300 



APPENDIX A 

 VALUE OF RESERVES ANALYSIS 



I. Introduction 



For most utilities, reserves are provided by generating resources In 

 excess of fi'-m requirements. Usually, this generation Is only occasionally 

 needed. However, holding this generation In standby Imposes costs on 

 utilities. In the Pacific Northwest. BPA's firm power sales contracts with 

 the direct-service Industrial (DSD customers provide the Federal system with 

 reserves through BPA's ability to restrict or Interrupt portions of DSI load, 

 subject to the conditions specified In DSI contracts. Having these 

 restriction rights allows SPA to sell, on a firm basis, energy and capacity 

 that otherwise would be Idle to provide reserves. Thus, reserves provided 

 through BPA's restriction rights result In a more efficient use of resources. 

 This discussion describes the analysis that measures the benefits to BPA 

 resulting from BPA's rights to restrict the Industrial load. 



The Federal system reserves provided by the DSI restriction rights are 

 separated Into three parts: forced outage reserves, stability reserves and 

 plant delay reserves. This separation follows the language of section 7 of 

 the DSI power sales contracts executed after December 5, 1980. Forced outage 

 reserves maintain the operating Integrity of the Federal system through BPA's 

 ability to restrict the DSI load. Stability reserves prevent regional and 

 Interregional Instability resulting from underfrequency on the electrical grid 



A-2 



