Managing Your Energy Future Has Anyone Seen MR.TU

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Managing Your Energy FutureHas Anyone Seen
MR.TU?

• NWPPA Power Supply Conference
• Portland, Oregon
• April 10-12, 2007
• Don Dame
• Northern California Power Agency

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NCPA Overview

• Joint Powers Agency - since 1968
• 18 Public Agency Members
• Total Loads, 1800 MW
• Pooled Load, 500 MW
• MSS Load, 1000 MW
• Hydro, Geothermal, Natural Gas Plants
• Full Service Wholesale Entity
• Budget 400MM 180 Employees

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2007 8.8 Cents
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Contracts / Market Complexity
1990
1-2 Pages
15-20 Pages
2000
200-300 Pages IA, MSSA
CAISO Tariff 1000 Pages
We have met the enemy And
MRTU 4000 Pages
2010
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The Economic Damage
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PGE
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• History teaches us that people and nations behave
  wisely once they have exhausted all other
  alternatives.

- Abba Eban
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Global Electricity need by 2030
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Projected U.S. Capacity need by 2030
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(GW)
Reference Case
Low Growth
2005 Capacity
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(MW)
2005 Capacity
Reference Case
Low Growth
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2030 BOTTOM LINE

• WECC INVESTMENT NEED
• 160,000 230,000 MW
• 185- 280 Billion
• NCPA INVESTMENT NEED
• 2,700 3,500 MW
• 3 4 Billion

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Current Market Design Flaws(the problems)

• Zonal Model Design
• Operationally infeasible plan
• Socialized constraint mitigation cost
• Price reversals due to market structure
• Insufficient unit commitment
• Non simultaneous optimization
• Ineffective market power mitigation
• Compromised reliability

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MRTU Fixes(the cure)

• Locational Marginal Pricing (LMP)
• Congestion Rights (CRRs)
• Resource Adequacy (RA)
• Integrated Forward Market (IFM)
• Full Network Model (FNM)
• Residual Unit Commitment (RUC)
• Market Power Mitigation (MPM)
• Real Time Market (RTM)
• Hour Ahead Scheduling Process (HASP)

Are you kidding?
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10 Insights

• Avoid Revisionist View of History
• Few Experts w/ Knowledge to many Experts
• Electricity is not a consensus business
• Real Price Signal Rates up 50 or more
• You trust an economist with electricity?
• Who is Responsible? (IOUs, CEC, CPUC, FERC,
  CAISO, IPPs, NERC, WECC, BPA)
• Complexity is not the Answer
• Built up huge vested interests
• Consider discipline cap

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Whose Problem is it?