Draft Plan Proposed Regional Conservation Targets for 2010 - 2014

1. Draft Plan Proposed Regional Conservation Targetsfor 2010 - 2014 June 10, 2009

2. Why We Need Guidance on Targets • Near term conservation targets determine medium term action plan on other generating resources • If significantly lower or higher targets are desired, portfolio model may need to be re-run to evaluate impact on other resources options

3. Proposed Targets 2010-2014

4. Alternative Targets • Staff received comment from some Conservation Resources Advisory Committee members that approximately 20 percent lower target should be set • This lower target would not include any of the “new” measures in the conservation assessment • Action Plan would include recommendation for minimum regional investment in deployment of these “new resources” – but not savings targets • Staff also was encouraged to evaluate higher conservation “ramp rate” constraints • Results showed some additional cost and risk reduction

5. Alternatives to Proposed Targets – Discretionary Conservation

6. Alternatives to Proposed Targets – Lost Opportunity Conservation

7. Cumulative Savings 2010 - 2014

8. Why These Targets • Fastest “Realistically Achievable” Acquisition Schedule • All portfolio sensitivity analysis supports these (or higher) targets • Historical achievements (200 aMW in 2007, ~235 aMW in 2008), equal to or above than near term targets • Proposed ramp rates based on “grounds up” measure-by-measure estimate of achievable savings • Region is better positioned today to achieve conservation than it has been at any point since the Act was past

9. Base Case Least Risk Plan Conservation “Build Out” Schedule Proposed Target

10. Portfolio Analysis Supports Accelerated Conservation Acquisition • Least-risk plans: • Model builds discretionary conservation at maximum pace for first 2400 MWa in all sensitivity cases • High premium for Lost-Opportunity in all sensitivity cases • $50/MWh premium over market (up to $120/MWh) • $40/MWh premium for high-pace discretionary sensitivity • Slower-paced sensitivity case shows large cost & risk penalty • Faster-paced sensitivity case shows smaller cost & risk reduction

11. Recent Utility Program Performance Equals Near Term Targets Prior Utility Program “Ramp Rates” Support Proposed Pace Recent Changes in State Codes & Federal Standards Support Medium Term Pace Market Driven Changes Show Increasing “Non-Programmatic” Improvements in Efficiency (based on survey of building characteristics) (e.g., the “Walmart Effect”) Are These Targets “Doable”?Rationale Based on Past Achievements

12. The Region Set An All Time Savings Record in 2007

13. Contribution of CFLs to Regional Conservation Savings

14. Utility Conservation Acquisitions Are Stable At Record Levels (“Mr. Toad’s Wild Ride”* May Have Finally Ended) See: http://en.wikipedia.org/wiki/Mr._Toad's_Wild_Ride

15. Are These Targets “Doable”?Rationale Based on Forecast “Achievability” • Proposed targets based on program “ramp rates” built up from measure-by-measure analysis • “Ramp Rate” Estimates Based On • Measure Characteristics • (e.g., new measures slower than measures in existing programs) • Implementation Strategies • (e.g. market transformation near-term ramps slower than “house-by-house” deployment) • Size & Cost • (e.g., lower cost measures deployed faster than higher cost measures) • Physical Availability of Equipment • (e.g., deployment of heat pump water heaters low for first five years because product is just entering market) • Training & Education Requirements • (e.g., savings based on “improved practices” deployed slower than “widget-to-widget” change outs)

16. Forecast AchievabilityMeasure-by-Measure Cumulative Sum of Ramp-Ups = 1270 aMW (~1270 MWa: 370 aMW LO + 900 aMW NLO) Maximum Annual Rates from Conservation Supply Curves: Retrofit at <$70/MWh and Lost-Opportunity at <$120/MWH

17. Forecast Achievability for New InitiativesMeasure-by-Measure Cumulative Sum of Ramp-Ups = ~340 aMW(130 aMW LO + 210 aMW NLO) Maximum Annual Rates from Conservation Supply Curves: Retrofit at <$70/MWh and Lost-Opportunity at <$120/MWH

18. Estimated Impact on “Regional Revenue Requirements” • Assumptions: • 2008 Regional Retail Electricity Sales Revenue = $11.4 billion • 2008 Conservation Investments in Retail Sales Revenue = ~ $300 million (2.6%) • Utility Share of New Conservation Cost = 65% • Lost-Opportunity Resources = $3.0 million/aMW • Discretionary Resources = $2.6 million/aMW

19. Impact on Regional “Revenue Requirement”

20. Estimated Cumulative Impact on Regional “Revenue Requirement” to Achieve Proposed Conservation Targets

21. The “Big Picture” • Through 2007 the region acquired 3600 aMW of conservation savings • This is equivalent to meeting all of the electricity needs of Idaho and Western Montana in 2008 • Acquiring 1200 aMW of conservation savings by 2014 • Could meet 50% regional load growth* • Is equivalent to adding the critical water output of three Bonneville Dams • Acquiring the ~5800 aMW of conservation savings by 2029 • Could meet 85% of regionally load growth* • This would keep most public utilities out of “Tier 2” for the next 20 years • Is equivalent to the critical water output of the seven largest hydroelectric projects in the PNW or meeting all of the 2008 electricity needs of the state of Oregon *Under medium load growth the region is forecast to grow by approximately 2350 aMW by 2014 and 6900 aMW over the next 20 years without any additional conservation.

22. Alternatives to Cope with “CFL Detox” • Adopt staff proposal of 1200 aMW Target for 2010 - 2014 • Alt 1 – Adopt staff proposal, but add savings from CFLs covered by federal standards to conservation potential in 2010-2011 (~20 aMW/yr) • Alt 2 – Same as Alt 2, but reduce 2010 – 2012 targets by 20 aMW/yr and move these savings to 2013 - 2014