20110816Letter re Avoided Cost Rates.pdf

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20" AUG '6 AM 10: 42
STATE OF IDAHO
OFFICE OF THE ATIORNEY GENERAL
LAWRENCE G, WASDEN
August 16, 2011
Avista Corporation
Michael Andrea
A vista Utilties
14 i i E. Mission
PO Box 3727
Spokane, VVA 99220-3727
Clint Kalich
Avista Utilities
i 4 i I E. Mission
PO Box 3727
Spokane, VVA 99220-3727
Rocky Mountain Power
Daniel Solander
Ted VVeston
PacifiCorp dba Rocky Mountain Power
One Utah Center
201 S. Main Street, Suite 2300
Salt Lake City, UT 84 i i i
Greg Duvall
Hui Shu
Laren Hale
PacifiCorp dba Rocky Mountain Power
825 NE Multnomah Street
Portland, OR 97232
Idaho Power Company
Donovan VV alker
Idaho Power Company
PO Box 70
Boise, ID 83707-007
Randy Allphin
Idaho Power Company
PO Box 70
Boise, ID 83707-0070
RE: Case No. GNR-E-ll-04
Pursuant to the Public Utility Regulatory Policies Act -of 1978 (PURP A) and the implementing
regulations of the Federal Energy Regulatory Commission (FERC), the Idaho Public Utilities
Commission (Commission) has approved a Surogate Avoided Resource (SAR) methodology for
calculation of the avoided cost rates paid to PURP A qualifying cogeneration and small power
production facilities (QFs) by Idaho Power Company, Avista and PacifiCorp. Avoided cost rates
are the purchase price paid to QFs for purchases of QF capacity and energy.
One of the key input variables in the computation of avoided cost rates is a long-term natural gas
price forecast. In accordance with the methodology approved in Order No. 29124, the medium
natural gas price forecast of the Northwest Power and Conservation Council (NPCC; Council) is
Contracts & Administrative Law Division, Idaho Public Utilties Commission
P,O, Box 83720, Boise. Idaho 83720-0074, Telephone: [phone], FAX: [phone], E-mail: IpucC1puc.state.id.us
Located at 472 West Washington St, Boise, Idaho 83702
August 16, 2011
Page 2
to be used as the basis for computing avoided cost rates. In Order No. 29124, the Commission
also found that the release of a new fuel price forecast by the Council or the Council's general
advisory committees automatically triggers a recalculation of the published avoided cost rates.
A new Council natural gas price forecast was approved on August 9, 2011. The forecast was
posted on the Council's website on August 12, 2011. The forecast amends Appendix A to the
Plan. A copy of the amended medium natural gas price forecast is attched. In accordance with
the approved methodology, east-side delivered prices are to be used for avoided cost
computations.
Commission Staff has recomputed avoided cost rates using the Council's most recent gas price
forecast. Accompanying this letter are sheets showing the results from recomputation of the
avoided cost rates using the new Council natural gas price forecast that was posted on August 12,
2011. If after reviewing the revised rates, you accept them as accurate please indicate your
approval by letter (or other fiing) directed to the Commission in the reserved case docket
numbers identified above. The case heading for the adjustment, Case No, GNR-E-11-04, wil
read as follows:
IN THE MATTER OF THE ADJUSTMENT OF AVOIDED COST RATES FOR
NEW PURPA CONTRACTS FOR AVISTA CORPORATION DBA AVISTA
UTILITIES, IDAHO POWER COMPANY, AND PACIFICORP DBA ROCKY
MOUNTAIN POWER.
Please fie your respective responses with the Commission on or prior to August 23, 2011.
Than you for your cooperation. Please feel free to contact me or Rick Sterling if you have any
questions.
Sincerely,~~
Kristine Sasser
Deputy Attorney General
Enclosures
L:GNR-E-II-04_ks_rs
AVISTA
AVOIDED COST RATES FOR FUELED PROJECTS
August 9, 2011
$/MWh
Eligibilty for these rates is limited to wind and solar projects 100 kW or smaller, and to non-wind and non-
solar projects smaller than 10 aMW
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2011 2012 2013 2014 2015 2016 YEAR RATES
1 22.26 22,60 22,94 23,28 23,63 23,99 2011 22,26
2 22,42 22,76 23,10 23,45 23,80 24,16 2012 22,60
3 22,58 22,92 23,26 23,61 23,97 24,33 2013 22,94
4 22,73 23,07 23,42 23,77 24,13 24,50 2014 23.28
5 22,88 23,23 23,58 23,93 24,29 24,66 2015 23,63
6 23,03 23,38 23,73 24,09 24,45 24,82 2016 23,99
7 23,18 23,53 23,88 24,24 24,61 24,98 2017 24,35
8 23,32 23,67 24,03 24,39 24,76 25,13 2018 24,71
9 23,46 23,81 24,17 24,53 24,90 25,28 2019 25,09
10 23.59 23.95 24.31 24.67 25.05 25,42 2020 25,46
11 23.72 24,08 24,44 24.81 25.19 25.57 2021 25.85
12 23.85 24.21 24.58 24.95 25.32 25.70 2022 26.24
13 23,98 24.34 24.70 25.08 25,46 25.84 2023 26.63
14 24,10 24,46 24.83 25.20 25.58 25.97 2024 27.04
15 24,22 24.58 24.95 25.33 25.71 26.10 2025 27,45
16 24.33 24.70 25.07 25,45 25.83 26.22 2026 27.86
17 24,44 24.81 25.19 25.56 25.95 26.34 2027 28.28
18 24.55 24.92 25.30 25.68 26.07 26,46 2028 28.71
19 24.66 25.03 25,40 25.79 26.18 26.57 2029 29.14
20 24.76 25.13 25.51 25.89 26.28 26.68 2030 29.58
2031 30.03
2032 30,49
2033 30.95
2034 31,42
2035 31.89
2036 32.38
EFFECTIVE DATE ADJUSTABLE COMPONENT
8/9/2011 29.33
The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables
above.
Example 1. A 20-year levelized contract with a 2011 on-line date would receive the following rates:
Years
1
2-20
Rate
24.76 + 29.33
24.76 + Adjustable component in each year
Example 2. A 4-year non-Ievelized contract with a 2011 on-line date would receive the following rates:
Years
1
2
3
4
Rate
22.26 + 29.33
22.60 + Adjustable component in year 2012
22.94 + Adjustable component in year 2013
23.28 + Adjustable component in year 2014
Note: The rates shown in this table have been computed using the Northwest Power and Conservation Council's August 9, 2011 Update
to the Fuel Price Forecast contained in its Sixth Power Plan approved on February 10, 2010. See Table 2, page 5, East-Side Delivered
prices, (Reference Order No. 30480).
AVISTA
AVOIDED COST RATES FOR NON-FUELED PROJECTS
August 9,2011
$/MWh
Eligibilty for these rates is limited to wind and solar project 100 kW or smaller, and to non-wind and non-
solar projects smaller than 10 aMW
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2011 2012 2013 2014 2015 2016 YEAR RATES
1 51.59 53,47 55.18 56.86 58.67 60.61 2011 51.59
2 52.49 54.29 55.99 57.73 59.60 61.60 2012 53,47
3 53.32 55.08 56.81 58.61 60.54 62.64 2013 55.18
4 54.10 55.87 57.65 59.51 61.52 63.65 2014 56.86
5 54.87 56.67 58.50 60,43 62,49 64.66 2015 58.67
6 55.64 57,48 59.37 61,35 63,44 65.66 2016 60.61
7 56,42 58.30 60.24 62,26 64,40 66.66 2017 62.68
8 57.21 59.13 61.10 63,17 65.35 67,65 2018 64.98
9 57.99 59.95 61.96 64.07 66.30 68.64 2019 67.26
10 58.77 60.77 62.82 64.97 67.24 69.62 2020 69.60
11 59.55 61.58 63.67 65.86 68.17 70.59 2021 72.11
12 60.33 62.39 64.52 66.75 69.09 71.55 2022 74.77
13 61.09 63.19 65.36 67.62 70.01 7251 2023 77,43
14 61.85 63.99 66.19 68.49 70.91 73.45 2024 80.25
15 62.61 64.77 67.01 69.35 71.80 74.38 2025 83.25
16 63.35 65.55 67.82 70.19 72.69 75.30 2026 86.24
17 64.09 66.32 68.62 71.03 73.56 76,21 2027 89,42
18 64.81 67.08 69,41 71.86 74,42 7711 2028 92.80
19 65.53 67.82 70.19 72.67 75.27 78.00 2029 96.27
20 66.24 68.56 70.96 73,47 76.11 78.88 2030 99.85
2031 103.67
2032 107.63
2033 111.75
2034 116.06
2035 120.56
2036 125.25
Note: The rates shown in this table have been computed using the Northwest Power and Conservation Council's August 9, 2011 Update
to the Fuel Price Forecast contained in its Sixth Power Plan approved on February 10, 2010. See Table 2, page 5, East-Side Delivered
prices. (Reference Order No. 30480).
IDAHO POWER COMPANY
AVOIDED COST RATES FOR FUELED PROJECTS
August 9, 2011
$/MWh
Eligibilty for these rates is limited to wind and solar projects 100 kW or smaller, and to non-wind and non-
solar projects smaller than 10 aMW
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2011 2012 2013 2014 2015 2016 YEAR RATES
1 21.99 22.32 22.66 23.00 23.35 23.70 2011 21.99
2 22.15 22,48 22.82 23.17 23.51 23.87 2012 22.32
3 22.31 22.64 22.98 23.33 23.68 24.04 2013 22.66
4 22,46 22.80 23.14 23,49 23.84 24.20 2014 23.00
5 22.61 22.95 23.30 23.65 24.00 24.37 2015 23.35
6 22.76 23.10 23,45 23.80 24.16 24.53 2016 23.70
7 22.90 23.25 23.60 23.95 24.31 24.68 2017 24.06
8 23.04 23.39 23.74 24.10 24,47 24.83 2018 24,42
9 23.18 23.53 23.89 24.25 24.61 24.98 2019 24.79
10 23.32 23.67 24.03 24.39 24.76 25.13 2020 25.16
11 23,45 23.80 24.16 24.53 24.90 25.27 2021 25.54
12 23.58 23.93 24.30 24.66 25.03 25,41 2022 25.93
13 23.71 24.06 24,43 24.79 25.17 25.55 2023 26.32
14 23.83 24.19 24.55 24.92 25.30 25.68 2024 26.71
15 23.95 24.31 24.67 25.05 25,43 25.81 2025 27.12
16 24.06 24,43 24.79 25.17 25.55 25.93 2026 27.53
17 24.18 24.54 24.91 25.29 25.67 26.06 2027 27.94
18 24.29 24.65 25.02 25,40 25.79 26.18 2028 28.37
19 24.39 24.76 25.14 25.51 25.90 26.29 2029 28.80
20 24.50 24.87 25.24 25.62 26.01 26,40 2030 29.23
2031 29.68
2032 30.13
2033 30.58
2034 31.05
2035 31.52
2036 32.00
EFFECTIVE DATE ADJUSTABLE COMPONENT
8/9/2011 29.33
Example 1. A 20-year levelized contract with a 2011 on-line date would receive the following rates:
The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables above.
Years
1
2-20
Rate
24.50 + 29.33
24.50 + Adjustable component in each year
Example 2. A 4-year non-Ievelized contract with a 2011 on-line date would receive the following rates:
Years
1
2
3
4
Rate
21.99 + 29.33
22.32 + Adjustable component in year 2012
22.66 + Adjustable component in year 2013
23.00 + Adjustable component in year 2014
Note: The rates shown in this table have been computed using the Northwest Power and Conservation Council's August 9, 2011 Update
to the Fuel Price Forecast contained in its Sixth Power Plan approved on February 10, 2010. See Table 2, page 5, East-Side Delivered
prices. (Reference Order No. 30480). These rates also reflect a change in Idaho Power's weighted cost of capital as a result of Order
No. 30722 in the Company's 2008 general rate case.
IDAHO POWER COMPANY
AVOIDED COST RATES FOR NON-FUELED PROJECTS
August 9, 2011
$/MWh
Eligibilty for these rates is limited to wind and solar projects 100 kW or smaller, and to non-wind and non-solar projects smaller than 10 aMW .
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2011 2012 2013 2014 2015 2016 YEAR RATES
1 51.32 53.20 54.91 56.58 58.39 60.32 2011 51.32
2 52.22 54.02 55.71 57,45 59.31 61.31 2012 53.20
3 53.05 54.81 56.53 58.33 60.26 62.35 2013 54.91
4 53.83 55.60 57.37 59.23 61.24 63.37 2014 56.58
5 54.60 56,40 58.22 60.16 62.21 64.38 2015 58.39
6 55.38 57.21 59.10 61.08 63.17 65.38 2016 60.32
7 56.16 58.05 59.98 61,99 64.13 66.39 2017 62.39
8 56.96 58.88 60.85 62.91 65.10 67,40 2018 64.68
9 57.75 59.71 61.72 63.83 66.05 68.39 2019 66.96
10 58.54 60.53 62.59 64.74 67.00 69.39 2020 69.30
11 59.33 61.36 63,45 65.64 67.95 70.37 2021 71.80
12 60.12 62.18 64.31 66.54 68.89 71.34 2022 74,46
13 60.90 63.00 65.17 67,43 69.81 72.32 2023 77.11
14 61.68 63.81 66.01 68.32 70.74 73.28 2024 79.93
15 62.45 64.61 66.85 69.19 71.65 74.23 2025 82.92
16 63.21 65,41 67.68 70.06 72.56 75.18 2026 85.91
17 63.96 66.20 68.51 70.92 73.45 76.11 2027 89.09
18 64.71 66.98 69.32 71.77 74.34 7704 2028 92,46
19 65,45 67.75 70.12 72.61 75.22 7795 2029 95.93
20 66.18 68.51 70.92 73,44 76.08 78.86 2030 99.50
2031 103.32
2032 107.27
2033 111.39
2034 115.69
2035 120.18
2036 124.87
Note: The rates shown in this table have been computed using the Northwest Power and Conservation Council's August 9, 2011 Update
to the Fuel Price Forecast contained in its Sixth Power Plan approved on February 10, 2010. See Table 2, page 5, East-Side Delivered
prices. (Reference Order No. 30480). These rates also reflect a change in Idaho Power's weighted cost of capital as a result of Order
No. 30722 in the Company's 2008 general rate case.
PACIFICORP
AVOIDED COST RATES FOR FUELED PROJECTS
August 9, 2011
$/MWh
Eligibilty for these rates is limited to wind and solar projects 100 kW or smaller, and to non-wind and non-
solar projects smaller than 10 aMW
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2011 2012 2013 2014 2015 2016 YEAR RATES
1 21.55 21.88 22.21 22.54 22.88 23.23 2011 21.55
2 21.71 22.04 22.37 22.71 23.05 23.40 2012 21.88
3 21.86 22.19 22.53 22.87 23.21 23.56 2013 22.21
4 22.01 22.35 22.68 23.03 23.37 23.73 2014 22.54
5 22.16 22.50 22.84 23.18 23.53 23.89 2015 22.88
6 22.31 22.64 22.99 23.33 23.69 24.04 2016 23.23
7 22.45 22.79 23.13 23.48 23.84 24.20 2017 23.58
8 22.59 22.93 23.28 23.63 23.99 24.35 2018 23.94
9 22.73 23.07 23.42 23.77 24.13 24.50 2019 24.30
10 22.86 23,21 23.56 23.91 24.27 24.64 2020 24.66
11 22.99 23.34 23.69 24.05 24.41 24.78 2021 25.04
12 23.12 23.47 23.82 24.18 24.55 24.92 2022 25.42
13 23.24 23.60 23.95 24.31 24.68 25.05 2023 25.80
14 23.37 23.72 24.08 24.44 24.81 25.19 2024 26.19
15 23.49 23.84 24.20 24.57 24.94 25.31 2025 26.59
16 23.60 23.96 24.32 24.69 25.06 25.44 2026 26.99
17 23.71 24.07 24.44 24.80 25.18 25.56 2027 27.40
18 23.82 24.18 24.55 24.92 25.30 25.68 2028 27.81
19 23.93 24.29 24.66 25.03 25.41 25.79 2029 28.24
20 24.03 24.40 24.77 25.14 25.52 25.91 2030 28.66
2031 29.10
2032 29.54
2033 29.99
2034 30.44
2035 30.91
2036 31.38
EFFECTIVE DATE ADJUSTABLE COMPONENT
8/9/2011 29.33
The total avoided cost rate in each year is the sum of the adjustable component and the fixed component from either of the tables above.
Example 1. A 20-year levelized contract with a 2011 on-line date would receive the following rates:
Years
1
2-20
Rate
24.03 + 29.33
24.03 + Adjustable component in each year
Example 2. A 4-year non-Ievelized contract with a 2011 on-line date would receive the following rates:
Years
1
2
3
4
Rate
21.55 + 29.33
21.88 + Adjustable component in year 2012
22.21 + Adjustable component in year 2013
22.54 + Adjustable component in year 2014
Note: (1) The rates shown in this table have been computed using the Northwest Power and Conservation Council's August 9, 2011
Update to the Fuel Price Forecast contained in its Sixth Power Plan approved on February 10, 2010. See Table 2, page 5, East-Side
Delivered prices. (Reference Order No. 30480). (2) The rates shown in this table have been computed using the weighted average cost
of capital from PacifiCorp's most recent general rate case. (See Order No. 32196).
PACIFICORP
AVOIDED COST RATES FOR NON.FUELED PROJECTS
August 9, 2011
$/MWh
Eligibilty for these rates is limited to wind and solar projects 100 kW or smaller, and to non-wind and non-
solar projects smaller than 10 aMW
ON-LINE YEAR
CONTRACT NON-LEVELIZED
2011 2012 2013 2014 2015 2016 YEAR RATES
1 50.88 52.76 54.46 56.13 57.92 59.85 2011 50.88
2 51.78 53.57 55.26 56.99 58.85 60.84 2012 52.76
3 52.61 54.36 56.08 57.87 59.79 61.88 2013 54.46
4 53.39 55.15 56.92 58.77 60.77 62.89 2014 56.13
5 54.16 55.95 57.77 59.69 61.74 63.90 2015 57.92
6 54.94 56.77 58.65 60.62 62.71 64.91 2016 59.85
7 55.72 57.60 59.52 61.54 63.67 65.92 2017 61.91
8 56.52 58.43 60.40 62.45 64.64 66.93 2018 64.20
9 57.32 59.26 61.27 63.38 65.59 67.93 2019 66.47
10 58.11 60.10 62.15 64.29 66.55 68.93 2020 68.80
11 58.90 60.93 63.01 65.20 67.50 69.92 2021 71.30
12 59.70 61.76 63.88 66.10 68.44 70.90 2022 73.95
13 60.48 62.58 64.74 67.00 69.38 71.88 2023 76.59
14 61.27 63.40 65.59 67.89 70.31 72.85 2024 79.40
15 62.04 64.21 66.44 68.78 71.24 73.81 2025 82.39
16 62.82 65.01 67.28 69.66 72.15 74.77 2026 85.37
17 63.58 65.81 68.12 70.53 73.06 75.71 2027 88.54
18 64.34 66.60 68.94 71.39 73.96 76.65 2028 91.90
19 65.09 67.38 69.76 72.24 74.85 7758 2029 95.36
20 65.83 68.16 70.57 73.09 75.73 78.50 2030 98.93
2031 102.74
2032 106.68
2033 110.79
2034 115.09
2035 119.57
2036 124.25
Note: (1) The rates shown in this table have been computed using the Northwest Power and Conservation Council's August 9, 2011
Update to the Fuel Price Forecast contained in its Sixth Power Plan approved on February 10, 2010. See Table 2, page 5, East-Side
Delivered prices. (Reference Order No. 30480). (2) The rates shown in this table have been computed using the weighted average cost
of capital from PacifiCorp's most recent general rate case. (See Order No. 32196).
W. Bil Booth
Idaho
Northwest
Power and
Conservation
Council
Joan M. DukesVice-Chair
Oregon
Bruce A. Measure
Chair
Montana
Rhonda Whiting
Montana
Bil Bradbury
Oregon
Tom Karier
Washington
James A. Yost
Idaho
Phil Rockefeller
Washington
August 10th, 2011
Update to the Council's Forecast of Fuel Prices
The Council monitors its power planning assumptions on a regular basis to identify any
significant changes that might affect its Sixth Power Plan, and the action plan also calls for a
biennial monitoring report (MON-I) and a mid-term check on conservation savings (CONS-16).
This report reflects the proposed changes in the Council's long-term fuel price forecast. It is often
difficult to distinguish short-term variations in fuel prices, which are expected and modeled in the
Council's planning, from significant long-term changes that can fundamentally alter the whole
range of future expectations. This rarely happens. However, changes in the outlook for natural
gas supplies in the last year appear to signal a fundamental shift in expectations about future
natural gas supplies. Cost-effective technologies to obtain natural gas trapped in shale formations
has changed the view of natural gas supplies from declining and constrained (as forecast in the
Sixth Power Plan) to plentiful and adequate for many decades to come. Although the potential of
shale gas was identified in the plan, the expected cost of developing it has been reduced through
technological breakthroughs so that future costs and prices are now lower.
After working with the Natural Gas Advisory Committee, the Council is proposing a downward
revision of our range of fuel price forecasts. A range of forecasts recognizes continued
uncertinty about developing shale gas--its costs and environmental effects--as well as the speed
of the economic recovery.
Natural Gas Price Forecast Revision
The range of natural gas prices is significantly narrower and lower in the near term compared to
the Sixth Power Plan's forecast. The rapid development of shale gas has created a glut of natural
gas that is likely to last for several years and depress prices. By the end of the forecast horizon in
2030, the forecast reflects a range of possible long-term equilibrium natural gas prices. The
revised medium forecast is about equal to the medium-low forecast in the Sixth Plan at $6.44 in
2010 constant dollars. The revised high forecast is a little above the medium-high, and the low
revised forecast is a little less than $1 below the low case.
The range of forecasts reflects the different views of supply and demand for natural gas. The high
price forecast might be consistent, for example, with a rapid economic recovery in the U.S. and
worldwide, environmental restrctions on shale gas development, aggressive regulation ,Of carbon
emissions leading to more substitution of natural gas electrcity generation for coal, increased use
of natural gas vehicles, increased demand for exports of LNG from Canada and United States, and
increased demand from gas-to-1iquid projects. In contrast, the low forecast would be consistent
85 i S. W. Sixth Avenue, Suite 1100
Portland, Oregon 97204.1348
www,nwcounciL.org
Steve Crow
Executive Director
503.222.5161
800.452-5161
Fax: [phone]
with conditions that limit the demand for natural gas and promote the rapid development of
supply.
Implications of Revised Natural Gas Price Forecasts
The likely effect of the revised fuel price forecast on a revised power plan reduces the forecast of
electrcity prices, and to some degree, changes the inter-fuel competition between natural gas and
electrcity. The Council doesn't expect significant effects on the resource strategy from this
change, but that wil be tested at mid-term. Natural gas generation is already the fall-back
resource in the plan, renewables are limited by RPS requirements, and efficiency was constrained
by the assumed rates of penetration and development.
The following figures compare the Sixth Power Plan's forecast with the revised forecast. The
revised forecast reflects lower natural gas prices.
Comparison of Revised and Sixth Plan Natural Gas Price Forecasts
Wellhead Price (constant 2010 dollars per mmBTU)
12.00
10.00
,¡8.00lDi
¡;"-e 6.00
.l0Q..
l\4.00
-Low
-Medium Low
-Medium
-Medium High-Hig""
.. ...... 6planLow
- , ~&PMedLow
-- -- &PMedium
--- 6P Med. High
...... 6PHigh
2.00
0.00
ri~..ç:ri~..toriÇ)""''~''''r¡~''l; "'()~t¡Ç)""lòii()~ riÇ)..'b"'Ç)..O",.Ç)"'()"'Ç)ri..~"''' riÇ)rV ",Ç)~ r¡()rt ~",'ò~rC ~ri'ò~~ "'()~()
Oil Price Forecast Revision
The range of world oil price forecasts has not been revised as significantly as natural gas prices.
In spite of the changes in natural gas supply and prices, oil prices have remained high, causing a
significant disconnection between oil and natural gas prices. Although the Council assumed that
natural gas prices would remain below oil prices on a Btu basis, the gap has widened and the
proposed revision maintains the wider gap in the future, though reduced somewhat from current
levels.
World oil prices have little effect on the Council's power plan because oil has, to a large degree,
been relegated to a transportation fuel in the U.S. The primary effect might be on electrc vehicle
development, but that is largely determined by other factors relating to technology, consumer
acceptance, and infrastrcture development.
2
Comparison of Revised and Sixth Plan Oil Price Forecasts
Refiners Acquisition Cost $2010/barrel
140
120
11
100
..II
:;80..
l!.l 600c~""..40
20
-Proposed Low
- Proposed Mod Low
-Proposed Medium
-Proposed Mod. High
-Proposed High
~,~.,. 6th Plan Low
. .. . . 6th Plan M ed Low
. .... 6th Plan Med
.. .... 6th Plan Mad High
. . 'l 6th Plan High
c: _ N c" .. II CD .. C/ CD 0 _ N M .. II CD .. C/ CD 0__________NNNNNNNNNNM~ 2 22222~~22222222 222 2
Coal Price Forecast Revision
Like oil, coal prices have relatively little effect on the Council's power plan. They can affect
electrcity market prices in relatively few hours and they affect the operating cost of existing coal-
fired power plants. However, new coal development is pre-empted in much of the region and
new plants do not appear in the Council's plan.
The primary change in the forecast is incorporating 2010 actual prices and narrowing the near-
term range. The long-term forecasts for 2030 are unchanged. Unlike the natural gas price
forecasts, neither the oil nor the coal price forecasts are used extensively in the region.
Comparison of Revised and Sixth Plan Coal Price Forecasts
Powder River Basin $2010/mmbtu
0.80
1.20
~
~ 1.00
::
¡¡
~
~I
~
~
~
j
- Proposed Lo'W
- Proposed Med I01N
-= Proposed Medium
- Proposed Med high
"" Proposed High
--- 6th Plan Lo'W
~._-, 6th Plan Med IO\N
. u.". 6th Plan Medium
6th Plan Med high
....,' 6th Plan High
=- --=~~=----------- --------=------~~------ -- -- ":.:~:.::::::'::'.:::,:'.:'.~.~"'._":..":..':.:::::::.::.::..:';-_':__":..':.::::.:::..0.60
0.40
0.20
0.00 ~~~~~~~~æ~~~~~~~~§~~~
3
Range of Price Forecast
The following tables present the numeric values for the revised natural gas price forecasts, as well
as the refiners' acquisition cost of oil and minemouth coal prices for Powder River Basin coaL.
The natural gas prices are shown for the wellhead, as well as at various hubs and delivery points.
The natural gas prices at wellhead under the medium scenario are shown in constant 2010 dollars,
as well as in nominal dollars.
Table 1: Proposed range of natural gas price forecast -wellhead prices in constant 2010 dollars.
Table 2: Natural gas prices delivered at various hubs and Northwest generators- medium forecast
Table 3: Wellhead price of natural gas in nominal dollars
Table 4: Henr Hub delivered price of natural gas in nominal dollars
Table 5: Refiners' cost of acquisition for oil in constant 2010 dollars
Table 6: Cost of Powder River Basin Coal in constant 2010 dollars
Table 1: Proposed Prices for Natural Gas Lower 48
State Wellhead (2010$/mmBtu)
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Table 2: Natural Gas Prices at Key Hubs and Northwest Generators
20 1 O$/mmBtu
Medium Case
U.S.Henry Sumas West-Side East-Side
Year Wellhead Hub AECO Price Delivered Delivered
2011 4.13 4.34 3.56 3.90 4.54 4.05
2012 4.21 4.43 3.65 3.97 4.63 4.18
2013 4.30 4.51 3.74 4.05 4.71 4.28
2014 4.38 4.60 3.84 4.13 4.79 4.37
2016 4.56 4.79 4.03 4.30 4.97 4.58
2017 4.67 4.91 4.15 4.41 5.08 4.70
2018 4.79 5.03 4.28 4.52 5.19 4.84
2019 4.91 5.16 4.41 4.63 5.31 4.97
2021 5.16 5.42 4.68 4.87 5.55 5.24
2022 5.29 5.56 4.82 4.99 5.68 5.39
2023 5.42 5.69 4.96 5.11 5.81 5.53
2024 5.56 5.84 5.11 5.24 5.94 5.68
2026 5.84 6.13 5.41 5.51 6.21 5.99
2027 5.98 6.29 5.57 5.64 6.35 6.15
2028 6.13 6.44 5.73 5.79 6.50 6.32
2029 6.29 6.60 5.90 5.93 6.65 6.49
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Table 3: Wellhead Price of Natural Gas Nominal Dollars
Proposed Update August 2011 Values
2011 4.43
2012 4.48
2013 4.53
2014 4.59
4.47
4.57
4.67
4.77
4.54
4.71
4.88
5.07
4.60
4.85
5.10
5.37
4.63
4.89
5.18
5.48
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Table 4: Henry Hub Price Forecasts (Nominal Dollars)
Proposed Update August 2011 values
2011 4.65 4.69 4.76 4.83 4.86
2012 4.70 4.80 4.94 5.09 5.14
2013 4.76 4.90 5.13 5.36 5.43
2014 4.82 5.01 5.32 5.64 5.75
2016 4.93 5.24 5.73 6.22 6.50
2017 4.99 5.38 5.97 6.52 6.90
2018 5.05 5.53 6.22 6.83 7.34
2019 5.11 5.68 6.49 7.15 7.80
2021 5.34 5.99 7.05 7.85 8.81
2022 5.46 6.16 7.35 8.22 9.37
2023 5.58 6.33 7.67 8.62 9.96
2024 5.71 6.50 7.99 9.03 10.58
2026 5.96 6.86 8.69 9.91 11.95
2027 6.10 7.05 9.06 10.38 12.71
2028 6.23 7.24 9.44 10.87 13.51
2029 6.37 7.44 9.84 11.39 14.35
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Table 5: Refiners' Acquisition Cost of Oil ($2010IBarrel)
2011 75 76 77 78 78
2012 74 75 78 80 81
2013 73 75 78 82 85
2014 72 74 79 84 88
2016 69 73 81 87 93
2017 67 72 81 88 95
2018 66 72 83 90 97
2019 65 72 84 91 99
2021 62 71 86 94 104
2022 61 70 88 96 107
2023 60 70 89 98 110
2024 58 70 90 100 112
2026 56 68 92 104 119
2027 55 68 93 106 122
2028 54 67 94 108 125
2029 53 66 95 11 1 129
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Table 6: Powder River Basin Coal Prices $2010/mmBTU
2011 0.68 0.69 0.70 0.70 0.72
2012 0.67 0.69 0.71 0.72 0.76
2013 0.66 0.69 0.72 0.74 0.79
2014 0.65 0.69 0.73 0.76 0.83
2016 0.63 0.69 0.74 0.78 0.89
2017 0.62 0.69 0.74 0.79 0.91
2018 0.61 0.68 0.74 0.80 0.92
2019 0.60 0.68 0.74 0.81 0.94
2021 0.58 0.67 0.75 0.82 0.98
2022 0.57 0.66 0.75 0.83 0.99
2023 0.56 0.65 0.75 0.84 1.01
2024 0.56 0.65 0.75 0.85 1.03
2026 0.54 0.64 0.75 0.87 1.06
2027 0.53 0.63 0.75 0.88 1.08
2028 0.52 0.63 0.75 0.88 1.0
2029 0.52 0.62 0.76 0.89 1. 1
* Subject to fuer updates
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