Wholesale Electricity Price and Retail Requirements, and Natural Gas Price Forecasts Michael Schilmoeller Power Committee Thursday January 8, 2009 Overview Wholesale electricity prices Energy requirements Natural gas price 2 Page 1
Current Electricity Price Forecast Interim, created Monday 1/5/2009 PNW prices east of the Cascades Average hydrogeneration conditions Most recent electricity requirements forecast Most recent (11/28/2008) natural gas price forecast To be updated: CO2 penalty assumptions RPS resource development assumptions cost and availability of new resources 3 Current Electricity Price Forecast 10 9 8 7 6 2006$/MWh 5 4 3 2 1 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Source: chart MONTHLY PRICES, wkb AO_6P_11112008_ABL_HD MONTHLY POWER PRICE FORECAST.XLS 4 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Jan-25 On-peak Off-peak Jan-26 Jan-27 Jan-28 Jan-29 Jan-30 Page 2
Current Electricity Price Forecast 10 9 8 7 On-peak Off-peak 6 2006$/MWh 5 4 3 2 1 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Source: chart MONTHLY PRICES2, wkb AO_6P_11112008_ABL_HD MONTHLY POWER PRICE FORECAST.XLS 5 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Nov-11 Current Conditions (ICE) 10 9 8 On-peak Off-peak 7 6 2006$/MWh 5 4 3 2 1 Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Source: chart Chart 1, wkb ICE MONTHLY AVERAGE 2005-2008.XLS 6 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Page 3
Current Electricity Price Forecast On- and Off-Peak Average 10 9 8 7 6 5 4 3 2 1 Sep-12 Sep-13 Sep-15 Sep-16 Sep-17 Sep-18 Sep-20 Sep-21 Sep-22 Sep-23 Sep-25 Sep-26 Sep-27 Sep-28 $2006/MWh Source: wks Electricity Price Futures, wkb Illustrations and graphs from 7 Current Electricity Price Futures 40 35 30 $2006/MWh 25 20 15 10 5 Sep-12 Sep-13 Sep-15 Sep-16 Sep-17 Sep-18 Sep-20 Sep-21 Sep-22 Sep-23 Sep-25 Sep-26 Sep-27 Sep-28 Source: wks Electricity Price Futures, wkb Illustrations and graphs from 8 Page 4
Deciles for Electricity Price Electricity $2006/MWh 45 40 35 30 25 20 15 10 5 2 3 4 6 7 8 input 2011 2012 2013 2014 2016 2017 2018 2019 2021 2022 2023 2024 2026 2027 2028 Source: wks EP Deciles, wkb Illustrations and graphs from L805 after extraction.xls 9 Close-Up on Deciles Electricity $2006/MWh 10 9 8 7 6 5 4 3 2 1 2011 2012 2013 2014 2016 2017 2018 2019 2021 2022 2023 2024 2026 2027 2028 2 3 4 6 7 8 input Source: wks EP Deciles, wkb Illustrations and graphs from L805 after extraction.xls 10 Page 5
Overview Wholesale electricity prices Energy requirements Natural gas price 11 Current Frozen Efficiency Load Forecast Regional loads without the aluminum smelters, i.e., Non-DSI loads Total requirements, including those for system energy losses, i.e., bus bar loads Loads in the absence of any customer response to market prices or to new conservation program availability or technology, i.e., frozen efficiency loads Include, however, conservation due to legislated programs and national appliance standards in place at the beginning of the study. 12 Page 6
Current Frozen Efficiency Load Forecast 46000 41000 36000 MWa 31000 26000 21000 16000 Sep-12 Sep-13 Sep-15 Sep-16 Sep-17 Sep-18 Sep-20 Sep-21 Sep-22 Sep-23 Sep-25 Sep-26 Sep-27 Sep-28 Source: wks Load Deciles, wkb Illustrations and graphs from 13 Applying the Fifth Plan s s Range Futures 4600 4100 3600 MWa 3100 2600 2100 1600 Sep-12 Sep-13 Sep-15 Sep-16 Sep-17 Sep-18 Sep-20 Sep-21 Sep-22 Sep-23 Sep-25 Sep-26 Sep-27 Sep-28 Source: wks Load Futures, wkb Illustrations and graphs from 14 Page 7
Distribution in Deciles Non-DSI Energy Requirements MWa 46000 41000 36000 31000 26000 21000 16000 Sep-12 Sep-13 Sep-15 Sep-16 Sep-17 Sep-18 Sep-20 Sep-21 Sep-22 Sep-23 Sep-25 Sep-26 Sep-27 Sep-28 2 3 4 6 7 8 Source: wks Load Deciles, wkb Illustrations and graphs from 15 Annualized for Comparison 46000 41000 36000 31000 26000 21000 2 2 3 3 4 4 6 6 7 7 8 8 original benchmark 16000 2011 2012 2012 2013 2014 2014 2016 2016 2017 2018 2018 2019 2021 2022 2022 2023 2024 2024 2026 2026 2027 2028 2028 Source: wks Load Deciles, wkb Illustrations and graphs from 16 Page 8
Comparison with Fifth Plan 40000 Average Megawatts 35000 30000 25000 20000 5th Plan Adjusted Non-DSI Load Range 15000 10000 1995 2000 2005 2030 Source: Figure P-35, Appendix P, NWPCC Fifth Power Plan 17 Comparison with Fifth Plan Council Load Forecast and Portfolio Model Range 40000 35000 5th Plan Adjusted Non-DSI Load Range Portfolio Model Non-DSI Load Range Average Megawatts 30000 25000 20000 15000 10000 1995 2000 2005 2030 Hydro Operating Year Source: Figure P-34, Appendix P, NWPCC Fifth Power Plan 18 Page 9
Overview Wholesale electricity prices Energy requirements Natural gas price 19 Current Forecast Latest Draft Natural Gas Price Forecast (developed 11/21/2008) Medium case Variable price component only Fully allocated price is about $0.50/MMBTU higher PNW price west of the Cascades ( Westside price ) Eastside prices forecast to remain about $0.60/MMBTU lower 20 Page 10
Current Forecast 9.00 8.50 8.00 7.50 7.00 6.50 6.00 Sep-12 Sep-13 Sep-15 Sep-16 Sep-17 Sep-18 Sep-20 Sep-21 Sep-22 Sep-23 Sep-25 Sep-26 Sep-27 Sep-28 $2006/MMBTU Source: wks NGP deciles, wkb Illustrations and graphs from 21 Futures for Natural Gas Prices 2 18.00 16.00 14.00 $2206/MMBTU 12.00 1 8.00 6.00 4.00 2.00 Sep-12 Sep-13 Sep-15 Sep-16 Sep-17 Sep-18 Sep-20 Sep-21 Sep-22 Sep-23 Sep-25 Sep-26 Sep-27 Sep-28 Source: wks NGP futures, wkb Illustrations and graphs from 22 Page 11
Natural Gas Price Deciles 6 $2006/MMBTU 5 4 3 2 1 2 3 4 6 7 8 Mean input Dec-10 Mar-12 Jun-13 Dec-15 Mar-17 Jun-18 Dec-20 Mar-22 Jun-23 Dec-25 Mar-27 Jun-28 Source: wks NGP deciles, wkb Illustrations and graphs from 23 Natural Gas Price Deciles $2006/MMBTU 14.00 12.00 1 8.00 6.00 4.00 2.00 Dec-10 Mar-12 Jun-13 Dec-15 Mar-17 Jun-18 Dec-20 Mar-22 Jun-23 Dec-25 Mar-27 Jun-28 2 3 4 6 7 8 Mean input Source: wks NGP deciles, wkb Illustrations and graphs from 24 Page 12
Natural Gas Price Deciles 4 $2006/MMBTU 35.00 3 25.00 2 15.00 1 5.00 2 3 4 6 7 8 input 2011 2012 2013 2014 2016 2017 2018 2019 2021 2022 2023 2024 2026 2027 2028 Source: wks NGP deciles, wkb Illustrations and graphs from 25 Natural Gas Price Deciles $2006/MMBTU 14.00 12.00 1 8.00 6.00 4.00 2.00 2011 2012 2013 2014 2016 2017 2018 2019 2021 2022 2023 2024 2026 2027 2028 2 3 4 6 7 8 input Source: wks NGP deciles, wkb Illustrations and graphs from 26 Page 13
Natural Gas Price Deciles 14.00 12.00 2 3 $2006/MMBTU 1 8.00 6.00 4.00 4 6 7 8 input 2.00 NWPCC high case NWPCC medium high case 2011 2012 2013 2014 2016 2017 2018 2019 2021 2022 2023 2024 2026 2027 2028 NWPCC medium low case NWPCC low case Source: wks NGP deciles, wkb Illustrations and graphs from 27 End Page 14