2021 IRP Webinar #1: Generic Resource Assumptions

2021 IRP Webinar #1:Generic Resource AssumptionsPlanning Assumptions & Resource AlternativesElectric Portfolio ModelMay 28, 2020

Welcome to the webinar and thank you for participating!How to ask a question or submit a comment Expand the Questions window on your control panel Type in your question Staff are on hand to keep track of questions on genericresource costs We will also take a Q&A break at several points duringthe presentation If there's more time available at the end ofthe presentation, we'll take more questionsVirtual webinar 2488354960834319Webinar ID: 537-409-243Call-in telephone number: 1-877-309-20742

Agenda Safety momentPSE IRP team introductionPublic participation plan overviewIntroduction to the 2021 IRPElectric IRP models overviewElectric generic resource assumptions3

Safety moment: Call 811 before you digDial 811 at least two full business days (not including the day you call)before you plan to dig, no matter the size of your project. It's not onlysmart, it's the law. It's important to have the locations ofunderground utilities verified andclearly markedStriking a natural gas or electric linemay result in service disruptions,bodily harm, fines and/or repair costspse.com/pages/know-whats-below4

PSE IRP Team5

Public participation approach

Public participation in the 2021 IRP7

Tools for public participationTo keep you informed. Website postings Email notifications Briefings Feedback Reports Consultation Updates E-Newsletters Topical fact sheets To seek your thoughts, ideas, concerns. Stakeholder interviews - completedFeedback webinarsOnline meetingsFeedback forms8

Feedback Form An important way to share your input Available on the website 24/7 Comments, questions and data canbe submitted throughout the year, buttimely feedback supports the technicalprocess Please submit your Feedback Form withina week of the meeting topicFeedbackFormFeedbackReportConsultationUpdate9

Feedback cycleActionTimingStakeholders can submit questions and feedback via the Feedback Form.Anytime, 24/7 onlineaccessPSE will share the meeting agenda,Feedbackpresentation slides and any supportingReportmaterials on the website.One week before eachmeetingA recording of the webinar and the transcript of the chat will be posted to thewebsite so those who were unable to attend can review.One day after eachmeetingFeedback Forms related to the specific meeting topic are due.One week after eachmeetingA Feedback Report of all comments collected from the Feedback Form, along withPSE’s responses, will be shared with stakeholders via the website.Two weeks after eachmeetingA Consultation Update, where PSE demonstrates how stakeholder feedback wasapplied, will be posted to the website.Three weeks after eachmeeting10

An introduction to the 2021 IRP

What has happened since the 2019 IRP process? The 2019 IRP resulted in a Progress Report filed in November 2019In December 2019, PSE hosted a webinar comparing different methods for applyingsocial cost of carbonThe 2021 IRP Work Plan, including a Public Participation Plan, were filed in April 2020and recently updated (see Docket No: UE-200304 and UG-200305)A new website pse.com/irp has launched and provides a robust platform forengagementThe Washington Utilities and Transportation Commission (WUTC) is progressing onseveral rulemakings: Integrated Resource Planning Rulemaking – UE-190698 Clean Energy Implementation Plans and Compliance with the Clean EnergyTransportation Act Rulemaking, UE-191023 Purchase of Electricity Rulemaking – UE-19083712

2021 Electric IRP PrioritiesThe IRP is a long-term forecast of demand side resources andsupply side resources that appear to be cost effective to meetthe growing needs of our customers.The study period for electric planning is 2022-2045.The 2021 IRP willCETA timeline 2025: Elimination of coalfired resourcesfrom electric power supply 2030: Carbon neutralenergy supply Transition to a carbon free electricity supply by 2045. 80% non-emitting andrenewable resources Remove coal generation from the portfolio of resources. 20% can be met withalternative compliance Reinforce our commitment to reliability as we transition to acleaner electricity supply. 2045: 100 percentnon-emitting electricitysupply13

2021 IRP modeling processThe 2021 IRP will follow a 6-step process foranalysis:1. Establish peak capacity, energy and renewableenergy need2. Determine planning assumptions and identifysupply-side and demand-side resourcealternatives3. Analyze scenarios and sensitivities usingdeterministic and stochastic risk analysis4. Analyze results5. Develop resource plan6. Develop 10-year Clean Energy Action ion Plan53DevelopResourcePlanPlanningAssumptions& ResourceAlternativesAnalyzeAlternatives& Portfolios4AnalyzeResults14

2021 IRP process timeline2020MayJunJulAugSepOctNovDecJanFebDRAFT IRPMar2021AprFINAL IRPPublic ParticipationEstablish resource needPlanning assumptions and alternativesAnalyze alternatives and portfoliosAnalyze resultsDevelop resource planDevelop Clean Energy Action PlanMeeting dates are available on pse.com/irp and will be updated throughout theprocess. This is a tentative timeline subject to revision.15

IRP modeling process

Electric IRP ModelsInputs & AssumptionsAURORApower pricemodelElectric price forecastGas pricesDemand ForecastGeneric supply-side elPeak Capacity Needand ide resourcesTransmission constraintsSocial cost of carbonPortfolios17

Electric generic resourceassumptions

Participation Objective Stakeholders share input on genericresource costs for the electricportfolio19

The purpose of generic resources What are the generic resources used for? Generic resources are used for planning purposes only. They are a stand-in tobuild portfolios of potential new resources Generic Resources give us an idea of what new resources might cost in the futureand how different resources can fit into PSE’s needs During an acquisition process, the generic resources are replaced with actualresources20

We heard you As part of the 2019 IRP process, PSE received feedback from stakeholders about genericresource assumptions. As a result, PSE has researched and revised aspects of our genericresource assumptions. What we’ve changed: Greater reliance on publicly available data sources New renewable resource options Generating resource capital costs have been updated Aspects of operations and maintenance costs have been updated What we’ve retained: PSE will continue to use the HDR report from the 2019 IRP for the operatingcharacteristics of thermal and energy storage resources Data available online as an excel spreadsheet that provides all the costs that we will review inthe slides. This is all the data that PSE has collected on capital costs, fixed costs, andvariable costs. Generic Resource Assumptions Workbook Summary21

Generic resource assumptionsGeneric resource assumptions are made up of different components11. Operating characteristics22. Ongoing costs for fuel and maintenance33. Capital cost to build the plant22

1Operating characteristics – Thermal PlantsCCCTFrame PeakerRecip PeakerNameplate (MW)33622518.7Heat Rate (Btu/kWh)6,6249,9048,445Min up (minutes)606035Min Down (minutes)151515Ramp Rate (MW/minute)404016Start time (warm, minutes)60215Forced outage rate (%)3.882.383.30Min capacity (%)383030Where does this data go?This data goes to the AURORA portfolio model, Plexos flexibilitymodel and the Resource Adequacy Model23

1Operating characteristics – Energy StoragePumped Storage HydroBatteryNameplate (MW)30025Round Trip Efficiency (%)8087Discharge rate (hours)84Degradation (%/yr)near zeronear zeroOperating Range (%)37.5 - 1002 - 100Forced outage rate (%)12Where does this data go?This data goes to the AURORA portfolio model, Plexos flexibilitymodel and the Resource Adequacy Model24

1Operating characteristics – Renewable resourcesAnnual Average Capacity Factor (%)Washington Wind28.6Montana Wind49.1Wyoming-East Wind48.2Wyoming-West Wind39.4Idaho Wind32.3Offshore Wind34.8Washington-West Distributed Solar12.9Washington-East Utility Solar27.7Indicates new resource added for 2021 IRPCapacity factor data is from NREL database and DNV GL. Thisdata reflects the total energy not the peak capacityLocation is a key driver of renewableresource characteristics25

1Operating characteristics – Renewable resources Renewable resource data sources include: NREL (WY Wind, ID Wind and W WA Solar) DNV GL (WA Wind, MT Wind and E WA Solar) Deterministic renewable resource shapes were selected as the most-representativeannual capacity factor (P50) value out of 250 draws The 250 draws are used in the resource adequacy model and in the stochasticmodel. The most-representative shape is used in the deterministic portfolio model.26

1Operating characteristics – Renewable resources - WindSeasonal Capacity Factor - Wind0.80.80.70.7Wyoming EastWyoming 2IdahoOffshore 0020:0021:0022:0023:00Capacity FactorDiurnal Capacity Factor - WindJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecRenewable resource capacity is often a function of both time of day and time of year27

1Operating characteristics – Renewable resources - SolarSeasonal Capacity Factor - Solar0.80.80.70.70.60.60.50.50.4Washington - East0.4Washington - :0018:0019:0020:0021:0022:0023:00Capacity FactorDiurnal Capacity Factor - Solar0Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecRenewable resource capacity is often a function of both time of day and time of year28

2Ongoing costsOngoing costs are divided into two categories1. Variable costs – these are costs that aredependent on the energy produced by the plant2. Fixed costs – these are costs that must bepaid regardless if the plant runs or not29

2Ongoing Costs – Variable – Operations and maintenance costs Includes fuel, waste disposal and other costs dependent upon the quantity of energyproduced Renewable resources typically have very low to zero Variable Operations andMaintenance costs Publically available data sources have been compiled for comparison and will bepresented for discussion shortlyWhere does this data go?This data goes to the AURORA portfolio model, and the Plexos flexibilitymodel30

2Ongoing Costs – Variable – Start-up Costs Thermal resources require additional resources during start-up procedures ascompared to normal operationPSE assumes a start-up cost of 6,502 per start for frame peaker generators. Source: 2019 HDR report on Generic Resource Costs, in 2018 US dollarsWhere does this data go?This data goes to the AURORA portfolio model, and the Plexos flexibilitymodel31

2Ongoing Costs – Fixed – Operations and Maintenance Includes annual maintenance, labor, materials, site leasing, gas pipeline capacity costand other recurring costs not dependent on quantity of energy producedPublically available data sources have been compiled for comparison and will bepresented for discussion shortly32

2Ongoing Costs – Gas Transport and Transmission Gas Transport Costs Gas transport costs are costs associated with moving gas from the source to thegenerator Gas transport cost values and assumptions will be discussed with the natural gasresource alternatives that will be released by June 30, 2020 Transmission Costs Transmission costs are costs associated with moving power from a generator ontoPSE’s distribution network Transmission cost values and assumptions will be discussed during theTransmission Constraints Webinar to be held on June 30, 202033