Eric M. Markell Sr. Vice President Energy Resources Puget Sound Energy

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Eric M. MarkellSr. Vice President Energy
ResourcesPuget Sound Energy
Planning to Transacting The Road to Getting
Renewables Done National Association of
Regulatory Utility Commissioners August 1, 2006
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Disclaimer
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Presentation Outline

• Intro to PSE Its Resource Needs
• Value Renewables Bring to Portfolio
• Challenges to Acquiring Renewables
• How Government/Regulators Can Help

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PSE Overview
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PSEs Resource Need
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Estimated Cost to Fill Need

• 3.7 Billion Dollars by 2015

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Value Renewables Bring to Portfolio

• Diversity--
• Mitigate fuel price risk
• Mitigate hydro risk
• Reduce risk to the environment
• Mitigate future environmental regulation risk

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Challenges to Acquiring Renewable Resources

• Global Competition for Technology/Talent
• Costs Up - A Lot
• Census of doable deals appears thin
• Ample capital but few quality development teams
• Good development teams are not scalable
• Small projects unattractive to capital/talent
• Transmission
• Intermittency
• Permitting

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Levelized Costs Are Up - A Lot
Notes 1) This chart compares the 20-year
levelized costs each individual resource bid 2)
2004 levelized costs do not include transmission
from Mid-C to PSEs system 3) PPA costs
represent fixed price offers and include imputed
debt 4) Impacts to the Companys credit costs
are not reflected in analysis.
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Transmission
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How Regulators Can Help

• Encourage Integrated Resource Planning and
  Acquisition.
• Encourage active utility engagement with
  developers and the development process.
• Encourage and reward renewable and environmental
  initiatives.
• Understand the deal making value chain.
• Provide strong capital structure, fair returns,
  and realistic opportunities to earn such return.

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Conclusion

• Renewable targets in WECC are aggressive.
• Alignment of all interests will be essential if
  success is to be had.
• Its going to be a bumpy ride!