Introduction

The 2007 Long-Term Reliability Assessment report represents NERC's independent judgment of the reliability and adequacy of the bulk power system in North America for the next ten years.

NERC's primary roles in providing this assessment are to identify areas of concern regarding the reliability of the North American bulk power system, and to make recommendations for their remedy. This is the second such assessment prepared by NERC in its capacity as the U.S. Electric Reliability Organization.(1) NERC cannot order construction of additional generation or transmission or adopt enforceable standards having that effect, as that authority is explicitly withheld by Section 215 of the U.S. Energy Policy Act of 2005(2). In addition, NERC does not make any projections or draw any conclusions regarding expected electricity prices or the efficiency of electricity markets.

The 2007 Long-Term Reliability Assessment provides a high-level assessment of future resource adequacy, an overview of projected electricity demand growth and generation and transmission additions, an analysis of two scenarios that could affect future reliability, and regional self-assessments. This year's report also includes an indepth discussion of long-term emerging issues and trends that, while not posing an immediate threat to reliability, will influence future bulk power system planning, development, and system analysis.

Report Preparation

NERC prepared the 2007 Long-Term Reliability Assessment with support from the Reliability Assessment Subcommittee (RAS) under the direction of the NERC Planning Committee (PC). The report is based on data and information submitted by each of the eight regional entities submitted in March 2007 and periodically updated throughout the process. Any other data sources consulted by NERC staff are identified in the report.

NERC uses a peer review process in preparing its reliability assessments taking full advantage of subject matter experts from across the industry. This process provides an essential check and balance ensuring the validity of the data and information provided by the regional entities. Each regional self-assessment is individually assigned to subcommittee members from other regions for in-depth and comprehensive review. Reviewer comments are discussed with the regional entity representative and efinements/adjustments are made as necessary. Each regional selfassessment is then subjected to scrutiny and review by the entire subcommittee. This review ensures that each member of the subcommittee is confident that each regional self-assessment is accurate, thorough, and complete. The entire document, including the regional self-assessments, is subjected to review by the PC and the Member Representatives Committee (MRC) fully vetting all findings and conclusions. At the conclusion of this process, NERC management reviews the assessment results in detail before the report is submitted to the NERC Board of Trustees (BOT) for final approval.

To further increase the transparency of the process and conclusions of the assessment, NERC this year sponsored a public workshop designed to discuss preliminary findings with industry experts and participants, identify industry concerns that may have been missed, and solicit improvements for the reliability assessment process. Key suggestions from this workshop were reflected in the final report. The presentations and notes from the workshop are posted on the NERC Web site(3).

In this 2007 Long-Term Reliability Assessment, the baseline calculations of electricity supply and internal demand projections are based on these assumptions:(4)
• NERC's projections are based on the regional forecasts submitted in March 2007. Any subsequent resource plan changes may not be fully represented.
• Average weather is assumed at the time of the peak in demand forecasts.
• Economic activity will occur as assumed in the demand forecasts.
• Generating and transmission equipment will perform at historical availability levels.
• Planned outages and additions/upgrades of generation and transmission will be completed as scheduled.
• Demand reductions expected from direct control load management and interruptible demand contracts will be effective, if and when they are needed.
• Other peak demand-side management and demand response programs are included in net internal demand forecasts.
• Electricity transfers between regions are contractually arranged and occur as projected.

1 Section 39.11(b) of the U.S. FERC's regulations provide that: "The Electric Reliability Organization shall conduct assessments of the adequacy of the Bulk-Power System in North America and report its findings to the Commission, the Secretary of Energy, each Regional Entity, and each Regional Advisory Body annually or more frequently if so ordered by the Commission."

2 http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h6enr.txt.pdf 

3 http://www.nerc.com/~filez/ltra_workshop.html

4 Forecasts cannot precisely predict the future. Instead, many forecasts report probabilities with a range of possible outcomes. Each regional demand projection, for example, is assumed to represent the expected midpoint of possible future outcomes. This means that a future year's actual demand may deviate from the midpoint projections due to the inherent variability of the key factors that drive electrical use, such as weather. In the case of the NERC regional projections, there is a long-run 50 percent probability that actual demand will be higher than the forecast midpoint and a long-run 50 percent probability that it will be lower.

For planning and analytical purposes, it is useful to have an estimate not only of the expected midpoint of possible future outcomes, but also of the distribution of probabilities around the projection. Accordingly, the Load Forecasting Working Group (LFWG) develops for each an upper and lower ten percent confidence band around the NERC regional demand and energy projections. This means there is a long-run 80 percent probability that future demand and energy will occur within these bands. Concurrently, there is a ten percent chance future outcomes could be less than the lower band and a ten percent chance future outcomes could be higher than the upper band.

The high and low bands around the demand forecasts are depicted in the charts at the end of each region's self assessment .