Integrated Resource Plan. Snohomish County PUD Approved August 17, 2010

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2010

Integrated Resource Plan

Snohomish County PUD

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1 OVERVIEW

The Snohomish County Public Utility District (PUD) began utility operations in 1949 by purchasing the electric distribution facilities of Puget Sound Power & Light in Snohomish County, and in the Camano Island portion of Island County. Today, it provides electric service to more than 319,000 residential and business customers, and is the largest public utility district and second largest municipally-owned utility in the Pacific Northwest.1 The PUD is governed by a Board of Commissioners, which is comprised of three members. Each is elected from a separate commissioner district and elected at large for staggered six-year terms. The legal responsibilities and powers of the PUD, including the establishment of rates and charges for services rendered, reside with the Board of Commissioners.

Figure 1-1

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Snohomish County PUD is the largest public utility district and the second largest municipally-owned utility in the Pacific Northwest, based on number of customers served and energy sold.

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Snohomish County PUD – 2010 Integrated Resource Plan 2

The PUD relies on a diversified power portfolio consisting of a long-term power supply contract from the Bonneville Power Administration (BPA), a broad range of conservation and energy-efficiency programs, three PUD-owned generating plants, and several long-term power supply contracts. In 2009, the PUD received 83% of its power supply from the Bonneville Power Administration (BPA), 9% from long-term contracts, a total of 5% from the Jackson and Woods Creek hydroelectric projects, and 3% from the Everett Cogeneration Project. To date, conservation and energy efficiency programs reduced the PUD’s load by 12%. The PUD also makes short-term purchases and sales in the wholesale power market to balance seasonal and daily variations in its load and resources.

An Integrated Resource Plan (IRP) is a document that establishes an action plan to ensure sufficient resources are available, at reasonable cost, to meet customer demand under a variety of futures that could occur. To achieve this objective, a variety of alternatives must be considered. This requires a plan that is flexible and allows the utility to adapt to changing circumstances without adverse financial impacts.

The Preferred Plan

The PUD’s Board of Commissioners has provided clear policy direction that the utility’s load growth will be met first by pursuing all cost-effective energy efficiency efforts; and for load growth not met by conservation, the utility will pursue a diverse portfolio of clean, renewable resource technologies.

The majority of the PUD’s load is served by power produced from the Federal Columbia River Power System via a long-term contract with BPA. This, combined with the PUD’s goal to acquire all cost-effective conservation, leaves a small amount of new resource needed to meet the wide range of possible futures. Staff began the 2010 IRP process by developing four possible futures and creating a resource portfolio to meet the load forecast and economic conditions of each of the four futures and a base case. After a review of the PUD’s existing and committed firm power resources and the historic performance of its intermittent

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resources, staff selected a single Preferred Plan. Considerations in the design of this plan included cost, reliability, risk, environmental concerns and operational constraints.

The Preferred Plan covers the 13-year period from 2010 through 2022, and meets the Commission’s two guiding principles: to meet the utility’s load growth and continue to position the PUD as a regional leader in conservation and renewable resource development. The plan sets a target goal of 126 aMW of new cost-effective energy efficiency for the planning horizon, and establishes a “stretch” goal of 152 aMW, some 20% higher than the target level of cumulative conservation. New resource additions over and above the PUD’s existing and committed power supply come from a portfolio comprised of:

• small hydro;

• landfill gas and biomass contracts; • utility-scale solar;

• customer-owned generation; and • geothermal and tidal energy projects.

The PUD is continuing its efforts to investigate the potential for tidal energy in the Puget Sound. Evidence also suggests geothermal energy exists in Washington state. The PUD has been exploring its service territory for possible sites since 2008. Exploratory drilling at select sites will commence in fall 2010. The Preferred Plan adds the first geothermal energy resource to the power portfolio in 2016, and anticipates the first tidal project in 2018. If the PUD’s geothermal development efforts prove successful, this baseload renewable resource could meet the needs of Snohomish County residents for many years to come.

The plan is fully compliant with Washington state’s Renewable Portfolio Standard, Initiative 937, and provides flexibility so that resource acquisition and development can either be delayed or accelerated if loads grow slower or faster than expected.

Figure 1-2 presents the details of the Preferred Plan. Sections 6 and 7 describe the assumptions and reasons behind the resource choices.

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Figure 1-2

Snohomish PUD’s Preferred Plan

aMW 2010 2012 2014 2016 2018 2020 2022 Expected Loads 833 850 880 908 941 968 1002 New Conservation (7.2) (24.0) (43.4) (62.6) (83.1) (104.7) (126.4) Load Net of Conservation 825.5 825.8 836.7 845.6 858.0 863.6 875.3 Existing/Committed Resources BPA Contracts 706 800 792 784 780 772 764 Jackson Hydro 29.5 29.5 29.5 29.5 29.5 29.5 29.5 Everett Cogeneration 37 37 37 37 0 0 0 Small Hydro 0.2 2.2 2.2 2.2 2.2 2.2 2.2 Packwood Hydro 6.0 1.2 1.2 1.2 1.2 1.2 1.2 Wind Resources 65.2 65.2 65.2 65.2 65.2 65.2 65.2 Klickitat Landfill Gas 2.0 2.0 2.0 0.0 0.0 0.0 0.0 Hampton Biomass 1.0 1.0 1.0 1.0 0.0 0.0 0.0 PSE Conservation Transfer (1.7) 0.0 0.0 0.0 0.0 0.0 0.0 New Resources Landfill Gas 0.0 0.0 0.0 3.0 3.0 3.0 3.0 Biomass 0.0 0.0 0.0 1.0 1.0 1.0 1.0 Tidal 0.0 0.0 0.0 0.0 1.0 5.0 5.0 Geothermal 0.0 0.0 0.0 5.0 10.0 50.0 50.0 Small Hydro 0.0 0.0 0.0 0.0 2.0 4.0 4.0 Customer‐owned Generation 0.0 0.7 1.4 1.5 1.6 1.6 1.7 Utility‐Scale Solar 0.0 1.2 1.2 1.2 1.2 1.2 1.2 Market Purchases /(Sales) (11.6) (105.2) (87.1) (77.3) (31.1) (63.7) (44.1) Total Planned Resources 825.5 825.8 836.7 845.6 858.0 863.6 875.3 Initiative 937 Requirement N/A 24.8 25.1 76.1 77.2 129.5 131.3 Planned Eligible Renewables1 67.3 71.0 72.4 84.5 86.7 134.9 135.1 Initiative 937 Surplus/(Deficit) N/A 46.2 47.3 8.4 9.5 5.3 3.8 1

Under Initiative 937 certain renewable resources are “eligible” and count toward the Washington State Renewable Portfolio Standard requirement beginning in 2012. One megawatt-hour of generation produced from an eligible renewable resource also provides an associated renewable energy credit (RECs). Eligible renewables sized at 5 megawatts or less may qualify to receive two RECs for every megawatt-hour of energy produced. The Preferred Plan includes a mix of renewable resources, some of which Initiative 937 does not recognize.

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Snohomish County PUD – 2010 Integrated Resource Plan 5 Action Plan

The PUD is well-positioned to serve the electricity needs of its customers into the future through the following actions:

1. Implement all cost-effective energy conservation measures.

2. Actively pursue conservation “stretch” goals and seek new opportunities for customers to save energy and reduce demand.

3. Evaluate energy storage technologies and take actions to enhance and preserve operational and resource flexibility.

4. Continue pursuing research and development of geothermal energy.

5. Continue efforts to research and develop tidal energy in Puget Sound.

6. Develop small hydroelectric resources in or near the PUD’s service area.

7. Encourage local resource development in Snohomish County and the PUD’s service area, as appropriate.

8. Engage legislators on Initiative 937.

9. Continue to monitor new demand-side and supply-side technologies and pursue where applicable.

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Snohomish County PUD – 2010 Integrated Resource Plan 6 Organization of the Document

This document is organized into eight sections:

• Section 1 is this overview.

• Section 2 describes the PUD’s load forecasting methods and the range of expected energy demands.

• Section 3 catalogs the PUD’s current demand and supply-side resources.

• Section 4 outlines current industry dynamics and recent legislation affecting utility operations, setting the stage for the planning process.

• Section 5 addresses the analytical framework used to evaluate the demand and supply-side resources.

• Section 6 describes resource options available.

• Section 7 presents the development and evaluation of the Preferred Plan. • Section 8 outlines the 9-item Action Plan necessary to implement the plan.

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2 ENERGY REQUIREMENTS

Integrated resource planning starts with a range of forecasts of future demand. These forecasts are estimates of how much energy, or demand, customers will place on the utility under a variety of different futures. When the forecasts of future demand are compared with the PUD’s existing and committed resources, the gap between the two identifies the resource need. Using planning scenarios allows for the evaluation of costs and risks associated with possible futures the PUD may face over the next 20 years, including the combination of resources and timing of resource additions.

The PUD’s 2010 Integrated Resource Plan (IRP) utilizes four forecasts which represent a range of possible economic drivers, customer electricity usage patterns, impacts of previously acquired conservation, and other factors. The representative forecasts include a slow/no-growth scenario, a slow but steady growth scenario, and two moderate

forecasts where a broader range of events occur.

Historical Perspective

The PUD’s historical loads, measured in megawatt-hours (MWh), grew at an average annual rate of 2.2% from 1970 to 2009. Figure 2-1 below shows 2%, 4.4% and less than 1% growth in residential, commercial and industrial loads, respectively, for the same period. The PUD’s continued emphasis on energy efficiency programs has reduced the rate at which load has grown. Were it not for these efforts, the PUD’s 2009 loads of 811 average megawatts (aMW) would have been 12% higher.

Figure 2-1

Snohomish PUD’s Historical and Forecast Annual MWh Retail Sales

0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Total Residential Commercial Industrial MW

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The shape of the PUD’s loads and resources is an important consideration for resource planning. The PUD’s loads have historically been highest in the winter, while its existing resources produce more energy in the spring and summer months. The result is monthly energy surpluses and deficits that the PUD must manage. Figure 2-2 below illustrates the shape of the PUD’s 2009 actual load and existing resources.

Energy deficits occur during the months of October through March, with energy surpluses typically occurring from May to August. This is primarily the result of the PUD purchasing over 83% of its power from BPA, with energy produced from the Federal Columbia River Power System (the Federal base system). The Federal base system is comprised of 31 federally-owned, multipurpose dams on the Columbia River and its tributaries. This system provides about 60% of the region’s hydroelectric generating capacity.

Figure 2-2

Actual 2009 PUD Loads & Existing Resources (in MWh) ‐ 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000 700,000 750,000 800,000 850,000 900,000

Jan Feb March April May June July August Sept Oct Nov Dec

Mw

h

BPA Jackson and Small Hydro Wind

Co‐Gen/Landfill Gas/Biomass 3rd Party Contract Market Purchases Net of Sales

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The dotted line in Figure 2-2 shows the PUD’s monthly loads in MWh during calendar year 2009. The PUD’s annual load shape is driven largely by electric heating loads during the winter period – making the PUD a “winter peaking” utility. Monthly energy imbalances are made up by selling or purchasing energy from the short-term wholesale power market.

Forecast Methods and Assumptions

The PUD forecasts future customer loads using a combination of end-use and

econometric methods. Economic inputs and other fundamental growth assumptions come from a model of the Snohomish County economy developed by Conway-Pederson, Inc. This model predicts population, employment, income, housing stock, and inflation based on historic relationships. Staff relies on an end-use model2 to forecast residential loads. This model is modified to include econometrically determined price and income elasticities. The PUD uses forecasts of population growth to predict the number of residential customers it will serve. Residential customers are divided into housing types (single-family, multi-family and manufactured/mobile home) and heating categories (electric or non-electric). Projected incremental energy use is added to existing use by housing type and heat source. Final adjustments are then made for past conservation, electric-to-gas conversions, and income and price elasticity.

Staff forecasts commercial loads based on county employment in the goods-producing, service-producing and military sectors. Loads for small industrial customers are

estimated by multiplying the number of customers by a constant annual kilowatt-hour (kWh) use per customer. Loads for large industrial customers are forecast based on feedback received from PUD Account Executives, along with information provided from customers.

For the Base Case load forecast, staff assumed there would be no change in the PUD’s retail rates, and that the county’s population would grow from its current level of 725,000

2

An end-use model forecasts loads based on the number and type of appliances in customers’ homes and businesses and other electricity consumption (end-uses).

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to 849,000 by 2022, or roughly 1.3% per year. Family size is expected to continue a slight downward trend. The forecast of new customers connecting to the PUD for electric service is based on the econometric housing and employment forecast and the historical relationship between new commercial customer connections and new

residential connections. New connections range from 4,023 to 7,350 per year over the next 13 years.

As shown in Figure 2-3, the majority of the employment growth in Snohomish County is expected to occur in the service sector, with over 50,000 new jobs forecast over the planning horizon. The largest gains are in retail and wholesale trade, education and health services, and government. Over the next decade, few new jobs occur in the goods-producing sector. The construction sector slowly regains pre-recession employment levels by the middle of the decade before returning to growth.

Figure 2-3

Snohomish County Employment

0 50 100 150 200 250 300 350 400 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 A n n u al A v er age Emplo y m e bn t (000) Total Goods Services

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Employment in the manufacturing sector as shown in Figures 2-4 and 2-5 is expected to remain flat over the next few years and then taper off. The aerospace industry is the primary driver with Boeing’s production of the new 787 Dreamliner and possibility of a new tanker program.

Figure 2-4 Manufacturing Employment (000s) Figure 2-5 Aerospace Employment (000s) 0 10 20 30 40 50 60 70 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 0 5 10 15 20 25 30 35 40 45 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

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The Base Case forecasts a slow decline in the share of new housing built for single family occupants as shown in Figure 2-6.

Figure 2-6

Single Family Home Penetration Rate

The single family electric heat penetration rate depends upon natural gas distribution line growth and relative gas and electric prices. Figure 2-7 illustrates the penetration rate has been falling for the last 40 years to the current level of just over 10%. As development occurs in the rural part of Snohomish County, access to gas service is limited and electric heat penetration rate increases slightly.

Figure 2-7

Single Family Electric Heat Penetration Rate 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

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The Base Case load shown below in Figure 2-8 contains year-by-year information on energy by customer type:

Figure 2-8

Base Case Load Forecast (without New Conservation)

2009 Actuals 2010 2014 2016 2020 2022 MWH Sales Residential 3,583,254 3,420,955 3,567,563 3,678,761 3,911,056 4,029,241 Commercial 2,428,976 2,497,508 2,632,423 2,668,420 2,729,490 2,762,302 Industrial 833,967 897,628 875,304 859,926 829,851 826,034 Other 26,599 26,837 28,247 29,262 31,179 32,104 Total 6,872,796 6,842,928 7,103,537 7,236,369 7,501,575 7,649,681

Annual Grow th Rate 0.8% 0.9% 0.9% 1.0%

System Requirements 7,189,117 7,157,875 7,430,478 7,569,423 7,846,836 8,001,759

Avg MW Requirements 821 817 848 862 893 913

Peak MW Requirements 1,531 1,423 1,455 1,467 1,499 1,524

Custom ers (Annual Average)

Residential 290,553 293,153 308,555 319,643 340,581 350,689 Commercial 29,444 29,726 31,694 32,749 34,621 35,492 Industrial 75 75 76 77 79 80 Other 325 328 345 357 381 392 Total 320,397 323,281 340,670 352,826 375,661 386,653 New Connections

Residential Single Family 2,879 2,700 4,200 4,900 4,300 4400 Residential Multi-Family 599 700 1,500 1,700 1,500 1600

Commercial & Industrial 578 600 600 700 700 700

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Snohomish County PUD – 2010 Integrated Resource Plan 14 Scenario Forecasts

Scenarios help explain how changes in social, technical, economic and environmental trends could affect future load growth and the cost and risk of various resource plans that might be developed in response. Scenarios provide various pictures of the future and provide insights into potential uncertainties and the broad set of risks faced by the PUD. Staff developed four possible futures for the 2010 through 2022 period:

Scenario 1: “Austerity”

Scenario 2: “Home Sweet Home” Scenario 3: “Shades of Green” Scenario 4: “Growth Returns”

Appendix B contains additional information on the assumptions for energy demand by customer type for each scenario.

Austerity

This scenario models a Northwest economy that remains sluggish for a decade. Unemployment is high and major employers leave seeking more favorable business climates. Snohomish County’s unemployment reaches a high of 12% which is gradually reduced over time to 8% by 2020.

This scenario assumes climate change policies are adopted by Congress within the next five years and these policies negatively affect energy prices. Higher energy prices affect all types of commodities and lead to job and business losses across the U.S. The

Northwest feels more of this impact than other areas and lags the nation in economic recovery. Consequently, income levels in the Northwest grow slower than the national average and Snohomish County families have relatively less discretionary income. Families cut back on elective purchases such as dinner out, electronics, entertainment systems and other luxuries. At the same time, neighborhoods and communities grow closer and rekindle their support for educational institutions in order to build a brighter financial future.

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Figure 2-9 shows that the PUD’s load growth is minimal, mixed with periods of decline through 2022. New conservation is less economically achievable, so incentives must be increased to encourage participation, primarily within the residential sector. New generation resources are not needed on an average energy basis until late in the period and only then to replace expiring power supply contracts.

Figure 2-9

Scenario 1: Austerity

Load Forecast and Existing/Committed Resources (without New Conservation)

Under the “Austerity” scenario, loads grow at an average annual rate of 0.3% (without new conservation), for cumulative growth of 3.2% over the 13-year planning horizon. The scenario reflects:

• Minimal population and jobs growth

• Growth in Snohomish County incomes is less than the Consumer Price Index • Major industrial employers depart Snohomish County between 2013 and 2018 • Naval Station Everett closes

• No new industrial employers arrive during the period 0 100 200 300 400 500 600 700 800 900 1000 aMW

BPA Jackson Hydro Small Hydro

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• National climate change or greenhouse gas reduction policies implemented in 2017

Home Sweet Home

In the “Home Sweet Home” scenario, Northwest unemployment remains below the national average but the situation is not as bleak as in the “Austerity” scenario. Families save more and opt for green lifestyles. As part of a movement toward sustainable living, many Snohomish County residents choose a simpler, more home-centered way of life. Rooftop gardens, solar panels and small wind turbines become popular along with many people downsizing to one car and shopping locally.

Conservation and environmental stewardship is taught in schools and emphasized in the media. Utilities increase their rebates for energy efficiency measures and offer low interest loan programs for a variety of conservation programs and customer-owned solar PV systems. The rate of growth in the demand for electricity falls as a result. State legislators provide incentives that accelerate adoption of plug-in hybrid electric vehicles (PHEV), which leads to a gradual rise in plug-in vehicles on the road.

Figure 2-10

Scenario 2: Home Sweet Home

Load Forecast and Existing/Committed Resources (without New Conservation)

0 100 200 300 400 500 600 700 800 900 1000 aMW

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The “Home Sweet Home” scenario reflects an average annual load growth of 1.0% (without new conservation) for cumulative load growth of 11.8% over the 13-year planning horizon, which is 8.6% higher than the load forecast in the “Austerity” scenario and is based on the following:

• Snohomish County’s unemployment rate remains constant at current levels • One major industrial employer gradually reduces employment and shuts down

altogether by 2018

• All other major industrial customers continue current operations • Real incomes remain flat over the 2012 to 2022 period

• Over half of the PUD’s load growth is met through new conservation

• A carbon tax is implemented in 2012; allowances range from just under $9 per ton of emissions initially to $22 by 2022

Shades of Green

The Northwest recovers faster from the current recession than the rest of the country in this scenario, due in large part to an influx of new businesses focused on developing green technologies in the Puget Sound. Companies from other states come in search of the region’s beauty, low real estate values, skilled workforce and tax incentives. The area becomes known for smart grid technology, nano-solar development, plug-in car design, and green manufacturing jobs.

The Port of Everett experiences growth as it expands distribution to Pacific Rim countries, including businesses located near the Port’s South Terminal in Mukilteo. Mukilteo’s proximity to high voltage transmission lines made this location ideal for naval support and cruise ships after federal legislation requires large vessels to run off

electricity while docked, to eliminate emissions from burning fossil fuels. By 2016 the Port’s South Terminal had expanded sufficiently to accommodate all types of large ships.

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Congress acts decisively to address global warming. A greenhouse gas tax is

implemented in 2012 affecting the price of all energy-based commodities. Washington State legislators adopt more stringent emissions standards for the transportation sectors. Several coal plants in the Western states are phased out of service beginning in 2017. To meet resource portfolio standards, large amounts of renewable resources are built in the West.

Snohomish County customers adopt a more energy conscious lifestyle. This is due to both higher energy prices and a greater focus on environmental stewardship. While the economy is strong, the demand for electricity grows more slowly than it has historically.

Figure 2-11

Scenario 3: Shades of Green Load Forecast with Existing Resources

(without New Conservation)

In the “Shades of Green” scenario, the load forecast incorporates growth at an annual average rate of 2.1% (without new conservation), and cumulative growth of 25.7% with no new conservation, over the 13-year planning horizon. The forecast in this scenario is affected by: 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 aMW

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• One in three households own a plug-in hybrid electric vehicle

• More companies focused on green technologies enter the region and Snohomish County

• Growth and expansion occurs at the Port of Everett and and Naval Station Everett • A carbon tax is implemented in 2013; allowances range from an initial $10 per

ton of emissions to $40 by 2022

• Regional coal plants are phased out between 2017 and 2020

• Customers are receptive to and readily adopt conservation measures

Growth Returns

Growth Returns depicts a world where the Snohomish County economy is booming. The Pacific Northwest received billions of dollars of stimulus funds supporting energy

efficiency, electric cars and the charging infrastructure, new generation and smart grid technology. The Puget Sound becomes home to many new companies and entrepreneurs, including those focused on renewable and smart grid technologies.

Both Boeing and the Naval Station Everett expand operations in support of U.S. military and trade growth. The Paine Field Airport begins nationwide commercial air traffic, which leads to the construction of new hotels and a convention center. The Everett area adds a large plug-in hybrid electric vehicle manufacturing plant and a center for

processing national health care insurance claims. With jobs plentiful, commercial real estate vacancies decline and home values rebound. Families use discretionary income to travel, buy vacation homes, purchase air conditioning systems and enjoy a variety of home electronics. Consumers are less focused on energy savings in this scenario and participation in conservation programs is less popular. The number of electronics and electricity using devices in homes grows significantly.

The federal government institutes a carbon tax in late 2010 that reaches $44.00 per ton of emissions by 2022. This legislative policy causes prices to rise throughout the national economy. However, Snohomish County’s robust income growth leaves residents relatively unaffected.

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Snohomish County PUD – 2010 Integrated Resource Plan 20 Figure 2-12

Scenario 4: Growth Returns Load Forecast with Existing Resources

(without New Conservation)

Overall, the Growth Returns scenario reflects a period of strong business, population, jobs and personal income growth. The scenario has an average annual growth rate of 2.6% (without new conservation) or cumulative growth of 32.4%, over the 13-year planning horizon. Specific assumptions include:

• New businesses bring rapid employment growth

• A federal insurance processing center is sited in Snohomish County • The Naval Station Everett and Port of Everett expand

• Boeing reaches peak production with military and commercial airplane orders • A new 4-year university is built

• Technology makes electric vehicles affordable for families by 2014

• A carbon tax of less than $1.00 per ton of emissions is implemented in late 2010, reaching just over $44 per ton by 2022

• Smart Grid technology takes center stage 0 100 200 300 400 500 600 700 800 900 1000 1100 1200 aMW

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• Greater incentives are required to stimulate participation in conservation programs

Figure 2-13 below illustrates how the PUD’s loads vary depending on the influence of changes to key drivers in each of the four scenarios and the base case:

Figure 2-13

PUD Average Annual Load Forecast by Scenario (without New Conservation)

Appendix C presents a complete description of each scenario.

500 600 700 800 900 1,000 1,100 1,200 aMW

Austerity Home Sweet Home Shades of Green Growth Returns Base Case

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3 SNOHOMISH PUD RESOURCES

The PUD relies on a portfolio of resources to meet customer demands. These include: BPA power sales contract

Conservation resources PUD-owned generating assets Long-term power supply contracts Regional transmission contracts

BPA Power Contract

The PUD meets its load and obligations by managing the energy available from its BPA power contract in concert with its owned resources and other long-term power supply contracts.

In 2009, the PUD purchased over 83% of its power supply from BPA through a long-term power contract. Under the current contract, executed in 2001, the PUD purchases the Block-Slice product. This product combines two energy components or services:

Block

The Block component provides a flat amount of energy delivered over all hours in a given month, with the energy amount varying each month based on the PUD’s loads. The amount of Block energy delivered under the current contract averages 353 aMW for each contract year. The PUD’s historical monthly load shape determines the amount of energy it will receive. For example, in the month of January, the PUD receives 449 aMW of Block energy, while in June, the total is 287 aMW.

Slice

The Slice component represents a percentage, or “slice,” of the actual output of the Federal base system. It provides the PUD with the ability to follow its

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customer loads by storing and dispatching energy within the contractual and physical constraints of the Federal base system. The PUD contracts for a 4.9929% share of the Slice system, which is 22.6% of the Federal base system. For the PUD, this is approximately 353 aMW under critical water conditions. The shape of the Federal base system output (in average energy) does not

coincide precisely with the monthly demand of the PUD’s customers. This leaves periods when the Power Scheduling Department must make short-term purchases or sales from the wholesale power market to match the variations in load with the output of this resource.

Administering Slice requires the PUD to manage the inherent risks and variability of its share of the Federal base system. If snowpack and water conditions are above average in the region, energy output is also above average. If snowpack and water conditions are low, the PUD’s energy supply is correspondingly reduced. Managing hydro and market risk associated with this component of the BPA contract places responsibility on the PUD’s Power Schedulers to match the seasonal and hour-to-hour variations in the Slice output to the seasonal variations in load. This involves monitoring snowpack and precipitation levels, market prices, temperature variations and shifting customer demands, and developing and executing short-term wholesale market hedging strategies. In 2009, the District received 396 aMW of Slice energy. The cost of Slice energy is based on a percentage share of BPA’s actual operating costs.

The PUD’s Block-Slice contract expires at the end of September 2011. A subsequent long-term contract was executed with BPA in December 2008, and is effective for the period October 2011 through September 2028. Under the new BPA contract, the PUD’s Block quantity will increase from 353 aMW to nearly 396 aMW. The PUD’s Slice amount is estimated to increase from 353 aMW to approximately 404 aMW, under critical water conditions. Under higher water conditions the PUD will receive proportionally more energy.

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PSE Conservation Transfer Agreement

The Puget Sound Energy Conservation Transfer Agreement began in 1990 when BPA developed a pilot program to transfer the benefits of conservation between three PUDs and Puget Sound Energy (PSE). For Snohomish, the arrangement involved an energy transfer to PSE of 10.6 aMW per year. This obligation expired in February 28, 2010.

Conservation Resources

The PUD has been actively engaged in energy efficiency and demand-side management for 30 years. Since 1980, conservation and energy efficiency programs have resulted in the cumulative acquisition of nearly 100 aMW of conservation resources, or enough to power more than 70,000 homes. The figure below shows the annual and cumulative savings accomplishments of the District through 2009.3

Figure 3-1

PUD Annual and Cumulative Conservation Savings (aMW)

3

Cumulative savings calculation includes degradation of savings as energy efficiency measures reach the end of their useful life.

0 10 20 30 40 50 60 70 80 90 100 aMW Cumulative Annual

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The PUD offers a broad portfolio of financial incentives, technical assistance and educational services to all customer segments.

Figure 3-2

PUD Energy Efficiency Programs by Target Sector

Program Description Target Sector

Residential Residential Multi-Family Commercial Industrial

Single Family Weatherization Multi-Family Weatherization

Resource Efficient Appliance Rebates Refrigerator/Freezer Recycling Compact Fluorescent Lighting (CFL) eKit

New Home Construction

Low-Income Housing Improvement Matchmaker X X X X X X X X X X X X X X X X

Commercial & Industrial

Custom Incentives – Existing Buildings Energy Smart Industrial

Commercial Kitchen Equipment Lighting Rebates - Existing Buildings Energy Smart Grocer

PC Power Management

Resource Conservation Manager Custom Incentives – New Buildings

X X X X X X X X X X X X X Cross-Sector Programs Community Power! Energy Challenge X X X X X X X

Customer Renewables Programs

Planet Power & Green Blocks Solar Express X X X X X X X Residential Programs

The PUD provides a comprehensive set of energy efficiency incentives for residential customers through programs targeting single and multi-family residences, new

construction, and low income households.

Single-Family Weatherization Program

Offered since 1980, this program is designed to reduce energy consumption in electrically-heated homes by encouraging customers to install insulation,

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high-Snohomish County PUD – 2010 Integrated Resource Plan 26

efficiency heat pumps and insulated windows. Customers can choose between low-interest, no-fee, 10-year loans or one-time cash incentives to help offset their efficiency investment. In 2009, the PUD participated in a regional pilot program that offered incentives to customers that install efficient ductless heat pumps, a technology that has been in use in Europe and Japan, but not widely used in the United States. Based on the pilot’s success the PUD began providing incentives in 2010 for ductless heat pumps in its weatherization program.

Multi-Family Weatherization Program

This program gives multi-family building owners and property managers cash incentives to install approved energy-saving measures. Qualifying measures include insulation upgrades, insulated windows and sliding glass doors, as well as installation of ENERGY STAR appliances, light fixtures and electronic

thermostats.

Resource-Efficient Appliance Rebates

This program encourages residential customers to purchase energy-efficient ENERGY STAR® appliances. Rebates are available for ENERGY STAR

dishwashers and refrigerators. In 2009, the PUD began paying tiered rebate levels for clothes washers (through the regional WashWise program), offering higher rebates for more efficient models. The PUD has offered appliance rebates since September 1999.

Refrigerator/Freezer Recycling Program

This program removes inefficient as well as secondary refrigerators and freezers from residences in an environmentally safe way. The PUD contracts with JACO Environmental, a local appliance recycler, to operate the program on its behalf. The program offers customers a cash incentive and free pick-up to recycle qualifying refrigerators and freezers. The program was established in 2005.

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Compact Fluorescent Lighting Program

The compact fluorescent lighting (CFL) program aims to reduce energy consumption related to residential lighting. The PUD subsidizes the cost of the bulbs for participating retailers, and those savings are passed through to consumers. Many retailers in the county have participated in this program. Beginning in 2008, the PUD increased the focus of the program on specialty CFLs such as reflector bulbs for recessed can lights, globe lights, and three-way bulbs. In addition, free bulbs are distributed through the eKit program (described below) and through customer events and outreach activities.

The PUD also participates in a regional CFL fixture program administered by Applied Proactive Technologies. Builders and PUD customers receive a $20 instant rebate for each qualifying ENERGY STAR CFL fixture purchased at participating lighting showrooms in the Puget Sound area. An additional incentive is paid to participating showrooms for each fixture sold.

eKit Program

The PUD distributed water-saving efficient showerheads and low-flow faucet aerators to its residential customers with electric hot water systems beginning in 2008. In 2009, the PUD introduced the eKit Program to all of its residential customers. This program incorporates the same efficient showerheads and low-flow faucet aerators with two ENERGY STAR compact fluorescent bulbs. The eKit delivers both energy and water savings, regardless of the fuel used for water heating.

New Home Construction Program – Build with ENERGY STAR

This program is designed to encourage builders to include energy-efficient measures in new homes being built in the PUD’s service territory. In existence since 2008, the program helps offset the cost of meeting Northwest ENERGY STAR and Built Green standards. Rebates are offered for efficient heat pumps, appliances (clothes washers, refrigerators and dishwashers) and ENERGY STAR lighting fixtures.

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Low Income Housing Improvement Program

The low income housing improvement program (HIP) offers funding to

community-based organizations to implement energy efficient improvements in low-income transitional housing. Supported improvements include

weatherization, lighting, heating, and demonstration projects related to renewable resources. Organizations apply for funding. For each application, the PUD

considers costs, expected energy savings, the number of people served by the organization, whether the organization has received PUD funding in the past, secondary impacts of the project (health, safety, and comfort), and whether there are other matching funds available. The program has existed in various forms for more than 25 years.

Matchmaker Program

This program offers qualifying low-income customers free energy-efficiency upgrades to their home, including: insulation, air and duct sealing, water-saving low-flow showerheads and faucet aerators, refrigerators, and compact fluorescent lighting. Comprehensive energy efficiency improvements make energy more affordable for qualifying customers. The program is implemented through the Snohomish County Community Action Partnership, which schedules, inspects and pays the contractor for the improvements. Contributions from the PUD are

matched by the State.

Commercial & Industrial Programs

The PUD offers financial incentives and technical assistance to business customers within its service territory to help them reduce energy use and operating costs.

Custom Incentives for Existing Buildings

The PUD calculates incentives for customer-specific projects based on expected energy savings. Energy savings are calculated based on the difference between

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existing and proposed equipment/systems and facility’s operating hours.

Incentives are based on the estimated annual savings and vary depending on the efficiency and type of equipment. Incentives are capped at 70% of project costs. Efficiency measures funded include: advanced lighting controls and fixtures, high-efficiency heating, ventilation and air conditioning (HVAC) systems, compressed air systems, motors, pumps and fans, refrigeration, heat recovery systems & controls, variable speed drives, weatherization, industrial process improvements, energy management systems, and building system optimization.

Energy Smart Industrial Program

To increase the penetration and adoption of energy efficient technologies and practices in industrial facilities, the PUD participates in the BPA Energy Smart Industrial Program administered by Cascade Engineering. New in 2010, the program offers a wide variety of incentive options for industrial users of all sizes and budget levels. In addition to traditional energy efficient technology projects, the program helps customers save electricity through integrated energy

management practices.

Lighting Rebates for Existing Buildings

Launched in 2007, this program encourages installation of high efficiency lighting systems in businesses of all sizes. Standard rebates are paid for more than 30 different technologies including fixtures and controls. Standard rebates are

designed to make it easy for small business customers to participate and leverages a network of qualified lighting contractors. The program currently pays 70% of project costs up to a maximum of $15,000 per building per year.

Commercial Kitchen Equipment for Existing Buildings

The PUD makes cash rebates available through restaurant equipment suppliers for resource-efficient commercial refrigerators and freezers, food steamers, fryers, food-holding cabinets and dishwashers. This program is offered in coordination

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with other Puget Sound utilities, including Puget Sound Energy and Seattle City Light.

Energy Smart Grocer for Existing Buildings

Implemented in cooperation with Portland Energy Conservation, Inc., under contract to BPA, this program is targeted to groceries, convenience stores, restaurants and other facilities with refrigeration equipment. A system audit is conducted to assess efficiency opportunities in individual facilities. Direct installation of low-cost measures and funding for more comprehensive upgrades are provided. The program is currently focused on promoting Electrically Commutated Motors (ECMs) and light emitting diodes (LED) in refrigerated cases.

PC Power Management

To encourage the adoption of efficient information technology practices and initiatives, and to reduce the energy consumption of networked computers, the PUD offers businesses a rebate per personal computer (PC) for installation of PC power management software. Software allows customers with multiple,

networked computers to deploy energy efficient operating protocols and measure and track energy savings. The program was initiated in 2008.

Resource Conservation Manager Program

New in 2009, the Resource Conservation Manager (RCM) program works with local school districts to designate key staff at schools to focus on meeting energy, water and garbage reduction goals. The RCM program taps utility resources – including PUD programs and technical assistance for operational changes – to reduce operating costs and promote environmental stewardship. The program pays incentives for realized savings and provides start-up grants to help fund staffing.

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Custom Incentives for New Construction

To reduce the future energy consumption of newly constructed commercial and industrial facilities, the PUD offers incentives for projects designed to perform at least 10% more efficiently than required by the Washington State Non-Residential Energy Code. This program pays up to 100% of the incremental cost of energy efficient measures installed. Incentives are based on the estimated annual savings, and vary depending on the level of efficiency and type of equipment. The

program covers components such as lighting and controls, heating and ventilation equipment, chillers, variable speed drives, and other measures. This program was started by the PUD in 2007.

Cross-Sector Programs

Cross-sector programs appeal to both residential and commercial and industrial customers alike.

Community Power! Pilot Program

A two-year pilot program supported through the American Recovery and

Reinvestment Act (ARRA) and co-sponsored by Snohomish County and the City of Everett, Community Power! is designed to drive residential energy savings through the grass-roots engagement of neighborhoods and other community groups.

The program takes a two-pronged approach to building community involvement. The “selection” component targets two densely populated areas with a high percentage of rental housing, multi-family units and small businesses to receive direct-install, no-cost energy efficiency measures that deliver large energy savings potential. The “invitation” component asks community groups throughout the County to submit conservation project ideas which their volunteers can help to deliver. In addition to providing no-cost and low-cost measures, this approach also promotes behavioral savings opportunities.

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Both approaches encourage residents to participate in existing utility programs and implement larger investment measures, some of which will be subsidized. An objective of this pilot is to assess the potential for either or both of the approaches to provide a sustainable model for targeting “hard-to-reach” customers and leveraging community engagement.

Energy Challenge

The PUD’s Energy Challenge asks customers to reduce energy use by 10%. This industry-leading program encourages customers to reduce their use through the implementation of energy saving technologies as well as the adoption of energy saving behaviors and operational practices. It is also designed to increase the PUD’s understanding of how to implement and evaluate behavior change programs.

The Energy Challenge is open to all PUD customers. The PUD itself was the first customer to participate in April 2009. Since then, more than 125 businesses and nearly 2,000 households have taken the Energy Challenge, pledging to reduce their energy consumption by 10%. Participants are encouraged to reduce their use starting with no-cost behavior changes and low cost improvements, and to

consider energy-saving investments based on their savings potential.

Be a Conservation Sensation

The PUD actively promotes its portfolio of efficiency programs through ongoing multi-media outreach efforts to raise awareness and increase participation in programs. Under the banner “Be a Conservation Sensation,” the award winning campaign includes print, TV, radio and internet ads featuring customer

testimonials. This theme is incorporated into displays for tradeshows,

neighborhood events, local festivals and street fairs. The PUD is active on the public speaking circuit and makes presentations to community groups, business and associations on its programs and actions that local residents and businesses can take to save energy. The Energy Challenge (described above) builds on the

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Conservation Sensation campaign by providing customers with specific information on how they can be “Conservation Sensations.”

Customer Renewable Programs

Customer Renewables Programs include a number of technologies for which the PUD provides cash incentives and loans. For example, when a customer installs a solar hot water system, they reduce the load that must be served by the PUD. The program increases customer knowledge and familiarity with a variety of renewable technologies and supports the development of qualified installers and equipment providers.

Planet Power and Green Blocks Programs

The PUD offers two optional programs as required by Washington state law (R.C.W. Chapter 19.29A) to provide customers the voluntary option to purchase energy from a qualified renewable resource. A qualified resource includes any energy production facility powered by a renewable technology such as wind, solar, biomass, geothermal, landfill gas, gas produced from wastewater treatment, wave action, small hydro, or other renewable technologies.

The PUD’s Planet Power program began in 2002, and was modified in 2009. Since the program revision, renewable resources are obtained through small-scale, renewable energy projects, funded in whole or in part by the PUD. All customers are eligible to subscribe by paying a minimum of $3.00 per month, or through a one-time contribution of $15.00 or more. The program uses these funds to award grants to support community projects. Potential projects are evaluated based on their technical feasibility, public accessibility, education/outreach plans, and project sponsor resource commitment. In 2009, a total of nine grants were provided to local schools, public agencies and a small business, resulting in development of six solar demonstration projects totaling 14.6 kW, and six schools receiving renewable education programs comprised of teacher training and

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The Green Blocks program makes renewable resources available to the PUD’s non-residential customers through acquisition of Renewable Energy Credits (RECs). Participants can subscribe for an unlimited amount of 350 kWh blocks at $3.00 per month, or purchase blocks by making a one-time payment to purchase a minimum of five blocks. This program enables participants to make claims about the portion of their energy consumption coming from new renewable resources. In 2009, 35 businesses participated in the Green Blocks program purchasing a total of 876,097 kWh.

Solar Express Program

The PUD introduced its Solar Express program in March 2009 to encourage the development of renewable electric generation by residential customers. The program offers cash incentives or low-interest loans to customers who install qualifying solar electric (photovoltaic) or solar hot water systems in their homes. The PUD provides workshops and expertise, lists of registered installers, and assistance in coordinating benefits with applicable state and federal programs (Washington State Production Incentive and federal tax credits). As of June 2010, a total of 54 photovoltaic systems and 12 solar water heating systems have been installed, resulting in 300 MWh of energy savings.

Regional and National Conservation Efforts

The PUD is engaged in regional and conservation activities to identify new technologies, develop new delivery strategies and affect policy related to energy efficiency and

conservation. The PUD actively participates and provides financial support for market transformation efforts through the Northwest Energy Efficiency Alliance (NEEA), the Consortium for Energy Efficiency (CEE), and the Electric Power Research Institute (EPRI).

The PUD is a member of the Regional Technical Forum and the Snohomish County Sustainable Development Task Force, supports the Pacific Northwest Integrated Lighting

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Design Labs, and participates in solar demonstration projects with the Bonneville Environmental Foundation. The PUD also maintains consistent efforts to promote programs and knowledge of electric efficiency in tandem with other local/regional utilities and energy efficiency groups.

The PUD actively participated in the development and review of the conservation supply curves developed by the Northwest Power and Conservation Council (NWPCC or Council) for the 6th Power Plan. The PUD supports the establishment of aggressive, but achievable, energy efficiency targets and recognizes the need to conduct research, development and demonstration activities to ensure a sustainable pipeline of energy efficiency resources.

PUD-Owned Generating Resources

Everett Cogeneration Project

The Everett Cogeneration Project is located at Kimberly-Clark Corporation’s pulp and paper facility in Everett, Washington. This project is owned by the PUD and is operated under an Operating Agreement with Kimberly-Clark. It was commissioned in December 1996 and has a 52 MW nameplate capacity rating. Under the terms of the Operating Agreement, Kimberly Clark receives steam for its mill operations and is contractually obligated to produce or otherwise provide the PUD with 325,000 MWh, or 37 aMW per year. For the first 10 years the plant operated, the PUD sold the project’s output to the Sacramento Municipal Utility District (SMUD). Since the expiration of the power sales contract with SMUD in October 2007, the PUD has used the output from the

Cogeneration Project to serve its own customer load.

The output from this project is driven by mill operations and fuel availability. The daily and hourly energy production is relatively flat but does vary, sometimes significantly, with steam loads and fuel conditions.

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Despite the fact that this Cogeneration project burns wood waste and red liquor, it is not recognized as an eligible renewable resource under Washington state’s voter approved Initiative 937. The Operating Agreement with Kimberly-Clark will expire at the end of 2016. Kimberly-Clark has the option to extend the contract in five year blocks. Only Scenario 4 “Growth Returns” considers this resource to be available after the 2016 expiration date.

Jackson Hydroelectric Project

The Jackson Hydroelectric Project is located on the Sultan River, north of the City of Sultan and is owned and operated by the PUD. The project has two large generating units rated at 47.5 MW each and two small generating units rated at 8.4 MW each, for a total nameplate capacity of 111.8 MW. Output is delivered to the PUD’s electric system at a switchyard adjacent to the powerhouse.

The project is operated to produce the optimum amount of electrical energy, subject to specified minimum releases of water into the Sultan River for maintenance of fish and diversion of water into the City of Everett’s water reservoir system. An agreement from 1961 and subsequent amendments in 1981, 2007 and 2008 established the rights and duties of the City of Everett and the PUD pertaining to the uses of water from the project. The City of Everett receives its water supply from Lake Chaplain which the project feeds. The PUD receives all of the generation output from the plant.

The City of Everett is a co-licensee for the project which expires May 2011, at which time the PUD expects to become the sole licensee. The PUD filed its Final Application for New License with FERC as sole-licensee in May 2009, and a Settlement Agreement was approved by all involved parties and filed with FERC in October 2009. The decision is still pending. There were no conditions in the Settlement Agreement that substantially alter the physical characteristics of the Jackson Project, although a significant uncertainty is the impact of future constraints that may be placed on the project as part of the FERC relicensing process.

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The project’s output varies annually with the amount and timing of rainfall and the subsequent impact on stream flows feeding the project. Power production is typically highest in the late fall through late spring periods due to precipitation and snowmelt. This output shape roughly matches the PUD’s seasonal load pattern. However, requirements to maintain stream flows and the City of Everett’s potable water supply limit the project’s ability to follow the PUD’s load within a day. Firm energy output for the project is 29.5 aMW, while the average annual energy supply is 45 aMW per year.

Any improvements to the Jackson project that increases production, without impounding or diverting additional water, could be considered “incremental hydro” and counted towards the PUD’s compliance with Initiative 937. As part of the PUD’s internal review of low impact hydroelectric alternatives in 2008-09, a detailed engineering and economic analysis was performed, evaluating the viability of adding a second penstock to reduce frictional losses and increase peak generation from the project. Based on this analysis, the modification did not prove viable.

Woods Creek

The Woods Creek Hydroelectric Project is located in Snohomish County, north of the city of Monroe, Washington, and has a nameplate capacity of 0.65 MW. The PUD purchased the powerhouse and adjoining acreage in February 2008. Prior to its

acquisition, the PUD had been purchasing output from this plant. This project is adjacent to Woods Creek, a tributary of the Skykomish River, with the powerhouse located above a natural impassible barrier to anadromous fish. In 2009 the project produced 1,200 MWh or 0.14 aMW of electricity; most was generated during the winter and spring months.

Youngs Creek

As a result of a Request for Proposals for Renewable Resources issued in 2007, the PUD purchased the partially-constructed Youngs Creek Hydroelectric Project located on Youngs Creek, a tributary of Elwell Creek near Sultan in Snohomish County. The PUD is

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moving forward to complete the 7.5 MW project. Construction is expected to be complete by mid-2011.

Long-Term Power Supply Contracts

The PUD currently has six long-term contracts for energy, each associated with a specific generating resource. The PUD has no ability to shape deliveries under these contracts.

Klickitat County PUD Power Purchase Agreement

In 1999, the PUD contracted with Klickitat County PUD for 5 aMW of energy and the associated renewable energy credits (RECs) from the H.W. Hill Landfill Gas project located in Klickitat County, Washington. This 10-year agreement expired in May 2009. The PUD secured a second power purchase agreement for 2 aMW for the period

November 2008 through October 2015. The output of this resource is delivered as a flat block of energy and qualifies as an eligible renewable resource under Initiative 937.

Hampton Lumber Mill Cogeneration Contract

In 2006, the PUD executed a 10-year contract with Hampton Lumber Mills-Washington, Inc., for the electrical output of a cogeneration project located at their mill located in Darrington, Washington. The project has a nameplate capacity of 7 MW and utilizes wood waste to produce approximately one aMW of energy on a continuous basis. It is recognized as an eligible renewable resource under Initiative 937. The project began commercial operation in November 2006 and the PUD has contracted for the project’s output through October 2016. The PUD has first rights to purchase any RECs associated with the project’s energy production.

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White Creek Wind Project

In 2007, the PUD executed a 20-year power purchase agreement with LL&P Wind, a wholly-owned subsidiary of Lakeview Light and Power, Tacoma, Washington, for the output of approximately 10% of the White Creek Wind Project. The project is located in south-central Washington along the Columbia River Gorge. The PUD’s share of the White Creek output is equivalent to 20 MW of wind capacity, with 6 aMW of wind energy forecasted each contract year. The project began commercial operation in November 2007. The PUD began taking output from the project in January 2008. This wind project qualifies as an eligible renewable resource under Initiative 937.

The PUD has contracted with BPA for a “firming and shaping” service that converts the variable output of the White Creek Wind Project to a flat block. Under the service agreement, BPA accepts the variable output of the project into its system as it is

generated, and re-delivers a set amount of energy seven days later to a central market hub in a flat block. The PUD’s Power Schedulers can then arrange for delivery of the energy to PUD customers.

Hay Canyon Wind Project

Consistent with the 2008 IRP, the PUD executed two power purchase agreements in February 2009 for 100% of the wind energy and renewable energy credits from the Hay Canyon Wind Project. This 100.8 MW nameplate project interconnects to BPA’s transmission system and is located in north central Oregon along the Columbia River Gorge. This wind project was developed by Hay Canyon Wind, LLC, a subsidiary of Iberdrola Renewables, Inc., whose parent company is Iberdrola Renovables, one of the world’s largest wind developers. The PUD began receiving output under the agreements in March 2009. The PUD receives 50% of the project’s output under a 15-year power purchase agreement and 50% under an 18-year power purchase agreement. At a 30% capacity factor this project’s estimated annual output of approximately 30.2 aMW. The

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Hay Canyon Wind Project qualifies as an eligible renewable resource under Initiative 937.

Wheat Field Wind Project

In 2008 the PUD signed a 20-year power purchase agreement for the entire output and renewable energy credits associated with the Wheat Field Wind Project. The project is located in north central Oregon, has a 97 MW nameplate rating, and interconnects to BPA’s transmission system. The project was developed by Wheat Field Wind Project, LLC, in conjunction with Horizon Wind Energy, LLC, a subsidiary of Energías de Portugal. The PUD began taking delivery of energy in April 2009. At a 30% capacity factor the annual output of this project is equivalent to 29 aMW. The Wheat Field Wind Project qualifies as an eligible renewable resource under Initiative 937.

Packwood Lake Hydroelectric Project

The small hydroelectric project located at Packwood Lake, 20 miles south of Mount Rainier in Packwood, Washington, began operation in 1964. This project is operated by Energy Northwest and has a nameplate capacity of 27.5 MW. The PUD is a participant in this project with a 20% share, or 2 aMW of the project’s firm energy output. The PUD assigned its share to Franklin and Benton County PUDs from 2002 through 2008. In October 2008 the PUD recalled its 20% share and negotiated the purchase of the balance of the energy produced by the project from the other participants for the period October 2008 through September 2011. This short-term power purchase agreement for 100% of the project’s output added 9 aMW of firm energy to the PUD’s power supply portfolio. Beginning October 2011, the PUD assumes it will receive only its 20% share, or 2 aMW.

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Snohomish County PUD – 2010 Integrated Resource Plan 41 Short Term Wholesale Power Market Purchases and Sales

In 2009, the PUD purchased 769,467 MWh of energy and sold 1,466,308 MWh in the short-term wholesale power markets. PUD staff make short term purchases from the wholesale market during the winter months when peak demands exceed the capabilities of the PUD’s owned and contracted resources. Sales are made when the PUD’s

contracted resources and surpluses associated with the BPA Slice product exceed the PUD’s load. Short term wholesale market purchases and sales fluctuate each year reflecting seasonal variations in customer load, weather, market and hydro conditions.

Transmission Contracts

The PUD relies on long-term transmission capacity from the BPA transmission network to transport its power supply from the source of generation to the homes and businesses it serves in Snohomish County and Camano Island. The PUD contracts with BPA for 1,618 MW of firm point-to-point capacity. This contract includes 16 different

Points-Of-Receipt (where BPA picks up power for the PUD) and six Points-Of-Delivery (where BPA will deliver power for the PUD). Of the 1,618 MW of capacity, 1,157 MW are designated for delivery directly to the PUD’s service territory. The remaining 461 MW are used to transport power supplies that exceed the PUD’s own load, primarily in the spring and summer periods, to the market. When the PUD needs more than 1,157 MW delivered to its service area, the staff formally asks BPA to “redirect” an additional contract capacity to Snohomish County interconnection points. Historically, BPA has granted the majority of these requests.

To meet its long-term peak demands, the PUD requested 350 MW of additional

transmission capacity from BPA for the post-2011 period, and was granted 300 MW of the capacity it requested.

Integrated Resource Plan. Snohomish County PUD Approved August 17, 2010

2010