The Northwest now has an early-warning system for potential electricity shortages and high prices to consumers.

“It’s like a smoke alarm for the regional electricity supply,” said Bill Booth, chairman of the Northwest Power and Conservation Council, which adopted the early-warning system this week for its own power system planning. “This new standard will provide an early warning about conditions that could lead to a reduced supply of electricity and resulting high prices.”

The standard, which may be useful to the region’s electric utilities, has two parts: 1) a minimum threshold that serves as an early warning should the construction of new power plants and the development of new energy conservation fall short of growing demand for power in the future, and 2) a higher threshold that encourages a faster and perhaps greater response to offset electricity price volatility.

The standard was developed over the last two and a half years by the Pacific Northwest Resource Adequacy Forum, a committee of electricity suppliers and regulators created by the Power Council and the Bonneville Power Administration, the region’s largest electricity supplier.

The standard was developed for two primary reasons. First, the lack of a regional standard contributed to the electricity crisis in 2000 and 2001, when drought reduced the region’s primary electricity supply, hydropower, and demand for power overwhelmed the supply from all sources. As a result, electricity prices soared and the Northwest came close to a blackout. Second, the standard will help the Northwest satisfy new electricity-supply adequacy requirements specified in 2005 federal energy legislation. The standard, which looks three to five years into the future, will be updated annually so that electric utilities can plan ahead to avoid potential shortages.

“The standard does not set mandatory compliance or imply enforcement mechanisms. Rather, it will serve as a gauge to assess whether the Northwest electricity supply is adequate to meet the region’s needs now and in the future,” Booth said.

The regional standard is not specific to individual utilities because every utility’s circumstances differ. It will be up to each utility to assess its own needs and risk factors, such as its reliance on purchases of electricity in the wholesale market to meet demand for power. Currently, the region has more than sufficient power supplies to meet the minimum threshold. However, many utilities are actively pursuing new generating plants and energy conservation to satisfy various needs, including state-mandated renewable-energy portfolios or to meet their own customers’ needs. The adequacy standard uses the Council’s Northwest Power Plan to define the economic threshold for the region. The power plan serves as a kind of roadmap or blueprint for the types and amounts of generating and conservation resources the region should acquire.

The standard is published in a paper, A Resource Adequacy Standard for the Northwest, which is available on the Council’s website as Document 2008-01 at this location: http://www.nwcouncil.org/library/2008/2008-07.htm

Appendix C of the document is a Factsheet that provides background about the standard.