851 S.W. Sixth Avenue, Suite 1100 Steve Crow 503-222-5161 

Portland, Oregon 97204-1348 Executive Director 800-452-5161 

www.nwcouncil.org Fax: 503-820-2370

W. Bill Booth 

Chair 

Idaho

Bruce A. Measure 

Vice-Chair 

Montana

James A. Yost 

Idaho 

Tom Karier 

Washington 

Dick Wallace 

Washington

Rhonda Whiting 

Montana 

Melinda S. Eden

Oregon 

Joan M. Dukes

Oregon 

A Resource Adequacy Standard 

For the Northwest 

April 16, 2008 

Council Document 2008-07 
2

A Resource Adequacy Standard 

for the Northwest 

The Resource Adequacy Standard serves as a gauge to assess whether the Northwest electricity 

supply is sufficient to meet the region’s needs now and in the future. It provides a minimum 

threshold that serves as an early warning should resource development fall dangerously short. It 

also suggests a higher threshold that encourages greater resource development to offset 

electricity price volatility. It does not mandate compliance or imply any enforcement 

mechanisms. It does not directly apply to individual utilities – because every utility’s 

circumstances differ. 

Currently, the region as a whole has more than sufficient resources to meet the minimum 

threshold for resource adequacy. The minimum threshold, however, should not be mistaken as a 

resource planning target. The prudent amount of resource acquisition should be derived from an 

integrated resource planning process. For the region, the Council’s power plan serves as a 

blueprint for the types and amounts of resources the Northwest should acquire. Individual 

utilities must assess their own needs and risk factors and determine their own planning targets, 

which are screened by public utility commissions or by their boards of directors. 

The Pacific Northwest Utilities Conference Committee (PNUCC) and the Bonneville Power 

Administration (BPA) amass utility planning information and produce regional assessments of 

loads and resources. These tabulations have a different purpose than the resource adequacy 

standard – they address utilities’ need to acquire prudent amounts of new resources not the bare 

minimum necessary to keep the lights on. It would be a misapplication of the adequacy standard 

to infer that utilities should slow down their resource acquisition activity because the adequacy 

standard is already being met. 

This document includes the language that defines the resource energy standard for the Northwest 

and a summary of the current assumptions and thresholds (Appendix A). Also included is the 

previously adopted implementation plan (Appendix B – Council document 2006-22), which 

describes how this standard will be used. Appendix C offers a background document with 

additional information on the standard. 

 
3

The Pacific Northwest Regional Energy Standard 

The energy metric for the Pacific Northwest 1 is defined to be the average annual load/resource 

balance, which is the available 2

 average annual energy minus the average annual firm load in 

units of energy (average megawatts 3), where: 

• The available average annual energy 4 is defined as the sum of: 

o Non-hydro resource generation, including renewable resources, accounting for 

maintenance and forced-outage rates and limited by fuel-supply constraints and/or 

environmental constraints 

o Uncommitted Independent Power Producer (IPP) resource generation, 

accounting for maintenance and forced-outage rates and limited by fuel-supply 

constraints and/or environmental constraints, and assuming 

 full capability from October through May and 

 the fraction of IPP capability available to Northwest utilities from June 

through September 

o Firm hydroelectric generation, based on critical water 5

 conditions 

o Planning adjustment energy, 6 which is derived from the currently used 5 

percent LOLP guideline 7

• The average annual firm load is based on normal temperature conditions and is adjusted 

for firm out-of-region energy sales and purchases and for conservation savings 

The energy threshold for the Pacific Northwest is zero, that is, on an annual basis resources (as 

defined above) should at least match the expected annual load. When the energy threshold is 

achieved, the resulting loss-of-load probability should be 5 percent. 

 

1

 The Pacific Northwest is defined to be the geographical area referenced in the 1980 Northwest Power Act, which 

includes the states of Oregon, Washington, Idaho, and the western part of Montana.

2

 The term “available” does not mean “expected” in this context. 

3

 One average megawatt is equivalent to 8,760 megawatt-hours of energy. 

4

 This refers to resources that are committed to serve regional load, whether or not they are physically located in the 

region. 

5

 For the region, under current operating constraints (including actions listed in NOAA Fisheries’ biological 

opinion), the critical water year is defined by the hydrologic conditions from August 1936 through July 1937. 6

 The value used for “planning-adjustment” energy is derived from the Genesys model and should be reassessed at 

least once a year or whenever new resource information is available. This factor represents an adjustment to be 

made to the load/resource balance so that when the balance is zero, the associated loss-of-load-probability (LOLP) 

will be 5 percent. The amount of planning-adjustment energy depends on assessments of the availability of out-ofregion resources and non-firm hydro energy that the region believes is prudent to plan on for energy adequacy. See 

Appendix A for specific assumptions. 

7

 The Resource Adequacy Forum is also reviewing the 5 percent LOLP guideline. Any change to this guideline 

could translate into a different “planning-adjustment” energy value. 
4

The Pacific Northwest Regional Capacity Standard 

The capacity metric for the Pacific Northwest is defined to be the planning reserve margin

(PRM), which is the surplus generating capability over the expected-peak load averaged over the 

sustained-peak period, for summer and winter periods, in units of percent, where: 

• The sustained-peak period is defined to be the highest 6 hours per day over 3 consecutive 

days (18 hours in total) 

• The generating capability is defined as the sum of the sustained-peaking capability from: 

o Non-hydro resources, including renewable resources, accounting for maintenance 

and limited by fuel-supply constraints and/or environmental constraints 

o Uncommitted Independent Power Producer (IPP) resources, accounting for 

maintenance and limited by fuel-supply constraints and/or environmental 

constraints, and assuming 

 full capability from October through May and 

 the fraction of IPP capability available to Northwest utilities from June 

through September 

o Firm hydroelectric sustained-peaking capability, based on critical water 8

conditions and assuming that no extraordinary actions are taken to increase 

peaking capability 

o Out-of-region capacity for both winter and summer, which is reviewed annually 

o Incremental hydroelectric sustained-peaking capability, which is an additional 

amount available in water conditions better than critical9 

• The expected-peak load is defined as the average load over the sustained-peak period, 

based on normal temperature conditions and is adjusted for firm out-of-region sales and 

purchases and for conservation savings 

The PRM thresholds are derived from the currently used 5 percent LOLP guideline.10 The PRM 

is the excess of defined resources over expected loads that yields a 5 percent LOLP. The PRM 

thresholds can be thought of as providing components to cover:11 

• Operating reserve requirements 

• Long-term loss of a resource 

• Load increases arising from adverse temperature 

 

8

 For the region, under current operating constraints (including actions listed in NOAA Fisheries’ biological 

opinion), the critical water year is defined by the hydrologic conditions from August 1936 through July 1937. 9

 This amount will be defined by an analysis of hydroelectric sustained-peaking capability. 

10 The PRM thresholds are derived from the Genesys model and should be reassessed at least once a year or 

whenever new resource information is available. 

11 These components are not strictly additive, and attempting to define a PRM threshold using this method may not 

lead to a result consistent with the loss-of-load probability analysis.
5

Appendix A 

Current Adequacy Thresholds and Assumptions 

Current Adequacy Thresholds 

• Energy: 

o Average annual load/resource balance is zero 

• Capacity: 

o Winter planning reserve margin is 23 percent 

o Summer planning reserve margin is 24 percent 

Resource Assumptions 

• Non-hydro resources: 

o Capacity will reflect seasonal adjustments. 

• Wind: 

o To be updated when the wind subcommittee completes its analysis of historic 

wind data 

o Energy standard: expected average annual generation (currently 30 percent of 

nameplate) 

o Capacity standard: 15 percent of nameplate 

• Uncommitted Independent Power Producer (IPP) resources: 

o To be updated annually or when new information is available 

o full capability from October through May and 

o 1,000 megawatts from June through September 

• Out-of-region market 

o To be updated annually or when new information is available 

o 3,000 megawatts per hour from October through May 

o None available from June through September 

• Incremental hydroelectric sustained-peaking capability: 

o To be updated annually or when new information is available 

o 2,000 megawatts from October through May 

o 1,000 megawatts from June through September 

• Energy Planning Adjustment:

o 1,300 average megawatts derived from the LOLP analysis 

Loss-of-load Probability Assumptions 

• Significant Curtailment for Energy: 28,800 megawatt-hours of total curtailment over 

the December through March period or the energy equivalent of the loss of 1,200 

megawatt-hours over a 24-hour period. 

• Significant Curtailment for Capacity: 3,000 megawatts in any hour of the winter or 

summer period 
6

Appendix B – Document 2006-22 

Pacific Northwest Resource Adequacy Warning Implementation Plan 

INTRODUCTION 

This paper describes the role the Council will take and the Council’s expectations of the roles 

others will take in the Pacific Northwest Resource Adequacy Implementation Plan. It includes 

current expectations about the outcome of Bonneville’s Regional Dialogue process, recognizing 

that those discussions are not yet complete. 

BACKGROUND 

Regional Awareness of Resource Adequacy Framework: There are a number of national, westwide, regional and state efforts currently underway, which have thrust resource adequacy into the 

limelight. The Energy Policy Act of 2005 mandates the Electric Reliability Organization (ERO), 

established by the act to implement mandatory reliability standards for the bulk-power system 

under the purview of the Federal Energy Regulatory Commission (FERC), “to conduct periodic 

assessments of the reliability and adequacy of the bulk-power system in North America.” The 

North American Electric Reliability Council (NERC), which was certified as the ERO on July 

20, 2006, is in the process of developing a standard for resource adequacy assessments. FERC 

said in its final rule on implementation of the ERO provisions of the legislation that it intends to 

require the ERO to make recommendations where entities are found to have inadequate 

resources following the assessments. 

In the West, the Western Electricity Coordinating Council (WECC) is developing guidelines to 

recommend appropriate methodologies for assessing resource adequacy. Although the NERC 

and WECC efforts act as drivers, momentum is also building within the region for a regional 

resource adequacy standard through the Forum and the resurgence of Integrated Resource Plans 

(IRPs). In fact, the state of Washington recently passed legislation requiring all large electric 

utilities, both public and private, to prepare IRPs. Utilities, state regulators and the elected 

boards of public utilities are all explicitly examining strategies for planning resources to meet 

load. The efforts described above, the active participation by the utility and state regulatory 

communities in the Forum and the adoption of the adequacy metrics and thresholds for the 

region by the Council all serve to elevate the electricity industry’s awareness of the regional 

standard, which is the first step to achieving resource adequacy. 

APPROACH 

Utility Reporting: Utilities, other than those that have chosen in advance to put their entire load 

on Bonneville, would report their load and resource forecasts annually to some regional entity. 

Bonneville would report for all the utilities that have chosen it as their ongoing resource supplier 

for load growth. Currently the utilities with responsibility for procuring resources to meet their 

load obligation report their forecasted loads and resources to PNUCC. This approach proposes 

to continue using PNUCC and its Northwest Regional Forecast (NRF) as the vehicles for 

reporting. Aside from possible refinements in data definitions and development of protocols for 

any new data, this reporting process would involve little change from current practice, except for 

those utilities that are newly assuming independent resource procurement responsibility. The 

NRF currently uses a five-year planning horizon, which would be maintained for this purpose. 
7

Reporting is central to the proposed implementation process and relies on full participation by 

the utilities, their regulators and local boards, and Bonneville. Bonneville contracts would not 

require that its customer utilities develop resources to meet adequacy standards, but they would 

require that utilities who do not rely on Bonneville to meet their load growth to report their load 

and resource data for this assessment. 

PNUCC and Council Assessments: The results of this reporting would be used in an assessment, 

in which the regional totals would be checked against the regional energy and capacity metrics 

and thresholds. This assessment would be done in the first instance by PNUCC. The 

assessments for the planning years, five and three years out, would be of most consequence for 

the region. The results of these “bottoms-up” assessments could then be compared with the 

Council’s “top-down” regional assessments in order to validate the assessments, or, in the case of 

discrepancies, either inform quality control checks of the data to further refine the assessments in 

the future or highlight differences in assumptions. Some differences in assumptions e.g., about 

capacity factors of wind generation, might provoke additional research, while others could be the 

result of policy or regulatory decisions. 

At this stage, the results of the assessment(s) would be depicted on an aggregated basis, as is 

currently done in the NRF. Utilities would be able to compare their resource strategies for 

meeting load obligations to the regional resource adequacy situation and adjust their plans 

accordingly. The regional assessment(s) would include the “planning adjustment” (winter outof-region spot market purchases plus hydro flexibility) and the regional uncontracted IPP 

generation in the regional totals, as described in the energy metric and threshold adopted by the 

Council. 

Highlighting how much the region is relying on the external spot market or on uncommitted 

regional IPP generation, compared to the amounts included in the currently proposed standard 

would provide a kind of warning signal to the region about potential upcoming adequacy 

problems. 

Indicators of Resource Adequacy Levels: The section below describes in more detail a “green 

light, yellow light, red light” approach to regional adequacy assessment and describes actions to 

be taken with each outcome. 

The description refers both to a physical standard, the minimum threshold adopted by the 

Council, and to an economic standard, a higher threshold that provides more resources than 

simply enough to avoid loss of load. The Council’s implied economic threshold12 developed in 

the Fifth Power Plan is an example of a possible economic standard. Developed by analyzing 

the exposure of the Northwest power system to a large variety of risks, including the risk of high 

market prices, such as were experienced in 2000-01, this threshold would give the region 

approximately an additional 3,000 MW of resources, above the level that would be developed 

pursuant to the minimum threshold adopted in the adequacy standard. The forum recommended 

that the Council’s power plan be used to set the threshold for the economic standard. 

 

12 See Volume 2, Chapter 7, “Portfolio Analysis and Recommended Plan” in Northwest Power and Conservation 

Council. Fifth Northwest Electric Power and Conservation Plan. Portland, Oregon, 2005. 
8

The approach is summarized in the following table: 

 How Economic Standard Physical Standard 

 When Pass Fail Pass Fail 

5th Year Out Green Yellow Green Yellow 

3rd Year Out Green Yellow Green RED 

A green light would trigger an acknowledgement that the region is on track. The yellow and red 

lights would be used to trigger different regional actions. 

The process can also be described by the following flow charts: 

Fifth Year-Out Assessment: 

Third Year-Out Assessment: 

Council Actions, Yellow Light: Since the yellow light would indicate a kind of early warning, a 

regional report could be issued by the Council. It would be presented at a Council meeting and 

public comment would be taken. This report would emphasize that the region is potentially 

entering a more serious situation and encourage utilities with load service responsibilities to take 

action. This report would not single out individual utilities. The Council could also convene a 

regional meeting to discuss the results of the assessment. 

Council Actions, Red Light: For the red light, additional actions would be taken. A regional 

discussion would be started to understand the reasons for being in the situation triggering a red 

light, to determine whether sufficient actions are being taken to remedy the forecast inadequacy, 

and to identify additional measures needed, if any. A regional conference would be held to begin 

Pass - 

Green 

Fail - 

Yellow 

Physical 

Standard

Pass - 

Green

Fail - 

Yellow

Economic 

Standard

Economic 

Standard 

Physical 

Standard 

Pass - 

Green 

Fail - 

Yellow 

Pass - 

Green 

Fail - 

RED 
9

that discussion. The goal of these discussions would be to ensure that sufficient actions will be 

taken to avoid an actual inadequacy. If the discussions are successful, then the Council would 

publicly announce its conclusion that sufficient actions are being taken to address the “red light” 

and would monitor progress on these actions. 

In the event that the Council concludes that these discussions did not succeed in providing 

sufficient assurance of avoiding inadequacy, further steps could be taken. One of those steps, for 

example, would be for the Council to report that the initial problem is not being adequately 

addressed. A second possible response would be for the Council to communicate directly with 

individual utilities, local boards or state commissions for those utilities that appeared to be 

disproportionately relying on uncommitted purchases. This action would ensure both that these 

key decision makers were aware of the potential problems and that the Council fully understood 

the reasons for the utilities’ being in such a circumstance. The Council could also consider 

publicly announcing which utilities are relying disproportionately on uncommitted purchases. 

With these options the Council would have sufficient recourse to follow up on regional 

inadequacy if it were to persist. 

Utility Economic Incentives for Meeting Adequacy Standards: Because of the variation in water 

conditions the Northwest experiences, prospective (planning) inadequacy will not necessarily 

turn into inadequacy in actual operations. However, should the region be inadequate on a nearterm planning basis (too short a timeline for construction of new resources), utilities that are 

short, for whatever reason, would face the market price and any environmental mitigation 

consequences of their actions. This will provide a strong natural incentive to develop adequate 

resources. 

Expected Bonneville Actions: Though Bonneville contracts will not require its customers to 

meet adequacy standards, they will reinforce this economic incentive. The Regional Dialogue 

discussions are not complete and Bonneville has not yet issued a final decision. Assuming, 

however, that discussions continue along the path they are currently on, the following is one set 

of probable outcomes. Bonneville expects to negotiate contracts with its public agency 

customers that will provide that customers either make an election to (1) purchase load-following 

power products from BPA or (2) take fixed amounts of power that do not follow load. Once a 

customer’s load is forecasted to exceed their entitlement to power at the Tier 1 rate on a three 

year out basis, the customer needs to decide whether to procure their own resources to meet its 

load growth, or to contract for power from Bonneville at the Tier 2 rate. Contracting for Tier 2 

power from Bonneville would potentially include a three-year notice requirement. This 

requirement would make it clear that Bonneville will not provide an assured “backstop” for 

utilities which fail to develop their own resources. The contracts would also include affirmation 

by the customers that they understand the resource adequacy standards and that Bonneville 

would not provide short-term backup service. 

The details of this relationship (amounts of power to be provided by Bonneville, etc.) will have 

to be worked out in the contract discussions between Bonneville and its power customers. 

It is also important to remember that, just as conditions could turn out in an operating year to be 

better than expected, they could also turn out to be worse. The planning metrics and minimum 

thresholds are established based on a five percent LOLP, which means that they are not intended 

to protect against all possible outcomes. There will be some circumstances in which, even if the 
10

region meets the planning criteria , it could face high market prices or even potential load 

curtailments. 
11

Appendix C 

Background on the Northwest Resource Adequacy Standard 

Summary 

The Resource Adequacy Standard serves as a gauge to assess whether the Northwest electricity 

supply is sufficient to meet the region’s needs now and in the future. Developed over the last 

two and a half years by the Pacific Northwest Resource Adequacy Forum, it provides a minimum 

threshold that serves as an early warning should resource development fall dangerously short. It 

also suggests a higher threshold that encourages greater resource development to offset 

electricity price volatility. 

The standard was developed for a number of reasons. First, the operation of the power supply is 

becoming increasingly complex with the addition of wind resources and greater operating 

constraints on the hydroelectric system. Second, utility planners want to avoid a repeat of the 

electricity crisis of 2000-01, which brought the region to the brink of a blackout and caused 

electricity prices to soar. Finally, the North American Electric Reliability Corporation (NERC) 

plans to initiate the development of a resource adequacy assessment standard in 2009, which will 

require the Western Electricity Coordinating Council (WECC) to develop an adequacy 

assessment framework. The WECC, in turn, has asked for help in assessing the adequacy of the 

Northwest’s power supply. 

 

The standard does not mandate compliance or imply any enforcement mechanisms. It does not 

directly apply to individual utilities – because every utility’s circumstances differ. The forum 

has provided some guidance for applying the standard to utility resource planning, but 

ultimately, each utility must assess its own needs and risk factors, such as its reliance on market 

supplies. 

Currently, the region as a whole has more than sufficient resources to meet the minimum 

threshold for resource adequacy. The minimum threshold, however, should not be mistaken as a 

resource planning target. The prudent amount of resource acquisition should be derived from an 

integrated resource planning process. For the region, the Council’s power plan serves as a 

blueprint for the types and amounts of resources the Northwest should acquire. Individual 

utilities determine their own planning targets, which are screened by public utility commissions 

or by their boards of directors. 

The Pacific Northwest Utilities Conference Committee (PNUCC) and the Bonneville Power 

Administration (BPA) amass utility planning information and produce regional assessments of 

loads and resources. These tabulations have a different purpose than the resource adequacy 

standard – they address utilities’ need to acquire prudent amounts of new resources not the bare 

minimum necessary to keep the lights on. It would be a misapplication of the adequacy standard 

to infer that utilities should slow down their resource acquisition activity because the adequacy 

standard is already being met. 
12

Background 

 

Electricity does more than keep the lights on in the Pacific Northwest. It literally powers our 

economy. The absence or presence of an adequate electricity supply can either curtail or 

facilitate economic growth. That’s why the region’s electricity experts have been working on a 

resource adequacy standard – to help ensure we continue to have an adequate electricity supply 

well into the future. 

In the worst extreme, an inadequate electricity supply can affect public health and safety, as in a 

blackout. Fortunately, such events are rare and when they do happen are most often caused by a 

disruption in the delivery of electricity (transmission lines), not the supply. However, there have 

been times – during extreme cold spells or heat waves – when the supply has been tenuous. The 

fact that most of the region’s electricity comes from hydropower presents unique challenges to 

the energy supply, too, since periods of drought that limit hydropower production are 

unpredictable. 

While most disruptions in supply have been short term, the Western United States did experience 

an extended energy crisis in 2000-01. At its root, the crisis was precipitated by an imbalance of 

electricity supply and demand centered in California and the Pacific Northwest, where for years, 

development of new energy resources had lagged behind energy demand. The ripple effects 

were felt throughout the West as the crisis drove electricity prices and consumer rates to historic 

highs. 

Electricity planners in the Pacific Northwest are taking the lessons learned from that crisis to 

heart. They have been working to ensure that such a crisis does not happen again in this region. 

The Adequacy Forum 

In the summer of 2005, BPA and the Council jointly initiated the Pacific Northwest Resource 

Adequacy Forum. The forum includes representatives from the region’s electric utilities and 

utility organizations, public utility commissions and public interest groups, as well as from BPA 

and the Council. It is made up of a steering committee and a technical committee. 

The forum’s overarching goal is to “establish a resource adequacy framework for the Pacific 

Northwest to provide a clear, consistent, and unambiguous means of answering the question of 

whether the region has adequate deliverable resources to meet its loads reliably and to develop 

an effective implementation framework.” 

To that end, the forum has been working to forge a consensus-based standard for the region to 

address both energy (annual needs) and capacity (hourly needs). This standard has been designed 

to assess whether the region has sufficient resources to meet growing demand for electricity well 

into the future. This is important, because it takes time – usually years – to acquire or construct 

the infrastructure necessary to provide an adequate electricity supply. 

As part of this effort, the Council accepted the recommendations of the forum and has adopted 

the proposed resource adequacy standard for the Northwest. The Council also adopted a 

voluntary implementation plan that was developed and recommended by the forum. 
13

Two Perspectives: Utility and Regional 

When the region’s utilities add up their loads and resources through the PNUCC Northwest 

Regional Forecast, they currently show a substantial need to acquire resources, and they identify 

the type and quantity of resources they plan to acquire. In contrast, the regional resource 

adequacy assessment currently indicates that the region is above the minimum threshold for 

resource adequacy. While these perspectives appear inconsistent with one another, each is valid. 

The regional adequacy standard defines a floor or minimum amount of resource development, 

whereas the utility assessment and the Council’s power plan suggest targets for more optimal 

amounts of new resource capability. 

There are four main reasons for the difference: 

 

 First, the regional adequacy standard includes a large amount of generation that is 

physically available to the region but is not owned or contracted for any utility. Most 

utilities only count resources they have firm rights to, through ownership or contract. 

 Second, most utilities use critical water (driest year on record) to measure hydroelectric 

generating capacity. The regional adequacy standard uses a somewhat less stringent 

measure to define the minimum threshold for adequacy. 

 Third, many utilities do not count the full availability of particular resources because of 

high operating costs, lack of firm fuel contracts or other reasons. The regional standard is 

based on the assumption that during emergencies, many of these resources would be 

available. 

 Fourth, many utilities are concerned about the risk of high costs during periods when the 

power supply is tight and, therefore take a more conservative approach in defining their 

need to acquire new resources. 

The current adequacy assessment indicates that there are sufficient resources (both firm and nonfirm) physically available to regional utilities to make the likelihood of a blackout very low – 

within the limits of what the region will tolerate. However, the minimum threshold does not 

address the optimal amount of resources, nor the types of resources that the region should 

acquire. Being at the minimum level may keep the likelihood of blackouts low, but it does not 

guarantee that prices will remain stable. The desired or prudent amount of resource development 

for the region is determined by the Council’s Power Plan, not by this standard. This higher 

threshold for resource development for the region has been referred to as the economic threshold. 

The optimal amount of resource development for individual utilities must be derived from their 

own integrated resource planning processes. 
14

The Regional Standard 

As the standard was developed, the forum 

considered a number of recent changes in the 

regional power picture. These changes include 

the growing role of independent power producers, 

enhanced wholesale power trading, reduced 

flexibility in the hydroelectric system, the 

increased importance of natural gas-fired 

generation, the growth in wind generation, and 

higher summer air-conditioning loads. 

The new standard is based on a sophisticated 

hourly assessment of loads and resources and how 

they might be affected by temperature (load 

deviations), precipitation (water supply), forced 

outages to generating resources, and other factors. 

At the heart of the forum’s effort is a computer 

program that estimates the future likelihood of a 

significant power curtailment under many 

possible future load and resource conditions. 

Historically, the region’s tolerance for a 

significant power supply shortage has been 

assumed to be 5 percent – that is, the region 

would tolerate a significant power shortage no 

more than once in 20 years. This assessment, 

usually referred to as a loss-of-load probability 

(LOLP) analysis, is converted into an equivalent, 

but simpler and more familiar load/resource 

balance measurement that regional planners use in 

their calculations. The boxed text summarizes the 

current standard. To view the actual standard, go 

to: http://www.nwcouncil.org/energy/resource/Default.asp. 

Implementing the Standard 

The forum also wanted to ensure it did not

overstep the jurisdiction of states or the 

prerogatives of individual utilities in planning and 

acquiring resources to meet load. Because each 

utility’s circumstances differ, it is difficult to 

translate a regional standard into a utility-specific 

standard. The forum has provided some guidance 

for utilities but, ultimately, they and their 

regulators are the decision makers for resource 

acquisition. The implementation plan depends on regional sharing of information, transparency 

of assessment methodologies, and regional coordination. The forum believes that a voluntary 

Energy Standard 

Energy in this context refers to the annual electricity 

needs of the region. The measure for this standard is 

the annual average load/resource balance in units of 

average megawatts. The threshold for this measure is 

set so that the resulting loss-of-load probability 

assessment yields a 5 percent value. In determining 

resource generating capability, the forum includes 

hydroelectric generation available under critical 

water, available annual output of regionally 

committed thermal generators and renewable 

resources, and a portion of the uncommitted 

independent power producer generation. The forum 

also includes a small amount of non-firm resources 

such as out-of-region market supplies and non-firm 

hydroelectric generation. The amount of non-firm 

resources the region should rely on is determined by 

the 5 percent loss-of-load probability analysis. In 

determining load, the standard uses the region’s 

average annual firm load based on normal 

temperatures and adjusted for firm out-of-region 

energy contract sales and purchases and savings from 

conservation programs. 

Capacity Standard 

Capacity in this context refers to the peak electricity 

needs of the region. The measure for this standard is 

the planning reserve margin, or the surplus sustainedpeaking capacity, in units of percent. It represents 

the surplus generating capability above the sustainedpeaking demand. In determining resource peak 

capability, the forum includes the same firm and nonfirm resources used to assess the energy standard for 

the region. The planning reserve margin is assessed 

over the six highest load hours of the day for three 

consecutive days (sustained-peak period). This is 

intended to simulate a cold snap or heat wave – 

periods of the year when the Northwest requires the 

most capacity. The planning reserve margin is 

computed relative to normal weather sustained-peak 

loads. The threshold for this measure is determined 

by the 5 percent loss-of-load probability analysis and 

should be sufficient to cover load deviations due to 

extreme temperatures and the loss of some generating 

capability. 
15

approach will work because utilities and their governing bodies have a strong incentive to 

develop adequate resources to meet retail loads. 

BPA will also play a significant role. As it signs new wholesale power contracts with its utility 

customers, BPA will require that customers provide forecast loads and resource data annually, on 

a confidential basis, to the PNUCC, or its successor organization. This information will be used 

to facilitate regional resource adequacy assessments. BPA expects its customer contracts to 

include terms that define which parties will have responsibility to serve load growth. 

For the reasons addressed above, it is to be expected that utilities will be acquiring resources 

even when the resource adequacy standard is already being met. The adequacy standard is 

intended to be the bare minimum, not the target, for regional resource development. 

The Future 

The Northwest is not alone in focusing on ensuring an adequate power supply. NERC plans to 

initiate the development of a resource adequacy assessment standard in 2009, which will require 

the WECC to develop an adequacy assessment framework. WECC has spent the past several 

years developing a framework for the West’s power supply, which is currently in place. 

WECC’s framework is explicitly not intended to override any state or regional assessments, 

including regional adequacy measures or their thresholds. In fact, WECC has solicited help from 

regional entities to aid in its assessment of west-wide resource adequacy.