Policy Principles

Resource Adequacy Principles

These Pacific Northwest Utilities Conference Committee (PNUCC) Principles provide a foundation for general, overarching discussion to address regional reliability. The intent is to create a framework under which standards (policies) are harmonized and regional stability is maintained.

The region should continue working together to ensure there is a safe, reliable, and resilient power system for the future. A well-designed power system that achieves the fundamental goal of reliability should be based on resource adequacy, resource sufficiency, and necessary transmission.

To that end, the following principles should be considered when evaluating an effective resource adequacy program.

  1. A regional resource adequacy program should provide common planning criteria for the assessment of adequacy to ensure reliability across multiple balancing authorities.
  2. A resource adequacy program should accurately assess regional and individual utility resource adequacy, inform planning and investments, and ensure customers will be served with a defined level of reliability.
  3. A regional resource adequacy program should include a governance structure for monitoring, mechanisms for performance, and accountability provisions for compliance.
  4. A regional resource adequacy program should address transmission constraints and effective solutions to connect the load to the power supply.
  5. A regional resource adequacy program should address west-wide resource and fuel diversity to efficiently integrate variable resources and maximize customer value.
  6. A regional resource adequacy program should be agnostic to resource solutions, support economic stability, and thrive for equitable outcomes.

Background

Currently, more than 73% of the installed electric generating resources in the northwest are carbon-free. That share will grow as northwest utilities continue their history of environmental sustainability with climate-friendly investments in carbon-free generation, energy efficiency, and demand response. The trend to reduce emissions accelerates as coal plants are retired and replaced with lower and zero-emitting resources.

The anticipated growth in variable energy resources(e.g. wind and solar) and upcoming capacity requirements will impact the region’s ability to meet peak demand. While improved technology, innovation, the market, as well as continued investments in energy efficiency and demand-side management programs will be part of the pacific northwest’s future, additional solutions are needed to address the almost 15,000 megawatts of coal retirements expected in the West Electricity Coordinating Council (WECC) by 2030.

Numerous studies already show that without further action, the region will not have the capacity needed to serve peak demand in the 2020 to 2030 timeframe. Operations are being explored for ensuring resource portfolios across the region are able to provide the attributes and characteristics necessary to support customer needs through a changing resource mix while managing weather events (cold snaps and heatwaves) and the effects of climate change.

Market Structure Principles
The Pacific Northwest Utilities Conference Committee (PNUCC) is an association comprised of consumer and investor-owned utilities in the pacific northwest. Members focus on key issues facing the region’s electric utility industry that impact supply, demand, costs, environmental effects, and reliability of the electric power system. The diversity of the PNUCC membership provides a unique opportunity to identify common interests.

Recent development and expansion of the California Independent System Operator (CASIO) Energy Imbalance Market (EIM), and current market economics have renewed regional interest regarding the benefits of organized power markets. Organized markets offer the potential of reliable wholesale power and transmission at a lower cost. Accordingly, nearly 2/3 of the U.S. currently operates under some form of organized wholesale power and transmission market.

PNUCC recognizes that potential benefits of well-functioning markets include:

  1. Optimized economic dispatch of generation resources to provide energy and ancillary services
  2. Regional resource adequacy and capacity planning to ensure reliability
  3. Coordinated transmission planning
  4. Efficient operating reserves
  5. Efficient integration of low-carbon, variable energy resources, and distributed energy resources
  6. Efficient integrated coordinated services

The following PNUCC Principles provide a foundation for general, overarching policy discussions on topics that could potentially influence the structure of a market for the northwest. The intent is to increase awareness of the value of a market framework that incorporates principles under which the benefits of a well-functioning market would be gained.

PNUCC thinks a reliable, well-functioning organized market must:

  1. Ensure fair and transparent recovery of transmission costs for utilization of the transmission network
  2. Ensure independent, representative governance that accommodates participating load-serving entities and multistate and federal jurisdictions
  3. Ensure adequate resource and transmission planning standards for the benefit of all customers
  4. Ensure transparent price formation mechanisms that reflect bids from identified resources including ancillary services
Greenhouse Gas Policy Principles

Greenhouse Gas Policy:

  1. Is most effective when addressed at the broadest scale possible because greenhouse gas emissions are a global pollutant
  2. Should be designed to encourage effective emissions reduction across all sectors of the economy
  3. Should recognize the need for flexible, dispatchable resources and preserve a path for portfolio options to ensure system reliability
  4. Should recognize the region’s aggressive past accomplishments in energy efficiency and demand response, support ongoing investments, and acknowledge the value – including carbon savings – they will continue to provide
  5. Should support equitable economic stability and minimize the impact on customers
  6. Should recognize and harmonize new and existing legal and institutional requirements

Currently, more than 75% of the electric utilities generating resources in the northwest are carbon-free and that share will grow. Over the past decade, northwest utilities have continued their history of climate-friendly investments in carbon-free generation, energy efficiency, and demand response. This trend to lower emissions resources will accelerate as coal plants are retired and replaced with lower and zero-emitting resources. By 2030, the Western Electricity Coordinating Council (WECC) expects almost 15,000 megawatts of coal retirements. Greenhouse gas reductions are also being realized through improved technology and the market, as well as continued investments in energy efficiency and demand-side management programs.