Serving the energy industry for over 30 years
By - Jon Brown

Avoided Cost Calculations Best Practices
Updating Traditional Methods
November 7-8, 2019 | Portland, OR

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Overview

Utilities must estimate avoided energy and capacity costs for a variety of reasons, including PURPA contracts, demand side management program design, and proposal evaluations.  Historic paradigms for determining avoided costs have consistently yielded values that have proven to be uneconomic. Low-cost renewables have substantially increased uncertainty in the avoided costs calculations.  Avoided cost analysis must now capture future states and conditions in ways that cannot be accommodated with traditional approaches and need to account for:

  • Uncertainty in prices
  • Intermittent/variable generation
  • Changing load shapes
  • Weather as the new driver of load, renewables, and market conditions
  • Technological and structural grid changes that impact avoided costs

If utilities do not adjust to this new landscape, they face the prospect of overpaying for PURPA contracts.  This course will examine the process of how utilities have typically estimated their avoided cost in multiple contexts.   It will recognize what’s valuable in those analyses.  It will then demonstrate additional stochastic and probabilistic methodologies that better capture the structural changes and shifting power market fundamentals to yield more accurate outcomes.  Finally, it will analyze the value of avoided costs from multiple stakeholder perspectives, including independent power providers, utilities, regulators, and demand side management program providers. 

Learning Outcomes

  • Explore how to incorporate new market dynamics in avoided cost calculations
  • Examine traditional calculation of avoided cost
  • Discuss defending avoided cost calculations
  • Review background on avoided costs
  • Identify what avoided cost is supposed to reflect/capture

Credits

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EUCI has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET).  In obtaining this accreditation, EUCI has demonstrated that it  complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, EUCI is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard.

EUCI is authorized by IACET to offer 1.0 CEUs for this event.

 

Requirements For Successful Completion Of Program

Participants must sign in/out each day and be in attendance for the entirety of the conference to be eligible for continuing education credit.

Instructional Methods

PowerPoint presentations and case studies will be used in program.

Agenda

Thursday, November 7, 2019

12:30 – 1:00 p.m. :: Registration

1:00 – 1:15 p.m. :: Overview and Introductions


1:15 – 2:45 p.m. :: What Avoided Cost Is Supposed to Reflect/Capture

  • Value of energy from future resource
  • Capacity value
    • Capacity contribution towards peak demand
    • Value of generation during peak demand
  • Renewable integration costs
    • Transmission upgrades
    • Ancillary service requirement increases

Background on Avoided Costs

  • Regulatory background of avoided cost economics
    • FERC principles on calculating avoided cost
    • History of PURPA
    • PURPA implementation by state
  • Utility experience with PURPA avoided costs

2:45 – 3:00 p.m. :: Afternoon Break


3:00 – 4:45 p.m. :: Traditional Calculation of Avoided Cost

  • Methods
    • Proxy Unit
    • Differential revenue requirement
    • System Lambda
    • Marginal cost to serve load
    • Competitive Solicitations
  • Advantages and disadvantages of each approach
  • Applicability of avoided cost analysis
    • PURPA contracts
    • RFP evaluation
    • Demand side management cost effectiveness analysis

4:45 p.m. :: Program Adjournment for Day


Friday, November 8, 2019

8:00 – 8:30 a.m. :: Continental Breakfast


8:30 – 10:00 a.m. :: Incorporating New Market Dynamics in Avoided Cost Calculations

  • Increasing volatility and uncertainty in wholesale energy prices
  • Explosive growth of renewables
  • Influence of weather on load, renewable generation and prices
  • Changing load patterns
  • Technology changes

10:00 – 10:20 a.m. :: Morning Break


10:20 a.m. – 12:00 p.m. :: Best Practice for Calculating Avoided Cost

  • Energy value
    • Defining the system operation conditions
    • Locational component
  • Capacity value
    • Defining the system peak conditions
    • Estimating the level of reliable generation during system peaks
  • System integration
    • Ancillary services requirements
  • Capturing market uncertainties
    • Changing volatility
    • Implied heat rates

12:00 – 1:00 p.m. :: Group Luncheon


1:00 – 2:45 p.m. :: Best Practice for Calculating Avoided Cost (cont’d)

2:45 – 3:00 p.m. :: Afternoon Break


3:00 – 4:30 p.m. :: Defending Avoided Cost Calculations

  • Justification of market forecasts
  • Connect avoided cost calculations with resource plans

Instructors

Gary Dorris, PhD, CEO & President, Ascend Analytics

Dr. Gary Dorris is President and CEO of Ascend Analytics.  For two decades, he has been a thought leader in energy modeling and risk analysis. He has led the development of over a dozen resource plans and pioneered new techniques for risk-based resource planning and portfolio selection.  Dr. Dorris has developed new techniques in risk management that integrate uncertainty around both the physical and financial aspects of a utility’s portfolio.  His analytic innovations have extended toward the development of over a dozen software applications used by over 50 energy companies.  In 2001, Dr. Dorris won distinguished recognition from the IPE for contributions to the field of energy risk management.


Dr. Brandon Mauch, PhD, Senior Energy Analyst, Ascend Analytics

Brandon Mauch is a Senior Energy Analyst at Ascend Analytics.

He provides modeling expertise and support in the integrated resource planning activities, energy markets, regulation and utility demand side management.  Dr. Mauch works in Ascend’s consulting group providing resources planning and regulatory support.  Prior to joining Ascend, Brandon was a Senior Program Manager for CLEAResult Consulting where he managed utility energy efficiency and demand response programs for Midwestern utilities.  Before that, he was a Utility Regulation Engineer for the Iowa Utilities Board where he worked on regional energy policy issues, resource planning and rate cases for Iowa’s investor-owned utilities.  Brandon holds a Ph.D in Engineering and Public Policy from Carnegie Mellon University where his research focused on wind power forecasting and risk assessment of wind forecasts. He also holds a master’s degree in Mechanical Engineering from the University of Wisconsin and a bachelor’s degree in Mechanical Engineering from the University of Kansas. 

Location

Hi-Lo Hotel, Portland

320 SW Harvey Milk St

Portland, OR 97204

Reserve your room:

please call 1-971-222-2100

Room Block Reserved For:

Nights of November 3 – 6, 2019

Room rate through EUCI:

$185.00 single or double plus applicable taxes
Make your reservations prior to October 11, 2019.

Register

Please Note: Confirmed speakers do not need to register and are encouraged to participate in all sessions of the event. If you are a speaker and have any questions please contact our offices at 1.303.770.8800

EventEarly Bird Before
Friday, October 18, 2019
Standard RateAttendees
Avoided Cost Calculations Best PracticesUS $ 1195.00 US $ 1395.00

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Cancellation Policy

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before October 04, 2019 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800

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