think that's a great example for sensitivity analysis yeah I would answer that by saying sort of um we for example on a lot of our history we utilities used to look back 50 years or 60 years and now that's really that dilutes the later trends when you talk about weather patterns and and load and consumption but we do need to test some things further um you know for example um Hydro conditions were were mentioned we've we've prepared you know our best

37:30 crystal ball relative to hydro conditions but we need to test that sensitivity what if it's not what we think it is how does that affect our portfolio what what are the risks that that creates same with further electrification if we see further load and electrification then what happens under that that type of scenario as well so we we we moderately continued trends that we're seeing today but we also need to test under a more extreme condition what new challenges and what new choices does that create and so that's kind of what we meant by a I would say a greater sensitivity around climate issues thank you really want me to go ahead I just have a

38:17 few my general ones that I'm stories of being so generic but um so 509 Peak happened what five years ago how 550 yeah so what happens during this modeling period if we have that Peak changes if we have a period of a week of below free below zero with Wind and Fire Peak go from 509 to 550. what happens to this problem I can tell you I can talk a little bit about that so this model really is looking out over the over the into the future over a long period of time and so we really it really is just a planning model and when we come into operations what we do um right now is we have what we call um a summer Readiness and a winter Readiness and so a couple months before

39:04 what are we in right now November so the Traders and staff and analysts are looking at what is what is it what does it look like um the what is the um what are the hybrid what is our forecast of Our Generation what's the forecast looking for our load and as it get it and they can say you know what it looks like we want to be able to um be prepared and so we'll hold an x amount of generation out so operationally it is different than planning in order to prepare and then it's the as the information we get closer and closer to any kind of an event then we can we can tweak it and they can buy and sell um depending on the the new information they have does that help yeah not being able to serve our customers right now we're the best we can do is

39:50 509 and that's the peak we've had in the history but if it goes to 550 are we going to have a shortfall of 41 megawatts and not be able to serve our customers yeah we would um you can go and even go a little bit longer in addition to our generating resources and if we get into that situation that we would be out on the market buying at a high and probably what I would consider a very high price because if Arlo's that high I'm sure others in the Northwest not right it doesn't brow typically going into a seed it's about your planning Horizon and and Megan's correct this is this is a long-term funding Horizon when we get into our our seasonal Horizons we tend

40:35 to look at a one in 10 event for example and and I'll just give you an example of this going into this last summer when we thought there was going to be some heat challenges we actually went out um similar to the stock market where you can you can hedge you can create call statements where you have the option to actually go procure from others you work out a deal that way so some of that is market and then and then some of it is another city that we'll want to run um but it's a little bit different from operational perspective than a planning perspective um depending on your answer they may have another question but where did the Snake River again

41:25 just assume that they're not going to be decommissioned or they are going to be we used E3 to help us generate a market Price Forecast I would have to follow up with them to get to the specifics of what they assumed about Snake River so I I don't know that we called that out specifically I could follow up on that but I think in general our Market forecasts assumed that the grid would remain reliable and that renewable standards would get met and that the grid would expand as needs expand so I don't know whether that includes that kind of leads to my next question where you know you I think the statistic is 40 of the electricity consumed in the state is from gas and coal and if they're both going away um and uh how we the state replaces that

42:10 plus our increased demand how did that factor into our our supply I understand that that is uh E3 that is that is one of the reasons that we did go to E3 and we calibrated our results to their results because they take that into consideration they all of the cold state are going to go offline of the gas and then they do replace they do have a methodology that the moment plates in sorry Frank about the stuff I was going to say your first question is captured in the fact that we assumed a Bonneville at the same rate so we assume the block and slice are going to remain the same so that that is not accounted for if if the size of Bonneville system were to shrink because of this of the Snake River they may still be obligated to supply us with the resource but it's it's makeup would probably be would be

42:57 different the the issue about scarcity needs to be tested a bit more market prices is one of the sensitivities that would that would drive that certainly and that's something that that will be that we'll be testing um and and the other one is is just the the scarcity on the transmission system which which we'll be testing and then um when you think about supply and demand it may impact the the peak cost of some of the resources that are selected so we'll we'll have to check that as well so so that's that's in the plan to to test to see um how I'll say like we had the climate

43:43 change scenario I think a scarcity scenario might be one that we look and say several of these components that go into these that from the assumptions need to be need to be checked in combination one last little and just clarification on Seneca um did you say that we're not I mean I'll get to the chase did you just assume we're not going to renew Santa Cruz contract and we're going to replace that load I think it's 19. and watch plus or minus we're going to replace that with something else that's renewable and and is that the assumption that I heard incorrectly well I would say we did not take that issue head off we know that factors in here so we offered the model an affordable biomass facility so it's like a pro prototype

44:28 let's say and that was based on some very high level assumptions and the model still didn't select it and so um I guess I would just say we did not we did not model explicitly Seneca we did not model explicitly IP we just wanted to see what resources would be selected by the model and kind of pull up the Thematic results so when we dive into this a little earlier if we we put the Seneca is one thing but the what it does about uh redundancy during major earthquake event or anything else if we put that as a priority it will will that be able to be factored into our future iterations yeah I think that that has to do with the check that will come come up a little bit when we look at the transmission thank you yeah there's

45:13 there's some some other so we can do we can take certain resources like he did with Lieber the model didn't select leeburg in 2036. he just been just unilaterally right I mean that's just that's just what he did um we can look at the resources so the value of localness would be one thing um the the other way is is as part of the an action plan what would be our response from a redundancy perspective and that may hey there is it is it has local value from an emergency perspective and we could come up with options that might involve Seneca in that so it's the model didn't select it based on its profile under this scenario but that doesn't mean it might not

45:58 select it or the board and the utility might want to select it for a different reason I would say the same about conservation I think Ben mentioned the conservation was selected at about half the value of what it is today there are other reasons we do conservation as well one of them is a BPA obligation that we have that they have from a regional perspective so some of these weren't selected but that doesn't mean that there aren't other reasons that that we can make decisions around the portfolio the program we're using is we can do things like that commissioner we can we can take the portfolio and force something in and then see what the difference is in the cost or see what

46:43 the differences and the other aspects of it performance again then you have something to measure thank you Matt when you say the when you say the model didn't selectively just mean it wasn't the lowest cost option that met all of our requirements uh thank you for the presentation and the memo and I say this every time I think it's so great to have this expertise and capability within the utility I I'm really grateful that we're investing thank you all for your work um and I don't think the upper Snake River dams are big generators I don't know what it's worth I don't think they're so lower form okay all right

47:28 um the question about the reserves uh do the reserves cost us or are we typically selling Reserves at the last minute to the benefit of the utility this model assumes that if you have any excess generation beyond your load in any given hour it just sells it to the market uh-huh okay which is what we do effectively right yeah we're a bit fancier than that we do Financial hedging and things like that so there's a there's a lot more right this is a little bit more not too uh yeah not to downplay the importance of our trading floor understood um you said Surplus energy can expose UAB to the risk of falling Energy prices would we expect that to be like a short-term duration in in suppressed classes or costs or is that because

48:14 we're looking at and overall we're seeing the price of new generation falling they're intertwined I think that's a really great question right so there are some World Views that if you build a massive amount of renewable generation that has zero dispatch cost you can actually see falling market prices um there's other World Views that you may not be able to build as much renewable as you need the market prices might be high so I think when we talk about doing our risk analysis where we kind of look at different market prices and see how these portfolios perform with high market prices and low market prices I think that gives us insight into we make a build portfolio of resources how much risk is in that portfolio so the software really lets us kind of play with that more market price

49:00 volatility to kind of see the impacts regardless of what causes it that market volatility right yeah I think I mean it's a great that's a great question because that that is why you test different sensitivities is to understand the upside and the downside of the risk and when T web built out significant resource in the in the early 2000s phenomenal performance in our wholesale business until about 2010 when we saw prices deployment by about a third so um there was that a price risk there um but you're right it's a really good observation the model is selecting based

49:46 on Peak but then it has a whole year of energy that's produced by those same resources and what do you do with those resources when you have some Surplus and you you recapture that in the market and that's what the model is assuming thanks um it's in terms of sensitivities uh we this particular calculation uses the base case um will we do a sensitivity to look at the electrification Rings consistent with state and local electrification goals that be yeah I think we can I think we could choose that our electrification studies what we used as our jumping off point which is based on likely electrification based on economics right so it doesn't

50:32 mean we can't choose a higher scenario to test right yeah just mostly seeing the state aiming that way and federal dollars aiming that way it seems like if we we realize to have one since one scenario that's assuming we're meeting those targets because it seems that's where the we're headed um I'm curious to see the sensitivity on low water years I'm also curious to see the sensitivity on unmanaged versus management Community charging charging it seems like that's a food opportunity to keep prices down and build in a bunch of flexibility that we're not currently assuming um I know we've talked a little bit about conducting a local conservation assessment is that something that we have that will be queuing up

51:22 I would I would say probably it's not part of an IRP process but potentially a different process this this is going to tell us what conservation is worth and how much we should we can afford to invest in it something like that would tell us so there is how much there is you know whether whether those two things align if you if it says go invest a lot but you don't have the potential to invest locally because of whatever building stock you're dealing with that's that's going to be a tough road to hoe and we would probably have to adjust what we're putting into the model for the cost of of that conservation which should probably then go pick a different resource so there's some it's a separate piece that would be used

52:07 as an input to this I guess I'll say that that's the same for the demand response too yeah and the customer programs that testing the value of the customer programs is one of the purposes of the model so if how much is managing ebp's Worth to us right if at some point it says it's not worth as much as going and getting another resource but hey it's worth this amount up up to that point so it allows us to then say these are the Investments that we should make the incentives that we should create for Peak shaving or load shifting or whatever other customer demand response programs or conservation programs we want that's one of the real values of testing of using a system like this good thanks and then one more question

52:53 is that can you go ahead and then I got John uh we have a pool around carbon free power over time I assume at some point here there's an appropriate time for us to collectively weigh in and president Brown was talking about it just like the the redundancy or the local resource whether it's generation or storage or something at what point do we have that conversation about what as a utility we'd like to see in terms of locally available resource I'd say I what I would say is um as we get to looking at what my actions what what you might want to direct staff to do around um you know the next year as we put out the final IRP that could be in some of our action items if you have some um if

53:38 you wanted us to provide you with information to help you have that discussion that would be one way to do it I would say but it's going to happen between now and June when we develop the action plan we test the sensitivities so that you know here is the value of a local resource whether that be for economic reasons or whether that be for redundancy or resiliency reasons the resiliency one is a little bit of a it doesn't necessarily always relate to the specifics of your day-to-day load um management and I say that because Let's see we we could have a contract with Seneca that's under emergency conditions we we

54:24 get access to that power we don't have to have access all the time who else are they going to sell it to under emergency we could we could have that type of relationship or we could have a relationship that was a little bit um more load load satisfying or or you know what can go into an IRP so those we can have those discussions really between now and and June as we run sensitivities get more public feedback and then come up with an action plan do you expect that would be an agenda item just squarely where we'd have a conversation about that particular yeah yeah I think so we're technically out of time but unless I hear an objection let's keep going thank you

55:10 um Anderson was there a scenario for hydrogen and anything going forward yeah we uh we did not assume a hypothetical gender is is that something that is in the in the model or sensitivity that can be put in so they don't never they haven't even built it yet uh so the software provider of Aurora has started looking at how to model hydrogen and so that is emergent but it is not currently in this reference case um something that's going to be helpful to me as a commissioner when dealing with constituents being able to answer the question why solar is not on the table

55:57 I mean it's in here it doesn't pencil out I understand that because I've sat in this room enough to to understand all the complexities of solar but I've got to be able to relate that to my constituents because they're hearing wind solar wind solar wind solar so is that something that a memo could be put together that could help me explain why we're why we are not even looking at solar as an option and what we were thinking about doing is providing some um uh tools next month one could be a q a or maybe even by January we're going to have some neighborhood meetings in this town hall one could be a q a one can be just a a

56:44 maybe a one-page summary of of the of the IRP um we can do a lot of those kinds of tools but a q a is definitely something I think we need I think that would meet your need I mean I think we can put some things in the report as well that the reality of it is that we we didn't ignore it the model didn't pick it and the reason it didn't pick it is it has very little contribution to when we need Peak um and yet over time um a very low capacity Factor basically so you you have to build a lot of it out and meet Peak which is expensive and then you have low energy production relative to wind and the other Alternatives so it's that's

57:29 um that's why the model in essence didn't pick it um so I guess that the next thing would be our jobs in implementing this IRP and at what point do you expect us and and what direction are you hoping to get from us are you good are we going to say I would like you to lead more into Comfort conservation or I would like you to lead more into Senate Seneca biomass where are those decisions and when will you ask us those or because I don't wanna

58:14 I wanna let you people that know how to do it know where to buy our power and stuff I think it's more of us giving the communities values to this IRP is what I feel my job is and I hope that that's right and I guess so if that's the case that I'm trying to protect the community's value into our IRP what areas are appropriate for us to do that on but I would feel so I would start with um the direction that you could the direction the staff will come back staff Advantage will come back and we'll provide you with you know maybe some um

58:59 and if we're seeing if we're doing a bunch of these sensitivities and we're seeing that there are some of these sensitivities that look like we may have a gap earlier or later it doesn't matter but you may want to have a conversation around what we can bring but what information we can bring to you to help you make some of those decisions on where you'd like us to look would you like us to look a little bit more into storage would you like us to provide you some information around when and then we could even go out and do an RFP at some point or an RFI um and and get more information and bring it back to you so this is a process that we will work we would work together on and before we did any before you know before any type of a resource was purchased we you know we'd all do the analysis of the triple bottom line for you and and and provide you with that

59:44 information I would add to that uh commissioner that early on in this process we really do want to engage the public a lot and I think that the Commissioners can help us get this get this out into the public to Garner um if not necessarily support but understanding of some of the components that go into this and the other area that I think really the Commissioners can can help with is um understanding that and and guidance in the areas of risk um where you know there's going to be Financial Risk trade-offs versus um you know you're always going to trade off for example do you want a a stable

1:00:29 low price or do you want the you know maybe a lower price but it has a little more risk to it or you know I think it's the values that you mentioned bringing the values to the to the process and then understanding that results in an action plan and we want to make sure that all of you are comfortable with the action plan knowing that that's going to iterate um you know most in fact I think investor owned utilities are required to do an IRP every two years years now and and we want to be able to iterate this a lot more that's why we've we've brought in the talent that we have so that we can make sure that we're not running off the rails but I think your values comment was was perfect

1:01:15 Tony you have some questions go ahead um real quick so in the Solar when you come back and talk about that please make it without a model and getting in the bathroom if we have like levelized costs or something where they can look at each of the costs and say oh well this one's you know 10 versus 20. even if they don't understand the units that would be I think more helpful to say oh well geez solar's like 50 times more expensive than this oh now I get it um so that comment on there [Music] um I'm curious if you can value the options on Liber that we have without you know us making the decision I'd love to see what it would look like if we did the partial return versus the

1:02:03 you know full return versus not doing anything and how that changes the model even before we make the decision because yeah I think we we have included a deployed and cost model and the value of the Libre choices relative to generation or not generation well we'll include that with our annotation thank you um on the biomass cost uh plant cost assumptions I am curious if there's been any discussion about actually talking with semica operators and saying you know when you first put in a plant you want to get all of the costs that you've put into it and I know the plant has a certain age of life but it's probably still quite a bit of it is still usable for some time

1:02:48 maybe the cost now that the original costs have been you know already paid for it might be a lot lower I don't know but it might be useful to if you've already had yeah yeah I think this this speaks to the gap between the IRP process which is kind of that philosophical strategic approach and then going to the all the way to like actually signing a deal on a procurement I think um the foundational nature of this IRP is we now know we have a need I think that was one of my key takeaways is in 2026 oh we see a need so now we know we actually are interested in new resources at some point so I think that's the the foundation that we can start to build on and start bringing in more data to this model like what is the cost of a new wind farm and what is the cost of a

1:03:33 generator and we could start adding more detail and getting more accurate so we can really um pick you know least cost and best fit about using these tools and Ben specifically on Seneca Mr Carlson we did not put in the cost for Seneca that exists today yeah I heard that I mean that was apparent how would you say okay we put in um a reference based on what we're hearing those kinds of resources are costing across the region so probably because I'll say it's been consistent with the market for that kind of resource that's still a new resource right that's not a it's like and went and built a resource not there's an

1:04:19 existing resource that's already there and could we contract with them also a lot of the functionality of the building and the resources already there could you say like an affordable biomass facility might look a lot like a fully depreciated biomass facility is that kind of what you're saying yes thank you perhaps but you did it as a levelized cost of energy didn't you yeah we so it's a little it I think her point is correct that there's going to be some Nuance in there but absolutely right so I'm if we don't pamper BPA growth just out of curiosity given that that there is a requirement in The Help cell

1:05:07 I'm just I'm looking at I'm going to be I'm going to throw this completely out there I look across the bow at Springfield and I see their rates so much lower than ours and I know that there are other factors to that so don't get me wrong there but they rely entirely on BPA so how much of that you know when they do have these Peak situations yeah they pay through the nose maybe you know a few times a year but maybe that doesn't entirely come out and if they do have a big need from others maybe it makes sense that they're the ones that are going out and finding the property and making a whole new kind of transmission do they only do

1:05:52 the rivers or you know hydro and nuclear or could they have do they have the option to do others if there was a need I'm just saying you know a larger ability of that nature going to have much bigger Sway and resources to get those kind of resources than us as a small util you know if you're curious if Bonneville if if so when uh in part of the conversation I was talking about with regard to negotiated renegotiating this next contract um there is discussion around what we're calling augmenting Bonneville um either going out with an RFP or uh or somehow they augment it they they increase the system size um and and allocate that and it kind of

1:06:38 gets peanut buttered over over everyone that is being discussed right now as an option and it weighs into you're you're getting ahead of us just a little bit because I think where you're going is what Megan and Rodman Deborah if she was here at some point we have to take a look at the business model that we have which is right now we are a vertically integrated utility we we generate we have transmission or buy it and and we deliver to load um we need to evaluate whether that's the best business model going forward and um this would be one of the tools that would go into that but it's certainly not the only one and and that's going to

1:07:23 be something that will probably I know we we've talked a little bit about it that's probably a 20 late 2023-2024 kind of uh time frame to look at that and when we when some of the costs of those and we model that in this next 20 minutes of IRP that will feed you into that as well yeah that's a that's a really I think that's probably that's a significant um piece of work for for the utility the board um because you know bonneville's looking at 15 to 20 year contracts uh you know

1:08:09 we more than likely can't be in the middle of a contract and easily make the kind of business adjustments that you're talking about so there is a pretty important time frame between now and 2025 or so um that we do a really in-depth analysis that you're talking about and have a really challenging and uh you know long-term impactful discussion um at the board level thank you on the resiliency side I know we've talked about you know location locality valuing that I think part of that touches in resiliency but there may be other attributes of resiliency the

1:08:56 ability to Black start some of those kind of attributes I don't know if that's capable to bust out in the model to some extent but I'd be interested in that as well I would say it's typically done through qualitative analysis where uh boards typically uh have like scoring matrixes that they kind of start considering these other things outside of just the modeling um so you can keep the bottom line like similar to the triple bottom line analysis you can kind of add criteria that the board wants to make decisions based on okay got it be in this model okay and then last um batteries so we're talking about batteries we're talking about using kind of a reverse where we're drawing on people's bar pictures or

1:09:41 other battery kind of modeling that we have this is just based on the assumed cost of building a new utility scale battery so utilities that build these large battery Banks or cite them next to wind farms they publish their data to National organizations like the Energy Information agency and they we can use we use that data as a prototype for the typical cost of a utility scale battery so we're not specific so if you had a program that was EV back feeding that was around that same price and had the same attributes you could say oh that's similar to what's in our model but we believe that that is it not food that you believe that the reason is picking the wind and this and the battery together is how they work together because you can store

1:10:27 yeah when it over generates a device or negative okay great I just I I continue to hear the thing about oh we could draw on people's power and their cars I don't need to kill battery life in my car maybe that's just you know personal ranged perspective but anyway I've gone too long thank you very much really appreciate the time thank you president Brown no I would I would add that some of the areas of storage we need to develop a little bit further you mentioned hydrogen hydrogen would basically be modeled as a some sort of generic form of storage it would have a profile and have a life it would have a capacity it would have a cost

1:11:13 um I have talked to E3 in the past it was one of our Consultants about how we model hydrogen and so we we will have to you know as things evolve and we understand that better we'll take a look at it I'm not sure about demand side charging they're they're there are risks with that I mean even if it was chosen as a an affordable option I think there's there's consumer relationship pieces to that and that would probably have to get modeled in the degree of participation that you would be able to get so you you know Eugene was full of battery electric vehicles there's only some percentage that would participate in that because of how that would work so there's some Evolution to the model that to take that

1:11:58 into account comment in a question my comment is I would just back to the idea about a conversation about local you know resources I would like to see some kind of conversation maybe more than just a memo um I think it's it's something that works grappling with here and um there's just a lot of pros and cons and I have just like a little bit more information about that yeah um and then my question is just like a bigger question you're doing a lot of modeling it's obviously a computer that's doing it and you're tweaking it how historically how good are we at modeling like when we did the last IRP be on target we'll be off I I'm glad you asked that question

1:12:44 because um that is we have engaged as as Frank mentioned E3 and E3 is very I mean this is this is the career they're they're no they have they're very reputable around not um about modeling and what we engage them around is how they can teach us and because we want to to become experts in it and so they uh so we we've taken their models we've calibrated it to ours it's we we come close this reference Place comes very close um uh and so what what our hope is is that it's we know that we're that I have a lot of a lot of um confidence in the

1:13:30 work that has been done now we know that we're going to continue to have some challenge you're going to be asking some questions and we're going to need to tap into some other experts hey how have you modeled that what does it look like then you have to do your you're you're double checking in your validity validation so I've incredible amount of confidence now but it doesn't mean we're not going to have challenge conscious as we move forward nobody has modeled the Bonneville products before and so we're going to need time to do that um and it just it takes time I mean I think what I think sometimes it takes a good I think I'm starting to remember what did Chris Robinson the head of he used to do it he's the head of Tacoma City Light and he said you know what it takes it it takes years for them to get it to get narrowed down on um uh on like the hydro

1:14:16 system and on the hydro system works so that's why we we lean into some partners and um we some of their results in them and calibrate that makes sense commissioner I would add that if if you look back at our 2011 IRP and some of the iterations of that did we did a pretty good job of predicting the future with a lot less sophistication the this I would say sometimes you can over sophisticate yourself into into feeling a certain way but because of the complexities that we see in the resources the market the consumption Direction This is necessary at this point going forward

1:15:01 the key to its accuracy is going to be how we treat assumptions how we look at the boundaries of what we think uh are we're testing for from a sensitivity perspective and ultimately we have to weigh in on on some of the qualitative things that that you all have talked about to be able to have a really logical balanced approach going forward and that you know you I don't want to say we're going to over rely on on modeling modeling informs the decision-making process that we all have to go through but historically we we've been pretty good at that if you look back at how our conservation and Energy Efficiency programs and the contribution that they made the one area that we really struggled with was when we saw a real

1:15:48 depressed Market occur and the impact that that had on the utility in that 2010 to 2015 Range because we had to raise rates almost 70 percent during that time these models are incredibly more sophisticated they were probability based back in um 2011. I think tonight you'll notice that we really emphasize that this is a reference point and we want to do we want to change our assumptions and then compare it to this reference point so I think I think as a modeling team we're really trying to highlight uncertainty and then use that uh to I guess explore that together and so that it can better inform the board to come up with strategies that we hope are more

1:16:34 resilient to uncertainty so I think that's one thing I think thematically we really try and emphasize it's a lot of extra work it's a lot of more back and forth conversations so that's why we're coming back quite a bit but we hope that it's it makes us more resilient when we make these hard long-term decisions I don't know if you thought he was joking or not but John's um writer said that when he pushes the button it runs for three days it runs for three days I mean I thought he was joking the first time I heard that and I was like oh it really does run for me Matt do you have any closing questions I don't either so um wrap up what else do you do this step anything else from us all right thank

1:17:21 you just know that we're here if you have more questions I'm pretty sure after tonight we're going to have some questions so any closing comments John um yeah just for the Commissioners uh tomorrow morning at 7 30 at the Eugene Chamber of Commerce we're doing a presentation on the leeburg can I help to get some input from the local business community so you're welcome to attend at 7 30 at the Chamber of 14th and we'll have it um doing a presentation yeah looking forward anything else really good at the order I will return the meeting thank you