Long Term Electric Resource Plan (LTERP)
Resource Planning Advisory Group (RPAG) Workshop #2
July 28, 2015
Meeting Notes
Date and Time: July 28, 2015 - 9:00 am – 3:00 pm
Location: BCUC Hearing Office – 1125 Howe Street, 12th Floor, Vancouver
Members Present:
B.C. Municipal Electric Utilities (BCMEU) / Alex LoveB.C. Public Interest Advocacy Centre (BCPIAC) / Erin Pritchard
B.C. Sustainable Energy Association (BCSEA) / Tom Hackney
B.C. Utilities Commission (BCUC) / Errol South
BC Hydro / Kathy Lee
Clean Energy Association of B.C. / Frankie Nash
First Nations Energy & Mining Council (FNEMC) / Cole Rheaume
Industrial Customers Group (ICG) / Robert Hobbs
Lower Columbia Community Development Team Society / Gordon DeRosa
Tolko Industries / Michael Towers
FortisBC / Mike Hopkins
FortisBC / Dan Egolf
FortisBC / Keith Veerman
FortisBC / David Bailey
FortisBC / Joyce Martin
FortisBC / Nguyen Pham
FortisBC / Ron Zeilstra
FortisBC / Tony Liu
Guests Present:
B.C. Ministry of Energy & Mines - Electricity and Alternate Energy Division / Paul WieringaFortisBC / David Bennett
FortisBC / Soyean Kim
FortisBC / Ken Ross
FortisBC / Paul Chernikhowsky
Members Absent:
Commercial Energy Consumers Association of B.C. (CEC) / David Craig
Irrigation Rate Payers Group / Brian Mennell
Discussion Topics
Welcome and Introductions 2
BC Electricity Policy and Emissions 2
Market Price Forecasts and PPA Rate Scenarios 3
Long-Term Load forecast and Scenarios 3
Load-Resource Balance 4
FBC Resources 4
Supply-Side Resource Options 5
Portfolio Analysis 5
Planning Reserve Margin 6
Transmission System Update 6
Wrap-Up and Next Steps 7
Welcome and Introductions
• RPAG members took turns introducing themselves and Mike Hopkins provided a recap of workshop #1 and reviewed the LTERP section outline and timeline.
BC Electricity Policy and Emissions
• Paul Wieringa from BC. Ministry of Energy and Mines provided an update on climate change and planning in respond to demand for energy services in BC. Discussed topics relating to BC Climate Leadership Plan (CLP) and the importance of energy efficiency. Paul requested that folks take the CLP survey online before the August 17, 2015 deadline so that the BC Government has plenty of feedback.
• A stakeholder expressed concerns about BC Hydro’s IRP workshop being cancelled due to the BC Government’s recent announcement of the Climate Leadership Plan. Paul explained that the government would like to come up with the Climate Leadership Plan first, and then use it as an input for BC Hydro’s IRP updates. The government is considering if it needs to amend any of the Clean Energy Act to make BC’s energy objectives more clear, as there are currently competing objectives and priorities.
• A stakeholder asked if there are any plans for renewing and replenishing the current First Nation clean energy fund. Paul explained that the government is looking into this concern.
Market Price Forecasts and PPA Rate Scenarios
• Tony Liu provided an update on market price forecasts and BC Hydro PPA rate scenarios.
• It was asked what are the driving factors of the variations in the gas price forecasts from the various sources. Some of the forecasts were done at different times and therefore during different market price environments with different market views of supply and demand factors. Overall, the base forecasts seem to be grouped into two groups – those from before 2015 and those from 2015. The 2015 forecast are slightly lower than the previous ones due to the increasing certainty regarding the abundance of shale gas supply in the market. Generally, the 2015 price forecasts are similar and trend upwards over time (on a real dollar basis) due to the expectation that demand factors, such as LNG exports and power demand from coal plant retirements, will catch up with gas supplies.
• It was asked what exchange rate was used for the forecasts. The current long-term Cdn/US exchange rate being used is 1.2. This is based on the latest update provided by some banks to FBC. FBC will continue to monitor the market and update the exchange rate if warranted.
• It was asked if the BC Hydro PPA rate scenarios were for the Tier 1 or Tier 2 rate. The Tier 1 rate only was used for the PPA rate scenarios as FBC does not expect to use the Tier 2 energy supply, except as a last resort, due to its significantly higher cost.
Long-Term Load forecast and Scenarios
• David Bailey and Soyean Kim provided an overview of the three-step process for developing the base load forecast and subsequent scenario forecasts. The load forecast presented excluded any impacts from DSM and Other Savings (i.e. RCR, AMI, CIP, codes and standards) since the long term DSM forecast will be determined after the Conservation Potential Review (CPR) study is done in the last half of 2015.
• It was asked what is the annual percentage increase in the load forecast. The annual load forecast, before DSM and Other Savings, is increasing at about 1.5% per year on average over the next 20 years – but this percentage differs by customer group.
• It was asked where LED lighting fits into the base load forecast. It was explained that this would be included in the load forecast scenarios.
• It was asked where do the losses come from for the annual load forecast? Losses include theft and unmetered loads but occur mainly due to transmitting electricity through wires.
• It was asked if the weather distribution due to climate change is included in the monte carlo load forecast range. No it is not – but weather variation due to climate change may be addressed in the load forecast scenarios instead.
• It was asked if customers in the FBC gas-electric shared service area would only be able to choose between FBC’s electricity or gas services. Customer in the FBC service area can use FBC electricity service and another fuel source that is not natural gas, such as propane or heat pumps.
• It was asked how FBC will apply numbers or data to the load scenarios and deal with any cross effects that could occur. FBC will look into this during the last half of this year. BC Hydro provided its approach which involved painting a story of the world first and then developing the building blocks for the individual scenarios after that.
• It was suggested that a high electric vehicle (EV) and low distributed generation (DG) scenario made less sense than a high DG and high EV scenario (or, on the opposite end, low DG and low EV). FBC will consider this but wants to try and “book end” the load forecasts so that whatever actual scenario or case we end up with in the future will be somewhere inside the range.
Load-Resource Balance
• Mike Hopkins provided an overview on FBC’s latest energy and capacity load-resource balance using the latest load forecast (presented by David and Soyean earlier) but using the previous DSM and Other Savings forecast.
• It was asked what the “other” category on the capacity – resource balance figure includes. ‘Other’ includes the Brilliant Expansion contract as well as other short-term contracts.
• It was asked if FBC buys supply from Independent Power Producers (IPPs). It was explained that FBC does buy power supply from IPPs, such as with the Brilliant contract. FBC currently does not have an open call for power from IPPs due to its lack of need for near-term energy or capacity, but would certainly welcome any discussions about potential opportunities in the future.
FBC Resources
• Dan Egolf provided an overview of FBC’s current resource portfolio and key considerations for existing contracts within the 20-year planning horizon.
• It was asked what is the current energy cost for BC Hydro’s Power Purchase Agreement. The Tier 1 rate for the PPA is based on BC Hydro’s embedded cost of energy and is currently about $45/MWh. The Tier 2 rate is based on BC Hydro’s Long Run Marginal Cost of energy and is about $136/MWh.
• It was asked how FBC determines when to use its capacity from WAX and if FBC incurs penalties for using it during Heavy Load Hours (HLHs). No, FBC does not incur any penalties for using its WAX capacity during HLHs and can use it anytime it requires it.
• It was noted that the First Nations representatives are currently petitioning BC Hydro to do a call for power and that FBC should do the same. It was noted by FBC, however, that FBC does not have the same requirements as BC Hydro and is not willing to pay the same price as BC Hydro as FBC’s current near-term marginal cost is market price ($30/MWh area) and so a call by FBC does not make financial sense right now. It was also noted that FBC does not need any May-June energy right now.
Supply-Side Resource Options
• Ron Zeilstra provided an overview of FBC’s potential supply-side resource options and preliminary unit costs.
• It was asked what proportion of the energy costs listed for the solar photovoltaic (PV) projects (on slide 34) is attributed to infrastructure versus labour costs. The direct labour costs represent about 10% of the average solar PV costs (on a plant gate basis). Once interconnection costs are included, the direct labour costs would be slightly lower. The following shows the cost components breakdown.
• It was asked if there could be more geothermal sites that are not discovered yet. It is likely that there are more undiscovered sites but there are many uncertainties related to these sites, as geothermal sites usually require a significant amount of upfront cost for exploration.
• It was asked why the Similkameen project is no longer a preferred project. It is no longer a preferred project because the cost of the project has increased since the previous estimate was done and the WAX CAPA contract provides FBC with significant capacity for most of the planning horizon.
Portfolio Analysis
• Mike Hopkins provided an overview on the portfolio analysis process.
• It was suggested that FBC could have some alternative or contrast portfolios instead of just one preferred portfolio. Yes, FBC expects to have several preferred portfolios for the RPAG to review in the next workshop.
• It was asked if FBC would perform the same level of detail in its portfolio analysis as BC Hydro does. FBC does not plan to go into the same level of detail in its portfolio analysis as BC Hydro does due to its limited resource compared to BC Hydro as well as FBC not requiring any new significant resources in the near-term. However, FBC still intends to perform a full portfolio analysis as described in the BCUC Resource Planning Guidelines.
• It was suggested that FBC should look into net metering and EV loads and examine time of use in its alternative portfolios. FBC will develop portfolio contingency plans which will take into account higher or lower loads and EV loads will be part of the load forecast scenarios.
• It was asked if the self-sufficiency (no market supply) scenario is in response to the government policies and the Clean Energy Act. Yes, although the self-sufficiency requirement of the Clean Energy Act is not a direct requirement for FBC but rather a consideration, while it is a specific requirement for BC Hydro.
• It was asked if the 100% market reliance portfolio would be like a low cost portfolio. Yes, the 100% market reliance portfolio is likely going to be a low cost portfolio given the current market prices relative to other supply-side resource options.
Planning Reserve Margin (PRM)
• Dan Egolf provided an overview of FBC’s planning reserve margin approach. It was noted that FBC has developed a Planning Reserve Margin Report to outline its approach and study results and offered a more detailed separate PRM seminar for anyone interested.
• It was asked how we derived the market access of 150 MW? This is based on the expected capacity of Line 71 that would be available after any of Teck’s needs are met.
• It was asked what the historical loss-of-load-expectation (LOLE) results would show. The LOLE’s would essentially be zero as there have never been any unplanned outages related to a lack of FBC supply to FBC’s staff knowledge.
• It was asked if the LOLE could be more than 0.1 in a particular year? Yes, since it is a 10-year average, the LOLE could be higher in any given year as long as the 10-year average was below 0.1.
• It was asked what the LOLE was for the two cases where it was not met? The LOLEs were much higher, in the 0.5 to 1.0 area.
• It was asked in the case where there is no market access, what do the LOLE numbers look like. The LOLE numbers would be several times higher without market access.
• It was asked when relying on market purchases if FBC can specify not including any resources from WECC coal plants. It was explained that it is hard to restrict what is included in market purchases, especially during periods of peak demand if FBC is experiencing shortages. It was noted that coal plants in the WECC and North America in general are gradually being replaced by gas-fired generation and renewable resources like wind and solar so that coal’s share is declining overall. Also, if FBC could not purchase any power from market purchases which may include coal, it is likely that FBC would need to acquire additional resources such as a SCGT plant (gas-fired generation) to meet reliability requirements.