- Cowlitz PUD

Post-2011 BPA PurchaseThe IRP analysis assumes that BPA will continue to make available Slice, Block,and Load Following products to the District at cost-based rates based on thepolicies that BPA adopted in the Regional Dialogue process. All scenariosanalyzed in the IRP assume that the District will purchase all of its entitlement toTier 1 power. The final decision on which product to purchase from BPA is notanswered in this IRP. Instead, this IRP includes an assessment of the positiveand negative attributes of the different products BPA will make available in thepost-2011 period.Modeling and ResultsThe District recognizes that the future is impossible to predict and even the bestforecasts can end up being very different from reality. Therefore, the Districtemployed a stochastic approach to identify the combination of resources bestsuited to meet its needs. Monte Carlo analysis varied underlying fundamentalconditions such as loads, hydro generation, fuel prices, power prices, capitalcosts, CO2 taxation over 100,000 iterations. Oracle Corporation’s OptQuest wasused to identify the combinations of resource additions that provide acceptableoutcomes across a wide array of possible futures. The results from theoptimization establish the efficient frontier of resource sets as shown in Figure 4.Figure 4Cost Risk Efficient Frontier$1,900,000$1,850,000Power Cost 20 Year NPV ($ Thousands)$1,800,000$1,750,000$1,700,000$1,650,000$1,600,000$1,550,000$1,500,000$1,450,000$1,400,000ABCD$55,000 $65,000 $75,000 $85,000 $95,000 $105,000 $115,000STDEV ($ Thousands)Each point on the graph represents a specific set of resource types added on aspecific timeline. The cost risk efficient frontier demonstrates the tradeoffs7