Meeting the Peak Demand Growth

1. Meeting the Peak Demand Growth TVA Confidential and Privileged - Pre-decisional Deliberative Document

2. Meeting the Peak Demand Growth • Reserves are intended to cover unexpected events. NERC requires each company to have Operating reserves, and a criteria for determining Planning reserves. • These unexpected events include unexpected loss of generation, higher than forecasted loads (economic development, population growth, abnormal weather, etc.), unexpected derates of generation assets (water temperature issues, equipment repairs, etc.). • Reserves are generally categorized into 2 buckets: Operating Reserves and Planning Reserves. • The North American Electric Reliability (NERC) organization sets the criteria for determining how much Operating Reserves are needed. For TVA, this amount is ~3000 MWs (~10%). This amount must be maintained each day throughout the year. • NERC also requires that each company have a criteria for Planning Reserves. For most companies, this amount is in the 8-12% range. • TVA uses a probability calculation of 20 Loss of Load Hours (LOLH), which falls between 8.5%j and 11% over the annual peak hours for the next 20 years. For TVA, this amount is currently 2700-3400 MWs. • Using the all time TVA peak day (chart to the right) of 8-16-07 as an example: Due to derates and other issues, the following planned capacity was not available on the peak hour: Nuclear – 1000 MWs, Coal – 1000 MWs, Hydro – 1600 MWs, Forecasted Load increase (due to high temps) – 1000 MWs; CT/CCs: 600 MWs. Total Capacity (plus higher load) not available: 5200 MWs. August 16, 2007 TVA Confidential and Privileged - Pre-decisional Deliberative Document