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## Resource Adequacy and Reliability in the IPM Projections **for the MATS**  **Rule** This document describes resource adequacy and reliability results in the IPM 2015 projections for the base case and MATS rule policy cases. As used here, the term Resource Adequacy means the provision of adequate generating resources to meet projected load and generating reserve requirements in each region, while Reliability includes t he ability to deliver the resources to the loads so the overall power grid remains stable . IPM is specifically designed to ensure generation resource adequacy, either by using existing resources or through the construction of new resources. IPM addresses reliable delivery of generation resources only for the delivery of electricity between regions, by setting limits to the ability to transfer power between regions using the bulk power transmission system. Within each model region, IPM assumes that adequa te transmission capacity exists to deliver any resources located in, or transferred to, the region. **Summary of Changes in Operational Capacity** Total operational capacity is lower in the policy scenario, primarily as a result of increases in coal retirement. Since most regions are projected to have excess capacity above their target reserve margins, most of these retirements are absorbed by a re duction in excess reserves. Operational capacity 1 

### changes from the base case in 2015 are summarized below:

Table 1. Operational Capacity Summary in 2015 Base case operational capacity (MW) 1,02 5,477 Minus Changes in Policy Case: ( - ) Coal retirements -4,677 ( - ) Coal capacity derated - 697 (+) New Capacity Additions 0 (+) Lower non -coal retirements + 386 Net Change in Policy Case -4,988 Equals Policy Case Operational Capacity 1,0 20,489 2 

### Since the model must maintain adequate reserves in each region, the reduced operational capacity of 4,988 MW in the policy case is taken largely from excess reserves that are not needed. In order to maintain resource adequacy in each region where coal resources retire, the model relies on this excess reserve reduction, on lower retirements of non -coal capacity and on greater new capacity additions. In some regions there may be fewer retirements under

1 Operational capacity is any existing, new or retrofitted capacity in the lower 48 states that is not retired. 2 Numbers in this table may not sum due to independent rounding.**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION**

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### the policy case than under the base case, as a result of shifts in the regions where the model determines that retaining such capacity remains economic . As the table shows, the reduction in capacity (excess reserves) is the largest source of change, followed by lower non -coal retirements . There was no change in aggregate new capacity additions between the base and policy case projections . Each of these policy case changes is discussed further below. **Reduction in Excess Reserves** IPM uses a ta rget reserve margin in each region as the basis for determining how much capacity to keep operational in order to preserve resource adequacy. IPM retires capacity if it is no longer needed to provide energy for load or to provide capacity to meet reserve margin during the planning horizon of the projections. Since current regional reserves are generally higher than the target reserve margin for the region, IPM may retire reserve capacity in 2015 if it is not economic to maintain relative to alternatives such as building new capacity or transferring capacity from another region. As a result, many of the coal plants that are projected to retire in 2015 will not need to be replaced for resource adequacy until later years when demand increases and reserves approach the target reserve margin. Reserve margin targets are generally based on the NERC 2010 10 Year Assessments for the region, except in cases where there are more stringent state requirements or other exceptions. In one region, ERCOT, the system planners recently raised their target reserve from the 12.5% used in IPM to 13.75%, subsequent to the most recent NERC assessment. However, IPM’s projected margin for ERCOT under MATS in 2015 remains above this revised 13.75% target, even when taking into account only the capacity reported by ERCOT as being available . 3 

### Table 1 above shows that operational capacity is reduced by less than one percent nationwide in 2015 under the policy. This re duction will have little overall impact, since the weighted average reserve margin at the national level are projected to be approximately 25% in the base case, compared to a default NERC level of 15%. Moreover, coal retirements are distributed throughout the power grid, so there will be only small impacts at the regional level. For example, in the RFC NERC reliability region, containing the coal -fired generating areas in Pen n sylvania, West Virginia and the Midwest, there was a decreas e less than 2% in po licy case

3 ERCOT recently revised its projection of available capacity for 2015 to be 7 8,144 MW in 2015 (Report on the Capacity, Demand, and Reserves in the ERCOT Region, June 9, 2011, Revision 2), which is lower than the total capacity of units in ERCOT as tracked by EPA’s NEEDS database (the source for determining IPM - projected reserve margins as presented in table A2). However, even ERCOT’s revised projection of available capacity in 2015 is more than adequate to meet IPM’s 2015 peak summer demand for ERCOT of 65,810 MW, yielding a reserve margin of 18.7% under those revised capacity assu mptions.**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION**

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### and a remaining overall reserve margin of over 20%. 4 

### These excess regional reserves above the target margin can be shared among subregion s to ensure adequate reserve margins within a larger reliability region. IPM permits these transfers of reserves, but limits their level to ensure the reliability of the bulk power system (see discussion below.) Although there are substantial existing regional variations in reserve margin , IPM adjusts regional capacities in 2015 to meet the specific ta rget reserve margin in each region, through reduction in non -coal retirements, construction of new generating capacity and transfers of capacity among regions to meet the specific reserve margin in each region . Each of these adjustments in the 2015 projections is described below. **Reduction in Non -** **coal Retirements** Reducing non -coal retirements relative to these retirements in the base case is the second largest adjustment needed to balance the loss of coal capacity. Overall combined cycle, combustion turb ine a nd nuclear retirements are 386 MW lower in the policy case compared to the base case. Lower nuclear retirement of 440 MW in the policy case occurred because this capacity became economic to maintain under policy in order to offset retirements of coal . The increase d nuclear capacity under the policy was offset by increase d retirement of 5 4 MW of gas-fired capacity, for a net reduction of 386 MW. The distribution of these retirements across IPM regions is shown in the Appendix. **Reserve Transfers** In cases where it is economic to transfer reserves from a neighboring region rather that supply reserves from within a region, IPM will transfer reserves, subject to summer and winter limits that are designed to ensure that these reserves can be transferre d reliably. The transfer of reserves can occur, for example, if a region must retire a large amount of coal capacity that was used in the base case to meet reserve requirements. T here are only a few significant shifts between the base and policy cases in reserve transfers, and most of these occur in neighboring IPM regions . For example, there is a net increase in transfer of summer reserves out of MACW ( an increase of 1,729 MW) and a net decrease in transfer of summer reserves out of RFCP ( a decrease of 1,345 MW). Reserve transfers by IPM region are provided in the appendix.

4 See map of IPM regions and Table of target and projected reserve margins in the Appendix. The IPM regions comprising the RFC NERC regions are MACE, MACS, MACW, RFCO, RFCP,MECS and COMD.**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION**

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# Appendix **: Tables by IPM Region A1.**  **Projected Operational Capacity in 2015**  **A2. Summary of Target and Projected Reserve Margins in 2015**  **A3. Policy Case Retired Capacity**  **Incremental to Base Case in 2015 A** **4 .**  **Capacity Transfers Region in Base and Policy Scenarios in 2015**

**Map of IPM Regions DRAFT MATERIAL FOR DISCUSSION ONLY**  **– NOT FOR DISTRUBUTION** 

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## A1. Projected Operational Capacity in 2015(MW)

All Generation Sources Coal Only Region Base Policy Change Base Policy Change AZNM 35,829 34,974 -855 9,603 8,749 -854 CA- N 41,285 41,285 0 217 217 0 CA-S 32,676 32,675 - 1 213 212 - 1 COMD 25,232 25,240 8 4,227 4,235 8 DSNY 9,747 9,742 -5 369 364 -5 ENTG 40,298 40,108 - 190 8,397 8,360 -37 ERCT 89,845 89,837 -8 18,409 18,149 - 260 FRCC 55,632 55,616 - 16 9,173 9,157 - 16 GWAY 31,829 31,914 85 19,320 19,437 117 LILC 5,487 5,423 - 64 MACE 30,626 30,626 0 2,759 2,759 0 MACS 12,111 12,003 - 108 5,109 5,001 - 108 MACW 30,852 30,939 87 10,882 10,969 87 MECS 27,607 27,585 - 22 10,820 10,798 - 22 MRO 50,038 49,962 -76 20,801 20,725 -76 NENG 33,106 33,103 -3 2,699 2,608 -91 NWPE 19,726 19,468 - 258 12,263 12,005 - 258 NYC 9,333 9,333 0 PNW 49,147 47,741 - 1,406 1,990 584 - 1,406 RFCO 48,174 47,450 -724 29,966 29,242 -724 RFCP 44,413 44,241 - 172 32,305 32,144 - 172 RMPA 18,374 18,573 199 7,529 7,728 199 SNV 9,196 8,490 -706 2,555 1,849 -706 SOU 62,845 62,550 - 295 24,583 24,288 - 295 SPPN 17,228 17,230 2 7,905 7,961 56 SPPS 40,168 40,188 20 12,023 12,133 110 TVA 37,065 36,851 - 214 12,228 12,014 - 214 TVAK 12,998 12,994 -4 9,445 9,441 -4 UPNY 15,776 15,724 -52 2,328 2,276 -52 VACA 48,680 48,347 -333 18,428 18,095 -333 VAPW 22,251 22,241 - 10 4,325 4,315 - 10 WUMS 17,903 18,036 133 8,229 7,922 -307 Total 1,025,477 1,020,489 -4,988 0 309,100 303,737 -5,374**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION**

**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION** 6 **A2. Summary of Target and Projected Reserve Margins in 2015 Projected Reserve Margins**  **IPM Region Target Reserve** 

**Margin Base Case**  **Policy Case** AZNM 13.6% 34.8% 29.4% CA- N 14.6% 18.4% 18.4% CA-S 14.8% 14.8% 14.8% COMD 15.3% 21.3% 21.3 % DSNY 18.0% 18.0% 18.0% ENTG 15.0% 37.2% 35.8% ERCT 12.5% 24.8% 24. 8% FRCC 19.3% 22.2% 22.1% GWAY 11.9% 61.0% 60.5 % LILC 18.0% 24.7% 18.0% MACE 15.3% 15.3% 15.3% MACS 15.3% 15.3% 15.3% MACW 15.3% 53.4% 41 .8% MECS 15.3% 47.2% 47.0% MRO 15.0% 15.0% 15.0% NENG 15.0% 25.7% 25.3% NWPE 12.0% 79.2% 76.4% NYC 18.0% 18.0% 18.0% PNW 20.0% 46.6% 41.6% RFCO 15.4% 19.8% 15.4% RFCP 15.3% 15.3% 15.3% RMPA 12.3% 12.3% 12.3% SNV 13.6% 13.6% 13.6% SOU 15.0% 26.7% 26.2 % SPPN 13.6% 75.2% 74.4% SPPS 13.6% 18.8% 18.9% TVA 15.0% 15.0% 15.0% TVAK 15.0% 37.2% 38.9% UPNY 18.0% 21.4% 20.9% VACA 15.0% 15.0% 15.0% VAPW 15.3% 15.3% 15.3% WUMS 15.0% 32.7% 33. 3 %**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION**

**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION** 7 **A3. Policy Case Retired Capacity Incremental to the Base Case in 2015 (MW)**  **CC Coal**  **CT Nuclear**  **OG Steam Total**  AZNM 0 1151 0 0 0 1151 ENTG 0 0 0 0 153 153 ERCT 0 236 0 0 - 252 - 16 GWAY 0 - 167 0 0 32 - 135 LILC 0 0 0 0 65 65 MACE 0 0 0 0 0 0 MACS 0 102 0 0 0 102 MACW 0 - 102 0 0 0 - 102 MECS 0 0 0 0 0 0 NENG 0 84 0 0 -88 -4 NWPE 0 232 0 0 0 232 PNW 0 1405 0 0 0 1405 RFCO 0 685 0 0 0 685 RFCP 0 81 0 0 0 81 RMPA 0 0 0 0 0 0 SOU 0 245 0 0 0 245 SPPN 3 -77 51 0 0 - 23 SPPS 0 0 0 0 90 90 TVA 0 163 0 0 0 163 TVAK 0 0 0 0 0 0 UPNY 0 53 0 0 0 53 VACA 0 293 0 0 0 293 VAPW 0 0 0 0 0 0 WUMS 0 293 0 -440 0 - 147 Total 3 4677 51 -440 0 4291**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION**

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### A4. **Net Capacity**  **Transfers by IPM Region in Base and Policy**  **Scenarios in 2015 (MW)**  (Net outflows are positive; net inflows negative)

Base Case Policy Case Net Change in Policy Case Region NetWinter NetSummer NetWinter NetSummer NetWinter NetSummer AZNM 0 681 0 1,185 0 504 CA- N 0 3,515 0 3,515 0 0 CA-S 0 - 11,014 0 - 11,014 0 0 COMD 749 321 749 321 0 0 DSNY 447 2,502 447 2,498 0 -4 ENTG 0 768 0 987 0 219 ERCT 0 0 0 0 0 0 FRCC 0 0 0 0 0 0 GWAY 0 385 0 385 0 0 LILC 0 222 0 439 0 217 MACE 0 -4,205 0 -4,205 0 0 MACS -932 - 2,908 - 1,096 -3,072 - 164 - 164 MACW 2,893 5,573 1,119 7,302 - 1,774 1,729 MECS 1,968 1,880 2,617 1,880 649 0 MRO 256 -3,085 256 -3,240 0 - 155 NENG 1,803 0 1,803 0 0 0 NWPE 0 1,966 0 1,966 0 0 NYC -437 - 2,670 -437 - 2,670 0 0 PNW 0 2,945 0 2,945 0 0 RFCO 2,786 6,909 3,691 7,108 905 199 RFCP -5,367 -7,226 -6,712 -8,571 - 1,345 - 1,345 RMPA 0 - 225 0 - 27 0 198 SNV 0 2,505 0 1,798 0 -707 SOU 0 1,189 0 1,113 0 -76 SPPN 0 570 0 570 0 0 SPPS 0 0 0 0 0 0 TVA 0 -613 250 -827 250 - 214 TVAK 0 166 166 0 166 - 166 UPNY 2,325 1,259 2,325 1,259 0 0 VACA 0 679 416 345 416 -334 VAPW 0 -467 929 -477 929 - 10 WUMS 0 256 0 256 0 0**DRAFT MATERIAL FOR DISCUSSION ONLY –**  **NOT FOR DISTRUBUTION**

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