NorthWestern Energy Group, Inc. · NASDAQ:NWE
NorthWestern Energy — Technical Presentation (July 2013)
10 slides from NorthWestern Energy's technical presentation, Jul 24, 2013
Slide 1: NorthWestern Energy Capacity Planning and Resource Adequacy
NorthWestern Energy Capacity Planning and Resource adequacy ETAC Presentation Steve Fisher Lands Energy Consulting July 24, 2013
Slide 2: Historic Perspective
Historic Perspective • Historically (pre-2000), the NWPP Region was the only energy-constrained region in the US Electric system o Critical water planning dictated need for new resources o Northwest peaks primarily in the winter, with California peaking capacity available in a pinch (February 1989)
Slide 3: The Complexity Continuum
The Complexity Continuum • Initially, Default Supply load served by PPL requirements contract at a fixed price – fully hedged, with explicit PPL obligation to serve peak load. Simple! • Today, mix of coal, wind, gas peaking resources, with majority of Default Supply MWH supplied by layers of wholesa
Slide 4: Northwest Power Planning
Northwest Power Planning • Portland General Electric, Puget Sound Energy, Avista, PacifiCorp, Idaho Power all use a combined approach to power planning: peak load service (reliability) first/energy cost (financial risk management) second • Hydro based public utilities (Seattle, Tacoma, Grant PUD, Ch
Slide 5: 2018 NWE Peak Load/Resource Balance
2018 NWE Peak Load/Resource Balance 2018: The earliest feasible on-line date for a new peaking resource NWE Firm Peaking Resources 432 MW Less 2018 Peak Load (50% Probability) (1201 MW) Less Planning Margin (14% of load) (168 MW) _________ Capacity L/R Deficit (937 MW) There is no crisis today, but
Slide 6: NWE Current Load Service Strategy
NWE Current Load Service Strategy • Acquire generation and generation-supported PPAs for peak load and energy service • Purchase HLH Mid C-delivered contracts (WSPP Schedule C) to hedge a portion of energy obligation 18-48 months into the future – convert to NWE system delivered purchases a few mont
Slide 7: Peak Day HLH – Winter 2018
Peak Day HLH – Winter 2018 1400 1200 1000 Deficit – Purchase Preschedule/Hour Ahead MW 800 Load Gen 600 Wholesale (HLH) 400 200 0 0700 0800 0900 1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000 2100 2200 Hour Ending
Slide 8: Schedule C Purchases as a Capacity Resource
Schedule C Purchases as a Capacity Resource • Effective way to hedge energy price risk, and… • Liquidated Damages provisions act as a good (albeit imperfect) deterrent to interruption by suppliers, but… • Reliable electricity service depends on the continued operation of properly located generation
Slide 9: Risks of Relying on Market Purchases
Risks of Relying on Market Purchases • Market purchases send price signals to generation owners regarding the financial feasibility of continued operation versus generating plant closures • MATL provides access for in-state generators to a new, higher clearing price market in Alberta • Colstrip 3/4
Slide 10: Conclusions
Conclusions • 2013 NWE Procurement Plan should incorporate more rigorous capacity planning and analysis. • The Plan should include a strategic plan to address near- and long-term capacity deficits. • Addressing capacity deficits with generating resources could be more costly than continued reliance
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