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Big Renewable Megawatts

Mark Ohrenschall
Con.Web, February 27, 2004

PacifiCorp Issues RFP for up to 1,100 MW of Renewables Capacity

PacifiCorp is seeking renewable energy resources in grand fashion.

The investor-owned utility wants up to 1,100 megawatts of additional renewables capacity by 2010, sought through a Feb. 5 request for proposals that identifies 500 MW for delivery to its Washington, Oregon and Northern California service territories, and 600 MW for Idaho, Wyoming and Utah.

This is among the Northwest's biggest renewables solicitations, comparable to Bonneville Power Administration's since-limboed 2001 RFP for energy from 1,000 MW or more of wind capacity. It represents a potentially huge increase in PacifiCorp's renewables portfolio, which now includes about 132 MW of Wyoming and Oregon wind capacity and 26.1 MW of geothermal.

"We do see this as significantly upping the percentages of renewables in our system, which we see as beneficial for several reasons," including addressing fuel price and environmental regulatory risks, and diversifying its resource mix, said PacifiCorp environmental policy analyst Virinder Singh.

Rachel Shimshak of Renewable Northwest Project called PacifiCorp's RFP "among the largest drivers for renewables in the region," and praised the six-state utility for an initiative that "will bring significant new renewable resources to the region."

The solicitation follows from PacifiCorp's 2003 integrated resource plan, which envisioned a need for 4,000 MW of new resources by 2014, including 1,400 MW from renewables. Most of the added resources would be fossil-fueled by natural gas and coal, furnishing a projected 2,100 MW of baseload capacity and 1,200 MW of peaking capacity. The plan also calls for 450 average megawatts of demand-side management.

Renewables eligible for PacifiCorp's RFP are wind, geothermal, solar, low-emission/non-toxic biomass, digester gas, landfill gas and hydro facilities outside protected areas.

PacifiCorp anticipates the most bids from wind power, although spokesman Deston Nokes said uncertainty over the lapsed federal wind energy production tax credit could affect the number of proposals from new projects. Wind bidders are required to list prices with and without the PTC.

Proposals are due March 9, and PacifiCorp hopes to reach final agreements with winning bidders by mid-June.

Integrated Resource Planning

In a look-ahead that led to the renewables solicitation, PacifiCorp's 2003 IRP found a widening gulf between the utility's power demand and supply. It forecast annual average system load growth of about 2 percent, and noted the upcoming end of some power supply contracts along with hydroelectric relicensing issues and more stringent environmental regulations on fossil-fueled resources.

The plan listed a resource deficit of more than 1,200 MW in 2004, growing to more than 4,000 MW by 2014. "Not taking prompt and focused action to close this gap would expose PacifiCorp and its customers to unacceptable levels of cost, reliability and market risk," it said.

The IRP found "[t]he strongest resource strategy relies on a diverse portfolio of options, including strong components of renewables and demand side management, but also natural gas- and coal-fired generating resources." PacifiCorp gets nearly two-thirds of its energy from thermal resources, and purchases most of the remaining third, according to utility information.

PacifiCorp in June issued an RFP for peaking, firm and baseload resources delivered to its eastern control area. The IOU in November announced the choice of its own proposed 525-MW gas-fired plant in Utah --a self-selecting decision that has generated controversy, according to the Deseret Morning News.

The renewables solicitation expressly forbids proposals from plants owned by PacifiCorp or an affiliate, or any proposals from an affiliate.

RFP Details

The renewables RFP outlines specific amounts and delivery dates for resources sending electricity to different areas of the far-flung PacifiCorp system.

For the utility's west control area of Oregon, Washington and Northern California, the RFP seeks 100 MW starting in April 2005, 200 MW more in April 2007 and another 200 MW by April 2009. PacifiCorp wants 200 MW for its east control area (Utah, Idaho and Wyoming) in each April of 2006, 2008 and 2010. Earlier acquisitions would be considered "if economical to do so," the RFP states.

PacifiCorp's schedule was designed for the lowest present value revenue requirements, according to Singh, but the utility also will consider marketplace realities, such as developer timetables and resource interests from other utilities. "The short answer is we do have those targets, but we have to take into account ... how the wind market's working in this region."

Megawatts listed in the solicitation refer to nameplate wind capacity. "PacifiCorp will likely choose a combination of renewable resources capable of producing the energy equivalent of the stated figures," the solicitation said. Minimum bid size is 70 million kilowatt-hours (nearly 8 aMW) delivered annually.

Proposed renewables could be new or existing, according to Nokes. There are no specific location requirements, although renewable energy must be "capable of delivery to PacifiCorp's network transmission system" and proposers are responsible for such arrangements. The solicitation also mandates that PacifiCorp would own "any and all renewable energy credits and environmental attributes ('Green Tags') associated with the energy generated."

PacifiCorp's evaluation of bids will give up to 60 percent weight to price factors, 30 percent for non-price factors and 10 percent for environmental issues.

"The highest ranking bids, based on the combined price and non price ranking factors ... will be chosen for the short list. PacifiCorp intends to enter negotiations with selected short listed bidders," the RFP states.

Price and non-price elements will then be further negotiated, according to the solicitation.

"Selection for the short list and post-bid negotiations does not constitute a 'winning bid proposal,'" the RFP cautions. "Only execution of a definitive agreement by both PacifiCorp and the bidder on terms acceptable to PacifiCorp in its sole and absolute discretion will constitute a 'winning bid proposal.'" The IOU also declares its discretion to change or end the RFP, and to avoid any final agreements.

by Mark Ohrenschall
Big Renewable Megawatts
Con.Web - February 27, 2004

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