Response'of'the'GTMax'Expert'Review'Panel'to'Comments'on'Our'2012'Report

Dr.'Edward'Kahn

Dr.'Verne'Loose

Dr.'Michael'Schilmoeller

February'2013

At'the'invitation'of'the'Grand'Canyon'Monitoring'and'Research'Center'

(GCMRC),'three'independent'experts'reviewed'the'GTMax'power'operation'

model'and'its'uses'for'economic'analysis'of'issues'relevant'to'the'Glen'

Canyon'Dam'Adaptive'Management'Program'(GCDAMP).''The'basis'for'this'

review'was'a'workshop'held'on'August'31'and'September'1,'2011'in'

Flagstaff,'Arizona.'In'January'2013,'GCMRC'released'our'report'along'with

comments'by'workshop'participants.

This'present'document'represents'the'response'of'the'expert'panel'to'these'

comments.'

The'comments'in'total'attest'to'the'difficulties'involving communications'on'

complex'technical'matters'such'as'those'at'issue'here'despite'the'best'efforts'

of'all'involved.'We'do'not'feel'that'pointTforTpoint'rebuttals'would'be'a'

productive'use'of'anyone’s'time.'We'recognize'that'there'were'areas' where'

our'knowledge'was less'deep'than'that'of'Workshop'participants.'The'

comments,'however, display'some'semantic'confusions and'rhetorical'excess.''

We'particularly feel'that'the'commenters'have'made'some'unfortunate'

inferences about'our'motives.'We'would'like'to'limit'our'response'to'a'few'

points,'and'leave'further'discussions'to'stakeholders'in'the'GCDAMP.'

We'address'three'issues'here:'(1)'the'scope'of'our'assignment,'(2)'the'alleged'

advocacy'of'the'expert'panel,'and'(3)'our'continuing'uncertainty'about'the'

role'of'institutional'constraints'on'the'issues'relevant'to'the'GCDAMP.

A'number'of'the'comments'assert'that'the'expert'panel'has'wandered'“too'far'

afield”'from'the'more'narrow'scope'of'simply'assessing'GTMax'capabilities'by'

some'unnamed'scientific'standard. We'were'encouraged'by'our'initial'contact'

at'the'GCMRC'to'take'an'expansive view'of'our'assignment'and'to'place'our'

remarks'in'a'broad'institutional'and'analytic'perspective.' We'were'provided'

a'copy'of'the December'2009,'Final&Report&of&the GCMRC&Socioeconomic

Research&Review&Panel,'which'endorses'a'more'comprehensive'scope for'

review for valuation and'production simulation tools. We'attach'a'document'
that'we'received'in'advance'of'the'workshop'which'also'endorses'the'broad'

view'of'our'assignment.'We'took'such'a'view,'addressing'issues'that'were'

both'near'term'in'nature'and'those'that'were'and'are'on'the'horizon'as'the'

economic'and'policy'environment'evolves.'

Several'commenters'allege'that'the'expert'panel'was'advocating'specific'

policies'toward'markets'and'institutional'behavior'to'which'these'

commenters'object.'We'distinguish'between'recommendations'to'consider)

alternatives'from'recommendations'to'adopt alternatives.''It'was'our'

intention'to'advocate'the'former,'and'not'the'latter.''We'felt'it'was'our'duty'to'

highlight'potential'opportunities'for'reducing'customer'rates.' We'feel'the

Report'met'that'standard.'

Many'of'the'conflicting'perspectives'center on'the'nature'of'the'institutional'

constraints'under'which'the various'participants'operate;'in'particular,'the'

obligations'of'a'federal power'marketing'agency.''While'we'make'no'claim'to'

expert'knowledge'of'the'legal'issues'that'may'be'involved'here,'we'are'

familiar'with'the'activities'of'the'Bonneville'Power'Administration'(BPA),'

which'is'quite'active'in'the'power'markets'of'the'Western'Interconnection

(WI).' Our'underlying'presupposition'in'the'Report'is'that'anything'BPA'does,'

any'other'federal'power'marketing'agency'may'also'do.

Our'Report'acknowledges'our'confusion'about'studies'we'have'reviewed'

which'sometimes'claim'that'only'customer'load'serving'actions'are'proper,'

but'then'also'invoke'“economic”'principles'that'rely'on'dispatch'and'

valuation'based'on'wholesale'market'prices.' If'only'customer'load'serving'is'

allowable,'then'the'market'based'dispatch'and'valuation'is'irrelevant.'Of'

course,'dispatching'to'load means'foregoing'opportunities that'are

conservative'and'traditional'utility'practices for'increasing'net'revenues'and'

thereby'reducing'customer'rates.''If'market'based'valuation'is'relevant,'then'

why'should'some'markets'be'excluded'from'consideration?''This'is'the'

context'in'which'we'mention'ancillary'services'markets'accessible'in'the'WI.'

If'Palo'Verde'energy'market'prices'represent'economic'markets,'why'

shouldn’t'these'other'market'prices'also'be'relevant?''

We'believe'that'only'stakeholders'in'the'GCDAMP'can'answer'these'

questions.'Our'job'as'outside'experts'is'to'raise'relevant'questions.'Nothing'in'

the'comments'received'changes'our'view'that'there'is'more'than'a'little'

confusion,'if'not'outright'selfTcontradiction'on'these'important'matters.'''As'

outsiders'to'the'GCDAMP'we'have'tried'to'bring'an'independent'perspective.'

Perhaps'our'report'will'serve'the'constructive'purpose'of'stimulating'

discussion'within'the'GCDAMP.
Scope-of-Work for GTMAx Model Review

The US Geological Survey’s Grand Canyon Monitoring and Research Center (GCMRC)

is organizing a workshop to evaluate the utility and applicability of a specific electrical 

energy generation and transmission model known as “GTMax” for assessing economic 

implications of changing dam operations at Glen Canyon Dam. This model was 

originally developed by Argon National Laboratories at the request of the Department of 

Energy (Western Area Power Administration) for the purpose of modeling and predicting 

how to maximize electrical power generation and transmission under varying load 

conditions and operational constraints. Western Area Power Administration (Western) is 

now proposing to use a modified version of this model to evaluate the economic 

implications of changing operations at Glen Canyon Dam to meet various social and 

environmental objectives, as specified in the 1957 Colorado River Storage Protect Act, 

the 1992 Grand Canyon Protection, and other legal and regulatory requirements. 

GCMRC, as the designated science provider to the Department of Interior’s Glen Canyon 

Dam Adaptive Management Program, is conducting an independent assessment of this 

model and its applicability for addressing economic information needs of the GCDAMP. 

In order to accomplish this, USGS is soliciting the temporary services of 3-4 individuals 

with highly specialized expertise and experience in electrical energy economics and 

electrical systems modeling to participate in this workshop and provide independent 

advice to USGS/GCMRC staff about several topics (see below). In their capacity as 

reviewers, the selected individuals are expected to listen to several technical presentations

over a two-day period concerning the model and the specific methods that are being used 

by Western to derive economic values from the output of the model. They will ask 

probing questions of the presenters to elucidate critical information about the structure, 

assumptions, functions, and potential and actual applications of the model and the 

accompanying economic analyses. During and after the workshop, the reviewers will 

coordinate with one another to provide USGS/GCMRC with a written assessment of their 

findings. The resulting report will concisely discuss (using generally non-technical 

language) the strengths and weaknesses of the model and evaluate the appropriateness of 

the overall approach proposed by Western to arrive at economic assessments for the Glen 

Canyon Dam Adaptive Management Program. 

In addition to assessing the strengths and weaknesses of the model, GCMRC would like 

the report to include an assessment of the following: 1) appropriateness of the proposed 

model and overall approach for meeting economic information needs of the Glen Canyon 

Dam Adaptive Management (GCDAMP) related to hydropower values, costs, and 

benefits; 2) whether the model could or should be modified in certain respects to produce 

better (more accurate/relevant) information, and if so, what modifications should be 

considered; 3) if the reviewers know of other models or approaches that would be better 

suited to meet the needs of the GCDAMP, the report will include recommendations about

these other models or approaches and explain why they might be better suited to the 

needs of the Glen Canyon Dam Adaptive Management Program. The report can 

include any other relevant information that the reviewers feel is important to convey to 
the US Geological Survey to assist them in determining how best to evaluate the 

economic implications of varying operations at Glen Canyon Dam.

Workshop Schedule and Deliverables

August 30: Travel to Flagstaff, arrive in time for a group dinner (7 pm) - if possible

August 31-September 1: Participate in Model Review Workshop (this will include at 

least one, possibly 2 evening sessions to begin outlining the contents of the report)

September 2 (optional): Hydropower Knowledge Assessment Workshop*

*This is a separate workshop that will follow immediately after the model review, in 

which GCMRC and Western will assess the current state of knowledge regarding 

hydropower values and impacts under various operating regimes. If reviewers wish to 

stay over and listen in on this workshop, GCMRC will cover additional per diem and 

hotel costs; however, reviewers are not required to participate on this second workshop.

Report Schedule (these proposed dates can be refined if needed): 

• Draft Report to USGS by October 1, 2011 (GCMRC will have up to 30 days to 

review and provide comments)

• Comments provided by GCMRC on draft report NLT October 31, 2011

• Final report due November 18, 2011