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(3) If carbon is $10 cheaper: Choose 35 MW of coal and 35 MW of combined cycle capacity. <br />Why? Coal is a good base load resource choice if you expect gas prices to be $7 or more and <br />carbon prices to be low ($20 or less). <br />This is why risk assessments are a necessary part of any rigorous analysis. <br />Portfolios should consider mixing combined cycle, coal, and hydro purchases to offset the risks <br />to base load of high carbon and gas prices. Hydro generation should be considered in particular for its <br />ability to lessen the pain of combined high fuel and carbon prices. The same is true of nuclear. <br />Economy energy is a good resource option for <br />(1) Avoiding the fixed costs for some combined-cycle capacity, <br />(2) Reducing expensive off-peak base load purchases; <br />(3) Reducing the operation of expensive intermediate and peaking gas-fired resources. <br />There will always be capacity and energy needs for local diesel generators, even if the EPA's <br />NESHAP requirements require retrofits. Each commission should begin planning for the cost of these. <br />satisfy your renewable standards by buying and selling all your wind energy needs (and <br />obtaining reliable replacement energy) through the market. You should therefore not use wind for <br />dependable energy and capacity needs like you would your usual sources (such as fossil fuels or hydro). <br />This would also mean that the problem of how to meet renewable standards is separate from how to <br />build our best portfolios of resources, and that issues associated with renewable energy can be handled <br />either as a group or individually. <br />Participant input is required to <br />(1) Determine the degree of comfort with long-term risk; <br />(2) Approve Phase 2 for an RFP and the choice of specific resource portfolio options. <br />