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Wholesale Power Price Forecast 01/28/03 Current Trends Update

Wholesale Power Price Forecast 01/28/03 Current Trends Update. Jeff King January 31, 2003. What is the power price forecast?. An estimate of future wholesale spot market power prices. E.g., as would be traded as short-term contracts at the Mid-Columbia trading hub. 2001 to 2025.

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Wholesale Power Price Forecast 01/28/03 Current Trends Update

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  1. Wholesale Power Price Forecast01/28/03 Current Trends Update Jeff King January 31, 2003

  2. What is the power price forecast? • An estimate of future wholesale spot market power prices. • E.g., as would be traded as short-term contracts at the Mid-Columbia trading hub. • 2001 to 2025. • Monthly and annual average prices for high & low-load hours (can also look at hourly prices). SN-03-E-CR&YA-02U

  3. Ancillary products • Market-driven future generating capacity additions. • Estimate of fuel use. • Estimate of certain environmental effects of system operation (e.g. CO2 production). • Transmission usage SN-03-E-CR&YA-02U

  4. Uses of the power price forecast • Estimate the market value of new resource alternatives (e.g., conservation measures). • Estimate the cost implications of policies affecting power system composition or operation (e.g., value of a seasonal shift in hydro output). • Estimate environmental effects of changes in power system composition or operation (e.g., effect of resource additions on CO2 production). • Price forecast input into risk analysis model. • Resource development forecast into GENESYS model SN-03-E-CR&YA-02U

  5. Forecasting process SN-03-E-CR&YA-02U

  6. Geographic Scope • Load-resource areas defined by transmission bottlenecks • individual generating units (>3700 total) • fuel price forecasts for ea. LRA • load forecast for ea. LRA • load curtailment blocks for ea. LRA • new resource options for ea. LRA SN-03-E-CR&YA-02U

  7. General assumptions • Projects under construction are completed as scheduled; additional projects are market-driven. • Suspended projects: • If > 25% complete, entered as partial-cost new resource options. • If < 25% complete, omitted • New projects are developed by resource-specific mix of developers. • Projects scheduled for retirement are retired; additional retirements are market-driven. SN-03-E-CR&YA-02U

  8. Other general assumptions • Intra-regional transmission cost: • $15/kW/yr point-to-point transmission & basic ancillary services cost plus 1.9% transmission loss penalty. • Exceptions include peaking units and industrial cogeneration • Pancaked inter-area transmission losses & rates. • Bid margin set at 5% of variable cost. SN-03-E-CR&YA-02U

  9. Significance of the “Current Trends” Case • Our best estimate of future wholesale power prices resulting from continuation of current economic and energy policy trends. • Average water conditions • Average loads • Not necessarily the “Right thing to do” • may not fully consider value of risk mitigation. • may represent less than desirable reserve levels. • Not intended to represent a recommended course of action SN-03-E-CR&YA-02U

  10. Current Trends case assumptions • NPPC medium fuel price forecasts. • NPPC medium load forecasts: • Demand returns to medium growth rates by 2006. • Long-term growth adjusted for programmatic conservation. • New resource options most likely to play significant role: • Gas-fired combined-cycle GT • Duct firing (power augmentation) for combined-cycle • Gas-fired simple-cycle GT • Wind • Pulverized coal-fired steam-electric • Solar PV • Permanent 1.7 cents/kWh production incentive for new wind & solar. SN-03-E-CR&YA-02U

  11. More Current Trends case assumptions • SBC and RPS resource development where adopted: • simulated as new wind. • quantity based on estimated above-market resource cost (resource cost less price forecast) • Oregon CO2 standard for all new fossil units: • offset fee $1/TCO2 (2000), escalating at 20%/yr. • applies to 17% of total CO2 production. • $7.50/MWh green tag revenue for new renewables. • Intermittent resources limited ~ 20% of total native capacity, by area. • No new coal in Western WA, W. OR, CA. SN-03-E-CR&YA-02U

  12. Forecast Fuel Price Trends(%/yr, 2003 – 2025) SN-03-E-CR&YA-02U

  13. Natural gas prices are based on US wellhead forecast SN-03-E-CR&YA-02U

  14. New resource characteristics SN-03-E-CR&YA-02U

  15. Additional new resource characteristics SN-03-E-CR&YA-02U

  16. Updates since September draft • Updated inventory of recently-completed projects and projects under construction. • Updated load growth forecasts. • CO2 offset cost escalates as originally intended. • Adjusted hydro shaping factors British Columbia. • Corrected fuel price pointers for several resources. • Corrected New Mexico variable gas prices. • Recalibrated duct-firing and RPS/SBC resource builds. • Adjusted quantities of second block of new wind. • Recalculated fixed O&M costs for existing resources. • First load curtailment block restored to default value. SN-03-E-CR&YA-02U

  17. Forecast WECC Resource Mix(012503 Current Trends Update) SN-03-E-CR&YA-02U

  18. Mid-Columbia price forecast SN-03-E-CR&YA-02U

  19. Levelized Mid-Columbia price forecast (2006 – 25) SN-03-E-CR&YA-02U

  20. Monthly average prices & loads (Mid C) SN-03-E-CR&YA-02U

  21. Forecast WECC Fuel Use SN-03-E-CR&YA-02U

  22. Forecast WECC CO2 Production(012403 Current Trends Update) SN-03-E-CR&YA-02U

  23. Base & sensitivity studies 1 SN-03-E-CR&YA-02U

  24. Base & sensitivity studies 2 SN-03-E-CR&YA-02U

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