NWPP taps Southwest Power Pool to design its resource adequacy program

by Peter Maloney
APPA News 
August 12, 2020

Northwest Power Pool (NWPP) has hired Southwest Power Pool (SPP) to develop a resource adequacy program for a set of 18 member utilities.

Public power participants in the RA program are the Bonneville Power Administration, the Balancing Area of Northern California (with its member, the Sacramento Municipal Utility District),

Chelan Public Utility District (PUD), Douglas PUD, Eugene Water and Electric Board, Grant PUD, Seattle City Light, Snohomish PUD, Tacoma Power and Turlock Irrigation District.

“Over the last few years, there have been several forecasts indicating shortfalls in resources relative to peak load in the 2020-2025 timeframe,” Frank Afranji, NWPP president, said via email. “These forecasts have created a strong incentive for utilities to work together to identify the regional resource adequacy needs.”

Over 5,000 megawatts of gas-fired generation were built in the Northwest between 2001 and 2010, but that pace has slowed recently. Only four gas plants, totaling 1,100 MW, have come online since 2011, according to an October 2019 NWPP report.

In recent years, many utilities in the region switched from building new generating resources to purchasing power through the wholesale market, and renewable development has been increasing. As of 2019, the Northwest had 450 MW of grid-scale solar power resources and 9,400 MW of wind power. Meanwhile, nearly 2,000 MW of coal-fired generating capacity in the Northwest is expected to retire by 2023 with another 1,500 MW expected to retire by 2029, according to the report.

Coal retirements combined with load growth could lead to capacity shortages as soon as this year and, by the mid-2020s, the region could face a capacity deficit of thousands of megawatts, leading to the risk of “extraordinary price volatility” and “unacceptable loss-of-load,” the report says.

The scope of SPP’s work for NWPP is expected to last through 2020 and will span the design phase of resource adequacy program development.

SPP will work with the NWPP and its participating member utilities to expand and refine the preliminary program design into a comprehensive resource adequacy program.

When the resource adequacy program is fully designed, NWPP members plan to conduct a competitive solicitation for a program administrator to implement and run the resource adequacy program.

“Southwest Power Pool has direct experience developing and running a resource adequacy program across multiple states and the skill set to help us determine key program design features to achieve the reliability objectives of the RA program,” Afranji said in a statement. “The program we are developing will be available to participants with different needs and interests across a wide swath of the West and we believe SPP’s multi-state RA program experience will help us develop a program that provides benefits for all participants as well as the region.”

The resource adequacy program would be voluntary to join, but once an entity has joined, they are obligated to fulfill the commitments under the program, Afranji said.

“Enforcement under the program is a design element that has not yet been defined,” he added.