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Michigan IRP Working Group Meeting

Closing out data and modeling assumptions for the Representative Market Model of Michigan. Discussing data assumptions, transmission interface limits, fuel forecasts, emissions, unit retirements, and demand side alternatives.

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Michigan IRP Working Group Meeting

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  1. Michigan IRP Working Group Meeting June 10, 2005

  2. Objectives and Agenda • The objective is to close out a number of data and modeling assumptions so that we can move on the next milestone – Representative Market Model of Michigan (6/27/2005) • Agenda • Data Assumptions • Transmission Interface Limits • Model Representation • Fuel Forecast • Firm Gas Transportation Requirements for CC’s and CT’s • Emissions – SO2, NOX, Hg • Unit Retirements • Demand Side Alternatives • Blocks for Land Fill Gas and Digestion • Modeling Assumptions • Objective Function and Constraints • External Capacity • Matrix of Scenarios and Sensitivities

  3. Transmission Interface Capability • ISSUE: The Michigan to ROW transmission interface limits are highly dependent upon loop flows through Michigan and into Ontario • Assumption to Resolve • Do we take a conservative approach? • Assume that 1500 MW of loop flow occurs all the time • Do we take a “problem resolved” approach? • Assume that loop flow problem does not exist or is corrected by phase shifters • Do we take an “in-between” approach? • Assume that loop flow happens half the time and take an average of the two previous numbers • Do we know a seasonal pattern of loop flow? • Assume that loop flow happens for a schedule of particular months

  4. Transmission Interface Capability • Example: Interface Capability from the Southern Market into Michigan • Assumption effects • Do we take a conservative approach? • 1,450 MW • Do we take a “problem resolved” approach? • 3,000 MW • Do we take an “in-between” approach? • 2,225 MW • Do we know a seasonal pattern of loop flow?

  5. Upper Peninsula Ontario METC TN ITC MAPP TN TN MAIN MAAC - Areas VACAR TVA - Tie Lines Model Representation ? ? ? 0 ? ? 1350 1400 1450 1450 1450 1450 1450 Interfaces based On Conservative Estimate

  6. Fuel Forecasts • ISSUE: The EIA Annual Energy Outlook does not represent the recent run up in Appalachian Coal, Gas and Oil prices • June 1 2005 NYMEX Henry Hub futures • Forecast adjusted monthly based on Platt’s shape

  7. Fuel Forecasts • ISSUE: The EIA Annual Energy Outlook does not represent the recent run up in Appalachian Coal, Gas and Oil prices. • based on May 31, 2004 NYMEX Central Appalachian Coal Futures • adjusted for an average heat content of 25.01 MBTU/Ton and .40 $/MMBTU for transportation for a delivered price to PJM

  8. Fuel Forecasts • Recommendation • Use current NYMEX Strip for Appalachian Coal, Henry Hub Gas, and Oil • Escalate beyond strip using EIA escalation assumptions, roughly 2.3% • Scale Midwest Coal forecast according to ratio of Platt’s Appalachian Coal to Platt’s Midwest Coal • The EIA forecast for Powder River Basin looks consistent, use as forecasted.

  9. Firm Gas Transportation - CC • ISSUE: The current economic assumptions for new Combined Cycle Technology do not include any provisions for reserving firm pipeline capacity to ensure delivery of gas to support CC operations. • Failure to reserve gas pipeline capacity may limit energy operations for CC’s. • RECOMMENDATION: • Include a Firm Gas Transportation charge of $1.71/kW-Month in the CC’s Fixed O&M expenses (represents a blend of reservation charges for ANR and Trunkline). • Include a Commodity charge of .014 $/MBTU to CC fuel.

  10. Firm Gas Transportation - CT • ISSUE: The current economic assumptions for new Combustion Turbine Technology do not include any provisions for reserving firm pipeline capacity to ensure delivery of gas to support CT operations. • Failure to reserve gas pipeline capacity may limit energy operations for CT’s • Options: • Assume dual fuel capability on all new CT’s. This provides CT’s with an alternative fuel to support quick start reserves and peak operation needs. • Assume a Firm Gas Transportation charge of $1.71/kW-Month in the CT’s Fixed O&M expenses (represents a blend of reservation charges for ANR and Trunkline) for peak requirement months. • Summer • Summer and Winter

  11. Emissions – SO2, NOX, Hg • Verification of Emission Spreadsheets • Mercury Emissions

  12. Unit Retirements • ISSUE: We have attempted to extend the life of units, such that, we are not seeking capacity alternatives to unit retirements. However, several Michigan unit’s retire prior to the study period and during the study period. • The Participants desire to not replace retiring units as a part of this study. • RECOMMENDATION: Set retirements of all existing units to beyond the study horizon.

  13. Demand Side Alternatives

  14. Blocks for Land Fill Gas and Digestion

  15. Objective Function and Constraints • OBJECTIVE FUNCTION • Minimize Utility Cost • Minimize Average Rate • Subject To: • Minimum Reserve Margin of • Maximum Reserve Margin of • Combinations • Restricted Combinations

  16. External Capacity • ISSUE: Are capacity purchases, external to Michigan, available as resource alternatives to count toward the reserve requirements of Michigan? • Point of Clarification: in the Capacity Need Forum Proposed Integration Scenarios there is a footnote associated with a Max Import Sensitivity that indicates capacity pricing based on 50% CT and 50% CC. • NewEnergy can generate a capacity and energy price for the various markets represented as an alternative.

  17. Other Critical Data Needs • Data Review by Lansing Water & Board and Wolverine • Review of Assumptions and Model Development

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