This EIS analyzes five alternatives. Alternative 1, the Proposed Action Alternative, describes the consequences of proceeding with the proposed PacifiCorp Surplus Firm Capacity Sale Contract (see Appendix A). Alternative 2, the No Action Alternative, describes the consequences of not making the proposed sale to PacifiCorp. The other alternatives analyze the effects of implementing variations in the terms of the proposed sale. Alternative 3, Larger Capacity Sale, describes the consequences of selling an additional 900 MW to PacifiCorp or another utility. Alternative 4, Stricter Return Provisions, describes the consequences of restricting the hours PacifiCorp has for making returns of peak energy (peak replacement). Alternative 5, Variations in Hours of Peak Demand Available, describes the consequences of increasing the hours (and thus the total peak energy) for delivery of peak demand to PacifiCorp.
The proposed long-term contract, Alternative 1, would expire August 31, 2011. The contract demand would be 1100 MW of capacity. Capacity and associated peaking energy would be provided up to a maximum of 10 MWh (megawatthours) per day per MW of contract demand, limited to no more than 50 MWh per week per MW of contract demand. Returns of replacement peaking energy normally are to be made by PacifiCorp within 168 hours.
A copy of the proposed long-term contract is provided in Appendix A. This copy is complete except that an additional point of delivery, Summer Lake Substation in south-central Oregon, would be added to the final contract if it is implemented. Adding this point of delivery to the contract will provide an additional point for BPA to make capacity deliveries to PacifiCorp, and for PacifiCorp to return peaking replacement energy, and has no substantive effect on how the contract would be used by PacifiCorp, or how BPA would meet its obligations under the contract.
The proposed contract includes operational provisions that would permit BPA to limit hourly rates of return of replacement peaking energy in the months of March through October. PacifiCorp is to preschedule deliveries each workday for each hour of the following day or days until the next regular workday. PacifiCorp would have a right to change these schedules with 30 minutes' notice but the total changes from prescheduled deliveries during heavy load hours would be limited to 6 hours per day. This is consistent with normal scheduling procedures now in use by BPA and scheduling utilities.
The proposed price for the capacity is to be escalated to reflect changes in BPA's average system cost (base) as determined in each successive BPA general rate case after September 1, 1991. With 5-year written notice to PacifiCorp, BPA may reduce contract demand (to zero if need be) to meet statutory obligations to preference customers; to meet prior contractual obligations including exchange obligations; or to meet capacity/exchange obligations incurred subsequent to the contract if at the time of incurring such subsequent obligation BPA had projected at least 300 MW firm capacity in excess of the aggregate of the new obligations.
Once BPA has reduced contract demand, it must offer to restore contract demand under certain conditions. PacifiCorp also has certain limited rights to reduce contract demand upon 5 years' written notice, or under special conditions, upon 1 year's notice. (See section 7 of the proposed contract, located in Appendix A of this document, for details on the two parties' respective rights to reduce or restore contract demand.)
This alternative is the Preferred Alternative because it secures a long-term source of revenue through a sale of capacity surplus to BPA's current and foreseen needs at a price well above what BPA could achieve through spot market sales. This will help stabilize BPA's wholesale power rates and BPA's revenues, thus helping to assure timely repayment of debt. Currently, BPA is not aware of an equivalent market for long-term firm capacity.
The Preferred Alternative would enable BPA and PacifiCorp to benefit from the complementary characteristics of their respective systems. PacifiCorp could maintain its thermal-based system and rely on BPA for much of its capacity needs. PacifiCorp's principally base-loaded thermal system is less accommodating to large load swings than BPA's principally hydro-based system, which can accommodate rapid load swings.
In addition, this alternative is preferred because it has the potential to make full use of existing resources on both systems, thereby reducing PacifiCorp's need to develop new resources with their attendant risks, adverse rate effects on PacifiCorp's customers, and adverse environmental impacts. Other alternatives studied are less desirable because they do not fulfill the needs of the two parties to the sale as completely.
The "No Action" Alternative is not entering into a long-term capacity contract with PacifiCorp. In the absence of such a contract, BPA would use the flexibility on its system to serve the purposes listed in section 1.4. BPA expects that it would use the flexibility on the system in the absence of a long-term PacifiCorp capacity contract to support additional short-term energy sales, to perform more seasonal storage transactions, and to make short-term or spot capacity sales or exchanges. There would be no potential need to acquire resources to support this alternative. Hydro operations will be consistent, as they would under any of the alternatives, with the outcome of the SOR process and interim operations, as documented by the 1992 Flow EIS and later supplements. The need stated in section 1.3, that is, to respond to the need for power as represented by PacifiCorp's request for a continued supply of firm capacity, would be unfulfilled. Some of the purposes, such as securing revenues through the sale of surplus capacity, may be met to a lesser degree than under other alternatives. In the near term, PacifiCorp may purchase some capacity (up to 800 aMW plus 15 percent reserves) on a short-term or nonfirm basis from BPA in the absence of a long-term contract, but would eventually secure its own resources and/or make long-term capacity arrangements with other utilities to meet its capacity needs.
Under this alternative, BPA would contract for an additional 900 MW of contract demand with PacifiCorp and/or other utilities under terms similar to the proposed contract. Based on current forecasts, BPA could serve the additional 900 MW by using surplus capacity that is available from BPA resources.
This alternative provides less flexibility to PacifiCorp in exercising its rights under the contract. This alternative is the same as the proposed action except BPA would impose stricter return provisions. In lieu of the 168-hour return in the proposed contract (§5(b)(1)), BPA would require either a 24-hour return (i.e., PacifiCorp would have to return energy associated with the delivery of peaking capacity within 24 hours of delivery instead of within 168 hours), or an end-of-week return (i.e., all peaking energy taken by PacifiCorp during a calendar week must be returned by midnight Sunday). A 24-hour return was an option under the old, now expired, long-term contract.
This alternative provides more flexibility to PacifiCorp in exercising its rights under the contract by relaxing some terms of the proposed contract.
First, BPA would make a greater amount of peaking energy available to PacifiCorp each day for the week while keeping the contract demand the same as in the proposed contract (i.e., 1100 MW). The proposed contract limits the amount of peaking energy to 50 hours of peak demand of 1100 MW for a total of 55,000 MWh per week. Under this alternative, BPA would allow PacifiCorp the additional flexibility to increase the number of hours of peak demand and thus increase the amount of peaking energy available for the week. This alternative assumes that BPA increases the amount of peaking energy available to PacifiCorp to an amount equal to the proposed contract demand of 1100 MW times 72 peak hours, a common hourly amount offered in some short-term BPA contracts. Total peaking energy would thus be 79,200 MWh.
Second, the special restrictions specified in §5(b)(3) and §5(b)(4) of the proposed contract on return of peak energy (peak replacement) during the fish flow augmentation months of March through October are deleted.