Draft Consensus Statement of the Load Forecasting and Power Flow Analysis Work Group

Introduction

Description of Current Generation and Transmission System

Electricity Resource Plan Action Plan

Updated Load Forecasts

Power Flow Studies

Operational Requirements

Findings

Introduction

The closure of the Hunters Point Power Plant has been an important City objective since 1998. Pacific Gas and Electric Company (PG&E) has agreed to shut down the Hunters Point Power Plant “as soon as the facility is no longer needed to sustain electric reliability in San Francisco and the surrounding area and the FERC authorizes PG&E to terminate the Reliability Must Run (RMR) agreement for the facility[1].”

In May 2001 the Board of Supervisors directed the San Francisco Public Utilities Commission and the Department of the Environment to develop an Energy Resource Plan to implement all practical transmission, conservation, efficiency and renewable alternatives to fossil fuel generation in the City and County of San Francisco[2]. After extensive public meetings throughout the City and a public hearing at City Hall, the Board of Supervisors unanimously adopted the San Francisco Electricity Resource Plan (ERP)[3].

The ERP establishes the following priorities[4]:

Maximize Energy Efficiency

Develop Renewable Power

Assure Reliable Power

Support Affordable Electric Bills

Improve Air Quality and Prevent Other Environmental Impacts

Support Environmental Justice

Promote Opportunities for Economic Development

Increase Local Control Over Energy Resources

To achieve these goals and allow for the closure of the Hunters Point Power Plant, the ERP calls for the development of new energy resources that includes energy efficiency, wind energy, distributed generation using solar and other clean technologies, transmission additions and new highly-efficient and operationally flexible generation at appropriate sites.

In April 2002 the California Independent System Operator (ISO) Board of Governors adopted a resolution directing ISO staff to work with the City and County of San Francisco and community stakeholders to effectuate the shutdown of the Hunters Point Power Plant[5]. Subsequently, Governor Gray Davis’ Office of Planning and Research (OPR) convened a meeting to discuss with City officials and community stakeholders issues related to environmental justice in Southeast San Francisco. Community groups requested that OPR provide resources to support a review of the feasibility of implementing the San Francisco Electricity Resource Plan, including shutting down the Hunters Point Power Plant without requiring the construction of a new large fossil fuel power plant[6].

As a result of these efforts a Load Forecasting and Power Flow Analysis (LFPFA) work group was formed[7]. The LFPFA has reviewed and discussed the following documents and presentations that provide the underlying support for this statement.

The Electricity Resource Plan: Choosing San Francisco’s Energy Future, Revised December 2002.

San Francisco Peninsula Load Serving Capability Study – California ISO, December 17, 2003.

San Francisco Internal Transmission System After AP-1 Technical Study, PG&E, August 6, 2003.

California Energy Demand 2003-2013 Forecast, California Energy Commission, February 2003.

PG&E (2002) 2003-2012 1-in-10-load forecast for San Francisco and Peninsula.

Overview of California Energy Commission Demand Forecast Methods, Lynn Marshall, Demand Analysis Office, CEC, Presented to LFPFA – October 6, 2003.

Terry Winter, President and CEO, CA ISO, Letter to Kevin Dasso and Theresa Mueller, April 18, 2003.

Terry Winter, President and CEO, CA ISO, Letter to Supervisor Sophie Maxwell, October 22, 2003.

Existing Generation in San Francisco

San Francisco-based electric generation consists of two natural gas fired boiler-steam turbine power plants, the 46 year old, 163 megawatt Hunters Point Power Plant Unit 4 owned by PG&E, the 39 year old, 206 megawatt Potrero Power Plant Unit 3 owned by Mirant Potrero LLC. Four 52-megawatt diesel-fired peaking turbines are located at Hunters Point and Potrero (Hunters Point 1 and Potrero 4,5 and 6).

All of the existing diesel-fired turbines have no emission control technology and are limited to operating 877 hours per year. The steam turbine power plants at Hunters Point and Potrero must meet increasingly stringent restrictions on emission of nitrogen oxides under requirements of the Bay Area Air Quality Management District. To allow Potrero 3 to continue to operate in compliance with BAAQMD regulations, Mirant plans to install selective catalytic reduction equipment on Potrero 3. Mirant expects to complete this project by early 2005.

PG&E is currently using interchangeable emission reduction credits (IERCs) to operate Hunters Point 4 in compliance with air regulations. Several community-based groups have reached a settlement with PG&E to allow the plant to continue to use IERCs through 2005. PG&E has indicated that it has sufficient IERCs to allow continued operation of Hunters Point through 2008[8].

Existing Bay Area Transmission System

The existing transmission system into the peninsula and San Francisco is insufficient to serve the load during all hours of the year without some in-area generation. There are four major constraints to the physical delivery of electricity to San Francisco from other areas of the State. The transmission constraints restrict 1) power flowing into the Greater Bay Area, 2) power flowing from the East Bay to the Peninsula, 3) power flowing up the Peninsula into San Francisco and 4) power flowing from the Martin substation on San Francisco’s border into points in San Francisco. Improvements to the transmission system at each of these bottlenecks can improve the import of electricity into San Francisco and lessen the need for in-city generation.

Key constraints that impact the need to operate the Hunters Point and Potrero Power Plants are those that exist north of the San Mateo substation. To prevent overloading the transmission lines serving the upper peninsula and San Francisco, generation must be operating at Hunters Point and Potrero Power Plant at certain load levels. Constraints within the 115kv underground transmission system within San Francisco north of the Martin substation also require the operation of generation at Hunters Point and Potrero. These constraints in the city limit the effectiveness of new transmission projects outside of San Francisco, such as the Jefferson-Martin line, to improve load-serving capability in the City.

Because of the intricate nature of the electric grid, and its sensitivity to different operating system conditions it is necessary to carry out complex power flow studies using various assumption to determine the ability of the system to reliably serve load.

ERP Action Plan

The ERP acknowledged that the City must take aggressive steps to achieve the closure of the Hunters Point Power Plant while assuring reliable electric service. In addition, the City has an interest in facilitating the closure of the power plants located at the Potrero Power Station when they are no longer needed for electric system reliability. The short-term action plan envisioned the possibility of facilitating the retirement of Potrero Unit 3 before costly upgrades were made that would extend the operation of this aging power plant. The ERP’s short-term action plan called for:

· Maximum investments in energy efficiency measures particularly peak reducing measures.

· Development of new highly efficient and operationally flexible generation at appropriate sites[9].

· Aggressive efforts to promote and facilitate installation of distributed generation using renewable technologies and clean natural gas-based technologies.

· Development of a plan between the City and Mirant to allow for the environmental dispatch of new generation owned by the City and Potrero Unit 3 to meet BAAQMD requirements under the State Implementation Plan for the Clean Air Act and ISO requirements for reliability.[10]

The ERP also put forward a medium term action plan that covered the period of 2006 through 2012. The ERP recognized the key challenges during this period of time was to close all power generation at Potrero and to meet the City’s commitment to reduce greenhouse gases. The key components of the mid-term action plan included

· Completion of the Jefferson to Martin transmission line

· Accelerated development of solar electric generation in San Francisco with the objective of having 50 megawatts installed by 2012

· Development of additional renewable energy, cost-effective co-generation, and clean distributed generation technologies in San Francisco

· Maximizing investments in energy efficiency and demand reduction with a goal of maintaining peak demand at a level no higher than 909 megawatts

· Development of at least 150 megawatts of new wind or other renewable generation that can be imported into San Francisco

The following table shows the contribution that each resource would make towards meeting the projected peak demand for electricity in San Francisco from 2002 through 2012. The projection of peak demand used in the ERP was that produced by PG&E for their 2001 Electric Transmission Grid Expansion Plan[11]. The targets for energy efficiency, solar and distributed generation were assumed to be met through a combination of investments by the City and County of San Francisco, PG&E and private investors[12]

	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
Hunters Point	215	215	215	52	0	0	0	0	0	0	0
Potrero	363	363	363	203	156	156	156	156	156	156	156
New Cogeneration	0	0	0	50	100	100	100	100	100	100	100
Energy Efficiency	1	10	16	23	32	43	55	68	81	94	107
New Combustion Turbines	0	0	150	150	150	150	150	150	150	150	150
Solar	1	2	4	7	10	13	16	19	23	27	31
Distributed Generation	3	6	10	17	24	31	38	45	54	63	72
Imported Power	363	384	277	559	601	592	582	571	557	543	529
Totals	946	980	1,035	1,061	1,073	1,085	1,097	1,109	1,121	1,133	1,145

Updated Load Forecasts for San Francisco

The California Energy Commission (CEC) annually completes a 10-year forecast of electricity and natural gas consumption and peak electricity demand. The latest forecast was developed for the 2003 Integrated Energy Policy Report. The forecast is contained within The California Energy Demand 2003-2013 Forecast[13].

The CEC forecasts use models that require extensive data about: 1) consumer characteristics such as building characteristics, demographic makeup, and end-use appliance saturations, 2) historic electricity and natural gas consumption, 3) economic and demographic projections and 4) impacts from building and appliance standards and energy efficiency programs.

A major effort of CEC forecasting has been to account for the influence of conservation and energy efficiency that is “reasonably expected to occur. The impacts from demand side management programs sponsored by utilities, state government, local government and other organizations are estimated directly with the CEC models[14].

PG&E annually conducts a 10-year forecast of peak electricity demand for determining the need for additional transmission projects. These forecasts are published in PG&E’s Electric Transmission Grid Expansion Plan. PG&E has noted the wide variation between its 2000 load forecast and subsequent load forecasts. PG&E observed that the 2000 forecasts were not realized because “the numerous rotating outages during the fall/winter of 2000-2001 and the subsequent increase in electricity price have spurred significant conservation efforts[15].”

The following table compares the PG&E 2000 and 2002 forecasts for San Francisco with the California Energy Commission’s most recent forecast for the period 2003-2012[16].

	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012
PG&E 2000 Forecast	980	1035	1061	1073	1085	1097	1109	1121	1133	1145
PG&E 2002 Forecast	900	915	927	942	955	968	978	989	998	1008
CEC 2003 Forecast	927	979	1004	1015	1034	1057	1074	1094	1112	1129

A significant difference that can be observed between the PG&E 2002 forecast and the CEC forecast is the larger increase in demand growth projected by the CEC for 2004 and 2005. The CEC forecast shows a return in 2004 to a level of demand greater than was observed in the year 2000 when economic activity in San Francisco was robust[17]. After 2005 PG&E shows an average increase in peak demand of 1.2 percent while the CEC projects an increase of 1.7 percent.

The observed peak demand for 2003 was 893 megawatts, which occurred on September 22. The temperature on that date was 87 degrees, which is ten degrees below the one in ten year conditions, which PG&E uses in planning for the reliability of the electric system[18].

Power Flow Studies

The Power Flow and Load Forecasting Work Group were presented with the results of two power flow studies. One was conducted by ISO Operations Engineering and Grid Planning for the San Francisco Peninsula electrical system, defined as the area bounded by the Ravenswood substation near Palo Alto on the south, and including all of San Francisco and almost all of San Mateo County. The other was conducted by Pacific Gas and Electric for the internal San Francisco 115 kv system assuming the installation of the Jefferson-Martin project and other transmission improvements.

The purpose of the ISO study was to improve the understanding of what mix of transmission and generation is needed to reliably serve the San Francisco Peninsula in the future. The ISO study presented its results in the form of “Load Serving Capability” (LSC). LSC is defined as the amount of electrical demand that can be served by the electrical transmission systems and available generation without violating a set of system performance standards. The ISO study looked at 37 different scenarios, using different assumptions about the availability of specific transmission and generation resources.

Key conclusions of the ISO Power Flow Study are as follows:

1) The ability of the Jefferson-Martin 230 kv transmission project to contribute to the LSC of the San Francisco is limited by constraints south of the San Mateo substation and on the 115 kv underground cable system within the City of San Francisco.

2) Utilization of the Jefferson Martin project with a reduction in existing generation within San Francisco requires reinforcement of both the transmission system south of San Mateo and the 115kv cable system within San Francisco.

3) The San Francisco Peninsula Area LSC can be increased by completing each or some combination of the following:

a. Re-rating of existing transmission facilities through replacement of limiting components or assumption of higher wind speeds across specific transmission lines which would allow higher load of the lines.

b. Reinforcement of the transmission system through either reconductoring of existing lines, rearrangement of existing lines or cables, and/or building new lines or cables.

c. Proposed new generation capacity within the San Francisco Peninsula area.

The differences in load serving capability for various transmission and generation scenarios are summarized in the following table[19]:

SF Generation Modeled On-Line	0	100	150	200	230	280	320
Base Case Transmission system	1316	1596		1850	1880	1921	1971
Jefferson-Martin Project	1271	1376				1561	1601
Jefferson-Martin & SM Re-rates	1271	1536	1666	1770	1850	1996	2081
Jefferson-Martin & SM Re-rates & New SF Cables	1976	2101	2106	2208	2213	2271	2291

It is noteworthy that the Jefferson-Martin project, by itself, decreases load-serving capability in the San Francisco Peninsula. Even with the south of San Mateo re-rates LSC is degraded for scenarios with less than 230 megawatts of generation on line. To realize the benefit of Jefferson-Martin it is also necessary to complete additions to the 115 kv transmission system within San Francisco.

In response to this finding that the Jefferson-Martin project could worsen load-serving capability in the San Francisco peninsula, PG&E conducted its own power flow study[20].

That study examined the 13 cables that constitute the internal 115 kv transmission system in San Francisco. This study assumed that in 2006 that the Jefferson-Martin project would be completed and that six additional transmission enhancements would also be finished[21]. The study stated that PG&E had investigated the feasibility of using higher emergency ratings for its 115 kv cables in San Francisco and found it to be feasible. The City and County of San Francisco has questioned this finding and expressed its concern to PG&E and the ISO that these re-rates in older cables could jeopardize reliability of electric service in San Francisco[22].

The PG&E study examined four potential new additions to the 115 kv transmission system in San Francisco separately and in combination[23]. The study found that the Martin to Hunters Point cable and the Martin to Mission cable increased LSC in San Francisco by the greatest amount after the retirement of the Hunters Point Power Plant. As a result of this study PG&E has proposed in its latest Electrical Transmission Grid Expansion Plan to proceed with the development of the Martin to Hunters Point cable. PG&E will need to conduct appropriate environmental analysis and apply to the California Public Utilities Commission for permission to construct this project. Earliest anticipated date for completion of this project is 2007.

Operational Requirements for Reliable Electric System for San Francisco

Power flow systems examine the capability of the electric transmission and generation system to serve load during normal conditions[24]. To assure reliability it is also necessary to examine specific “abnormal” conditions when transmission lines or substations are taken out of service for maintenance or repair. ISO operations staff routinely turn on generation in San Francisco when maintenance or repairs is needed on transmission lines or at substations within San Francisco or on the Peninsula north of the San Mateo substation. Typically sufficient generation is turned on during each of these conditions to prevent shedding of load if the next largest transmission resource is forced out of service.

The ISO expects that 400 megawatts of generation will need to be available north of San Mateo in 2006 after the completion of the Jefferson-Martin transmission line to allow for typical San Mateo substation wash conditions[25].

Findings

Implementation of the Short Term Action Plan recommended in the San Francisco Electricity Resource Plan will permit the permanent closure of the Hunters Point Power Plant[26].
The capability of the Jefferson-Martin transmission line to improve reliability in San Francisco by increasing the amount of load that can be served is dependent on improvements to the transmission system both south of the San Mateo substation and within San Francisco. Improvements to the internal 115 kv underground system are not scheduled to occur earlier than 2007. The completion of the additional transmission enhancements both South of San Mateo and in the City of San Francisco in combination with the Jefferson-Martin project can decrease the amount of generation that is needed in San Francisco.
Following the completion of the Jefferson-Martin and other transmission projects there will be an ongoing need for approximately 400 megawatts of generation north of the San Mateo substation to meet the operational requirements of the Peninsula electric. That needed generation could be met by the combination of by the existing 363 megawatts of generation at Potrero and 52 megawatts of generation at the Hunters Point Power Plant (unit 1) or by replacement generation.
A key goal of the San Francisco Electricity Resource Plan is to maintain peak demand for electricity in the City at the average of what it was for the period of 1996 to 2000 (909 megawatts). Peak demand in 2003 was 893 megawatts and could have been above the 909 megawatt target under more extreme weather conditions. Peak demand is forecast to increase to between 989 and 1094 megawatts by 2010. Significant additional resources will be needed to achieve sufficient reduction in load through energy efficiency measures in new and existing facilities to achieve the ERP goal[27].

5. Clean distributed generation has the potential to meet an increasing percentage of San Francisco’s electricity needs. The ERP has aspired to a target of 72 megawatts of clean distributed generation in addition to the equivalent of 31 megawatts of peak solar capacity. Achieving these aspirations will require overcoming several important barriers to project development[28].

[1] Agreement between the City and County of San Francisco and Pacific Gas and Electric Company to Close Hunters Point Power Plant, July 9, 1998.

[4] San Francisco Public Utilities Commission and San Francisco Department of Environment, The Electricity Resource Plan: Choosing San Francisco’s Energy Future, Revised December 2002.

[6] At the time Mirant Potrero LLC was proposing to build a 540 megawatt combined cycle power plant at the existing Potrero Power Station.

[7] The LFPFA is a technical working group that includes representatives from community-based groups, the San Francisco Public Utilities Commission (SFPUC), PG&E, ISO, and other local and state agencies. The LFPFA has held 12 meetings since it was convened. An attendance list for the January 7, 2004 LFPFA meeting is attached.

[8] Correspondence between PG&E and Communities for a Better Environment, date

[9] The ERP envisioned the siting of new efficient and flexible generation by the summer of 2004 that would allow for the closure of Hunters Point Unit 4 by the end of 2004. Currently new generation could be completed, under favorable circumstances, by the end of 2005 or early 2006.

[10] Mirant and the ISO have reached an agreement that would allow the retrofit of Potrero Unit 3 with selective catalytic reduction equipment to reduce emissions of nitrogen oxides and allow for the recovery of the cost of this equipment over five years.

[11] The forecast for the 2001 Transmission Expansion Plan was produced by PG&E in December, 2000. Load growth for each geographical division in the PG&E service area is developed by PG&E distribution planning and is determined by allocating total system load growth to each division based on non-simultaneous transmission bus levels.

[12] The ERP assumed the following: 50 percent of the solar installations would be funded by CCSF and 50 percent by private investors (e.g. homeowners, commercial property owners); 30 percent of distributed generation would be funded by CCSF and 70 percent by private investors; 25 percent of commercial energy efficiency measures would be funded by PG&E and 75 percent by commercial property owners, 25 percent of residential energy efficiency measures would be funded by PG&E, 25 percent by CCSF and 50 percent by residential property owners.

[14] Communication from Lynn Marshall, Demand Flow Analysis Office, CEC to the Power Flow and Load Forecasting Working Group, October 6, 2003

[16] The forecasts are for weather conditions that have a probability of occurring once in ten years.

[17] Peak demand for electricity in 2000 for San Francisco was 950 megawatts. Subsequently, there has been a substantial increase in vacancies in commercial office and retail space in San Francisco.

[18] The load temperature sensitivity factor used by PG&E in load forecasting for San Francisco is 0.4 percent per degree Fahrenheit. Using this adjustment factor would result in a peak demand of approximately 930 megawatts.

[19] Results from modeling cases 1-36 reported by the CAISO in the San Francisco Peninsula Load Serving Capability Study and ISO’s staff’s 9/8/03 and 12/3/03 reports to the Load Forecasting and Power Flow Analysis Group. Results shown are for the Peninsula electrical system bounded by the Ravenswood Substation.

[20] San Francisco Internal Transmission System After AP-1 Technical Study, August 6, 2003.

[21] Newark-Ravenswood rerate, Ravenswood-San Mateo rerate, Tesla-Newark upgrade, Ravenswood 230/115 kv transformer, San Mateo-Martin No. 4 Line 60kv to 115kv conversion, Potrero-Hunters Point Underground cable.

[22] Correspondence from Barry Flynn representing CCSF to PG&E, July 21, 2003

[23] Potrero to Mission Number 2 Cable, Martin to Mission Cable, Potrero to Martin Cable and Martin to Hunters Point Cable.

[24] In planning for electric system reliability it is assumed the system will be robust enough to withstand specified contingencies. In the case of the San Francisco Bay Area the assumption is that reliability of electric service can be maintained when the largest transmission lines fails and the largest generator in the City is unavailable and one of the old diesel-fired peaking plants fails to start.

[25] The ISO assumes San Mateo washes occur during weekend conditions when San Francisco load could be as high as 750 megawatts. See letter of October 22, 2003 from Terry Winter to Sophie Maxwell.

[26] This finding has been confirmed in correspondence between the California ISO and representatives of the City and County of San Francisco. Letter from Terry M. Winter, President and Chief Executive Office, CA ISO, to Kevin Dasso and Theresa Mueller, April 18, 2003 and letter from Terry M. Winter.

[27] PG&E and the San Francisco Department of the Environment are currently implementing a program to reduce peak demand by 16 megawatts. Careful monitoring of this program would be beneficial and its continuation supported if it is successful in achieving this goal.

[28] Barriers include: 1) Lack of information and market familiarity by customers, 2) High capital costs and difficulty in obtaining financing, 3) Power sales tariffs that do not reward the grid support benefits of distributed generation, 4) Utility practices which discourage the use of distributed generation in “islanded” mode to continue to serve loads during a grid outage and 5) Difficult and expensive utility interconnection and system protection requirements.