PacifiCorp 2007 Integrated Resource Plan (May 30, 2007)

PacifiCorp – 2007 IRPChapter 6 – Modeling and Risk Analysis Approaching the primary sources of portfolio cost uncertainty. Additional sensitivity analysis scenarioswere also developed to investigate the individual effects of certain planning and resourcespecificassumptions.The main objectives of this screening effort include the following:• Determine and study resource selection choices given different assumptions about the future• Determine the range of resource quantities selected for alternative future scenarios designedto favor one or more resource types over others.• Identify the frequency of resources selected across the alternative futures modeled.• Determine acquisition patterns (quantities and timing) for smaller-scale resource types—front office transactions, wind, DSM programs, and Combined Heat and Power facilities—tobe incorporated into the risk analysis portfolios based on an aggregate view of the alternativefuture modeling results.Alternative Future ScenariosThe alternative future scenarios consist of cases to test the impact of variations in load growth aswell as combinations of several variable values that simulate conditions variously favorable andunfavorable to the major resource types (coal, gas, renewables, and DSM). The input variableschosen to represent the alternative futures consist of the following:• Incremental coal cost, consisting of new CO 2 regulatory costs (via a dollar-per-ton CO 2 adder)and alternative commodity price trends driven by assumptions on coal production andtransportation costs.• Natural gas and wholesale electricity prices, based on PacifiCorp’s forward price curves• Retail load growth• The level of renewable electricity generation requirements stemming from renewable portfoliostandard (RPS) regulations• The availability of renewable energy Production Tax Credits (PTCs) after 2007• The potential for demand-side management programs, defined as a program’s achievablemarket potential adjusted to account for competition with existing programsPacifiCorp developed low, medium, and high values for each of these input variables to ensurethat a reasonably wide range in potential outcomes is captured. The one exception is for renewablePTC availability, which was structured as a yes-or-no outcome.Table 6.1 profiles the 16 alternative future scenarios developed, indicating the assigned variablevalue levels for each of the six input variables. Note that alternative future scenarios are labeledwith the acronym “CAF”, which stands for CEM alternative future. The CAF studies include abusiness-as-usual case reflecting no new regulatory requirements (CAF00) and a medium casebased on the company’s official load forecast and forward price curves (CAF11, “medium loadgrowth”). All CAF scenarios assume a 15-percent planning reserve margin.119