Puget Sound Energy Unveils 2011 Update to Integrated Resource Plan

More Energy Efficiency, Wind Power and ‘Peaking’ Resources Needed By Utility

BELLEVUE, Wash. (April 01, 2011) - Puget Sound Energy’s updated draft plan to meet customers’ energy needs over the next 20 years stresses energy efficiency, additional transmission capacity and acquisition of peak-demand power resources. The draft 2011 Integrated Resource Plan (IRP) released today emphasizes flexibility to respond to evolving markets and least-cost criteria for obtaining new electric supply. The major challenge facing PSE, according to the draft plan, is meeting its customers’ peak hourly and seasonal power demands, not their average power requirements.

As described in the draft plan, PSE needs to obtain about 1,400 megawatts of electric capacity by 2016 to meet its customers’ peak, wintertime demand. Such need is being driven principally by expiring power-supply contracts that must be renewed or replaced with alternate resources. That need continues to grow in later years as additional purchased-power contracts expire and aging power plants potentially are retired.

The draft IRP notes the Pacific Northwest currently has adequate power-generating capacity, with a near-term surplus during certain seasons. The surplus results from robust conservation and the region’s recessionary drop in energy demand, along with increased production of renewable energy, primarily wind power. These factors, together with abundant natural gas supplies, have helped moderate the wholesale market price of power.

“The low market prices we’re seeing for power are a special dividend coming from all the new wind power in the region and advances in natural gas exploration technology,” said Kimberly Harris, PSE’s president and CEO. “These will continue to benefit our customers for years to come.

“As this updated draft plan explains, PSE aims to be nimble and to capitalize on the best resource opportunities and best prices that present themselves in the market. As the economy rebounds, we will be ready. That could mean building or acquiring new transmission to access attractive market resources. It also could mean building “peaker” power plants if we’re not able to find attractive supplies from other market participants.”

As always, PSE’s first choice for satisfying customers’ peak demand is energy efficiency. According to the draft resource plan, cost-effective conservation programs can cut PSE’s projected need for new power capacity resources by about 700 MW, or more than 25 percent, over the next decade.

In terms of PSE customers’ average power load, the draft IRP forecasts a 10-year increase of 660 average-megawatts (or nearly 5.8 million megawatt-hours) in their electricity usage. Energy efficiency should be able to meet about 80 percent of that projected increase.

Beyond the power supply PSE obtains through energy efficiency, most of the remaining resources PSE will need to acquire should come either from “peaker” gas-fired power plants acquired or built, or from market purchases. Delivering such supplies from potentially new resources may require that PSE obtain additional capacity on the region’s transmission grid.

“The deciding factor will be cost and risk,” Harris said. “Whatever we find that best serves our customers is what we’ll pursue.”

The draft IRP points out that PSE also will need to obtain an additional 325 MW of renewable energy – primarily wind power – by 2020 to comply with Washington’s renewable-energy mandate. A 2006 voter-approved state law requires larger utilities to obtain 15 percent of their customers’ power supply from renewable resources by 2020.

PSE already has two large wind facilities in operation, the 157-MW Hopkins Ridge Wind Facility in Columbia County, and the 270-MW Wild Horse Wind and Solar Facility in Kittitas County. Once PSE’s 343-MW Lower Snake River Wind Project-Phase I comes online next year, the utility will have comfortably met the state’s requirement that, by 2016, at least 9 percent of PSE’s electric load be from qualified renewable resources. PSE customers’ bills will continue to benefit from the utility’s marketplace sales of renewable energy attributes currently surplus to PSE’s own needs. Those sales lower the net cost of power to PSE customers.

The draft IRP estimates that PSE customers’ demand for natural gas will increase by 23 percent over the next 10 years, and by 46 percent two decades from now. The utility’s energy efficiency programs can cut more than one-fifth (or 86 million therms) of that projected 20-year increase in demand. (The typical household uses 68 therms per month, on average.)

Obtaining additional natural gas supply – both to serve customers’ rising demands and, potentially, to fuel more gas-fired power generation – may require PSE to acquire additional capacity on the West Coast’s pipeline transmission grid, the draft IRP notes. The operational requirements of expanded gas-fired power generation also could drive the need for more local gas-storage capacity in coming years, including storage for liquefied natural gas.

PSE released its draft IRP today for review and comment by the public and various stakeholders. The draft plan, to be filed by May 31 with the Washington Utilities and Transportation Commission, guides PSE’s efforts for acquiring new energy resources in the most cost-effective and environmentally responsible manner over the coming 20 years.

PSE revises the plan every two years with an updated forecast of customer energy requirements and exhaustive analyses of the economic, environmental and technological issues involved in securing new energy supplies. The entire draft of the 2011 IRP can be viewed at PSE.com.

About Puget Sound Energy

Washington state’s oldest local energy utility, Puget Sound Energy serves more than 1 million electric customers and 750,000 natural gas customers in 11 counties. A subsidiary of Puget Energy, PSE meets the energy needs of its customer base through incremental, cost-effective energy efficiency, procurement of sustainable energy resources, and far-sighted investment in the energy-delivery infrastructure. PSE employees are dedicated to providing great customer service and delivering energy that is safe, reliable, reasonably priced, and environmentally responsible For more information, visit www.PSE.com.

Media Contact

Roger Thompson, 1-888-831-7250