PacifiCorp 2007 Integrated Resource Plan (May 30, 2007)

PacifiCorp – 2007 IRPChapter 1 – Executive SummaryMODELING AND PORTFOLIO SELECTION RESULTSPacifiCorp assessed “alternative future” scenarios to determine resources and capacity quantitiessuitable for inclusion in risk analysis portfolios. Based on the Capacity Expansion Module’s optimizedinvestment plans, the company selected wind (as a proxy for all renewable resources),combined heat and power, supercritical pulverized coal, combined cycle combustion turbine,single-cycle combustion turbine, integrated gasification combined cycle (IGCC), load controlprograms, transmission additions and short-term market purchases in subsequent portfolio studies.The company studied portfolios using its stochastic production cost simulation model. Theseportfolios were distinguished by a variety of resource strategies intended to address major portfoliorisks, such as carbon regulations and natural gas/electricity price volatility. These resourcestrategies were distinguished by the planning reserve margin level and the quantity and timing ofwind, pulverized coal, front office transactions, and IGCC resources included.The portfolio analysis yielded the following general conclusions:• Diversification of resources helps to balance costs and risks. A combination of supercriticalpulverized coal, additional renewable generation, and gas-fired resources is desired toachieve a low-cost portfolio that effectively addresses all major sources of risk; conversely,portfolios dominated by a single resource type were found to be more expensive and risky forcustomers. Studies also demonstrated that increasing wind capacity and reducing reliance onmarket purchases promotes a better balance of portfolio cost and risk.• Eliminating front office transactions after 2011 decreased risk exposure and increased portfoliocost. To maintain planning flexibility and resource diversity, PacifiCorp will continue torely on them as needed to support energy requirements in the west control area, and use themas needed to address peak load requirements in the east control area.• While the portfolio analysis indicated that lowering the planning reserve margin increasedportfolio stochastic risk and reduced reliability, the decision on what margin to adopt is asubjective one that depends on balancing portfolio risk against affordability. The portfoliomodeling also showed that reducing the planning reserve margin from 15% to 12% increasedCO 2 and other emissions due to greater reliance on the company’s existing coal fleet.Based on superior performance with respect to stochastic cost, customer rate impact, cost-versusriskbalance, and supply reliability, a portfolio with the following characteristics was chosen asthe preferred portfolio:• A total of 2,000 megawatts of renewable resources by 2013• An additional 100 megawatts of load control (Class 1 demand-side management) beginningin 2010• A west-side combined cycle combustion turbine in 2011• High-capacity-factor resources in the east in 2012 and 2014• East-side combined cycle combustion turbines in 2012 and 2016• Balance of system need fulfilled by front office transactions beginning in 2010• Transmission additions between 2010 and 2014 to support integration of the resource portfoliowith loads7