Board of Directors Meeting. February 23, 2017

Transcription

1 Board of Directors Meeting February 23, 2017

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3 Video

4 Board of Directors Meeting February 23, 2017

5 2016 Operations Review Board of Directors February 23, 2017

6 Year-End Operational Results Category YTD Variance Municipal Demand (2.1%) Municipal Energy (0.2%) Baseload Generation (8.8%) Wind Generation 6.8% Solar Generation (33.1%) Surplus Sales Volume (27.3%) Surplus Sales Price (16.4%) Dispatch Cost (3.7%) Variance Key: Favorable: >2% Near budget: +/- 2% Unfavorable: <-2%

7 Surplus Sales Market Changes in market drivers resulted in lower than anticipated surplus sales pricing $/MMBtu $7 $6 $5 $4 $3 $2 $1 $0 PR Average Power Price CIG Average Gas Price $/MWh $45 $40 $35 $30 $25 $20 $15 $10 $5 $0

8 Impact of Renewable Resources At times, wind generation can force out coal, beating the cost of Rawhide Solar has shown similar growth, but at lower overall magnitudes 8,000 PSCo Wind Generation (GWh) 300 Platte River Wind Generation (GWh) 7,000 6,000 5, , ,000 2,000 1,

9 2016 Events of Significance Served a new all-time record peak load of 659 MW on 6/21 Commissioned Rawhide Flats Solar farm on 10/14 Purchased nearly ¾ million MWh to serve municipal load lower than budget and average market prices Successfully maintained system reliability during a significant winter storm in March Operated 156 days without a unit trip at Rawhide and maintained environmental compliance throughout the entire year Achieved significant cost savings throughout 2016 through self-supply of spinning reserves Received approval from FERC on the Joint Dispatch Agreement in February began testing in September Completed the Laporte Substation 230 kv expansion project in June

10 2016 Events of Significance Saved 21.6 GWh in energy and 2.7 MW of demand from efficiency programs Conducted over 1,100 residential and commercial efficiency assessments Processed 810 commercial efficiency rebates and nearly 72,000 efficient lighting discounts Executed an IGA with the municipalities for DSM and DER programs and initiated a demand response pilot program Received approval for the 2016 Integrated Resource Plan in August Implemented the quarterly Power Supply Plan during the 2017 budget process Developed a charter and modeling approach for the Customized Resource Plan In December 2016, the board approved and adopted the first comprehensive Platte River Water Policy, which will provide direction to Platte River going forward in the management of water resources and assets.

11 Questions?

12 2016 Financial Review Board of Directors February 23, 2017

13 Significant Events Municipal loads were very close to projections Surplus sales pricing and energy significantly lower Debt financing/refunding Final debt payment associated with Windy Gap Project Planned maintenance outage at Craig Unit 1 Forced outage exchange agreement payout Liability recorded for closure costs of impoundments Capital 15 out-of-budget for $2.0M (board contingency of $1.2M) 9 over budget projects for $1.2M 38 projects carried over to 2017 for $7.3M

14 2016 Financial Results Category Variance from Budget (in millions) Indicator Net Income $7.3 Revenues ($10.3) Operating Expenses $15.5 Capital Expenditures $9.3 Debt Expense $1.4 > 2% Favorable 2% to -2% At or Near Budget < -2% Unfavorable

15 $/Millions Operating Expenses Variance from 2016 Budget: $15.5M 2016 Budget 2016 Actual $61.8 $57.4 $55.0 $46.4 $34.3 $33.3 $18.9 $17.4 Operations & Maintenance Fuel Purchased Power A&G Below Budget Variances $8.6 Fuel (price and quantity) $1.9 Windy Gap water / Yampa $1.1 Personnel expenses $0.9 Self provided reserves $0.8 General maintenance $0.7 Demand Response / Planning $0.6 Chemicals / railcar parts / non-routine projects $0.5 Bottom ash piping / ash pond cleaning $ outage parts returned in 2016

16 2016 Financial Summary All Strategic Financial Plan targets were exceeded. AA credit rating affirmed. Strategic Financial Plan Net Income (In Millions) Debt Service Coverage Days Cash On Hand Debt to Capitalization Target 3 Yr Avg > $6 Million $13.8 $18.0 $6.8 $16.6 > 1.5X > 200 Days < 50% 31% 33% 29% 31%

17 Questions?

18 2016 Corporate Services Review Board of Directors February 23, 2017

19 Significant Events - Safety Speaker on Workplace Violence Disaster Management Training for Electric Utilities

20 Significant Events - HR Recruitment Total # of positions filled % of positions filled internally 29% 30% 30% Turnover Voluntary 4.11% 0.88% 2.94% Involuntary 1.83% 1.32% 2.52% Retirements 5.03% 3.53% 2.52% Total Turnover 10.97% 5.73% 7.98% Employee Demographics Average age of employees % of employees eligible for retirement 38.43% 38.20% 36.10% Talent Management Leadership Development Employee Training Operations Simulator

21 Strategic Initiatives and Goals Cyber Security Adopted enterprise cyber security principles Began work on nine key cyber initiatives Compliance/Employee Engagement Implemented compliance hotline Expanded ethics policy HQ Campus January December progress From review of current site and possible alternates to beginning schematic design Technology Implemented engineering document management system

22 Questions?

23 2016 Communications and Marketing Board of Directors February 23, 2017

24 Significant Events / Results External Communications Launched new Platte River website Expanded social media presence Engage - Awareness - Value Build a resource Improvements: Aligned with Strategic Plan Improved navigation Updated & expanded content Consistent brand & theme Examples: Employment Annual Bird Count Rawhide Flats Solar

25 Significant Events / Results Internal Communications Supported employee advisory group Supported compliance hotline Crisis Communications Plan What to do / who to contact Guidelines / readiness Public Relations & Outreach Community events Fundraising

26 Significant Events / Results Efficiency Works Marketing Held first annual Efficiency Works Trade Ally event 10 contractor / trade ally trainings & Rawhide tour Expanded outreach & collaboration ads / social media Rawhide Flats Solar Communications to municipalities & stakeholders Ribbon cutting ceremony & expanded Rawhide Energy Station tours

27 Questions?

28 2016 General Counsel Review Board of Directors February 23, 2017

29 Key Activities and Results Zayo matter settled RelianceGlobalCom matter settled 2015 Reasonable Diligence water filing settled Provided support during the LTEMP EIS Supported analysis and negotiations underlying the Craig Unit 1 decommissioning Supported formation efforts for Mountain West Transmission Group Supported Rawhide Flats Solar contract and procurement Series JJ bonds and continued support on private activity issue for future Windy Gap Firming bonds Initiated project to organize policies and processes

30 Questions?

31 2016 General Manager Board of Directors February 23, 2017

32 Key Activities and Results Internal Management Retreat reorganization for improved organizational effectiveness Revamped Board Meeting Agendas better facilitate strategic discussions Conducted a Board Retreat focused on board collaboration and communication Finalized Strategic Plan Finalized Craig Unit 1 Exit Strategy Collaboration with Municipalities on Community Initiatives Regional Broadband Initiatives

33 Moving Forward Distributed Energy Resource Evaluation Demand Response Pilot System-Wide Community Solar JTAC Subcommittee GridWise Alliance Regional Broadband Resource Diversification Organized Energy Market Joint Customer Information System Collaboration and Communication with the four Municipalities

34 Moving Forward Workforce for the Future - Succession Planning, Leadership Development, Recruitment HQ Campus Project Execution Asset Protection Physical, Cyber, Risk Proactive Strategic Discussions Senior Management and Board

35 Questions?

36 Board of Directors Meeting February 23, 2017

37 HQ Campus February 23, 2017 Link

38 Platte River Power Authority Board of Directors Meeting 23 February 2017 New Headquarters Campus

39 Agenda Project Process and Goals Site Development Building Development Critical Adjacencies Neighborhoods Public Space Next Steps Platte River Power Authority Board of Directors Meeting 23 February 2017 New Headquarters Campus

40 Schematic Design Adjacency Diagrams Program Analysis Precedent Study Site Analysis Platte River Board of Directors Meeting (Feb 23 rd ) Plan Development Spatial Composition Code/LEED Analysis Elevation/Massing (Jan 24 & 25) (March 7) Architecture Architecture Camp Camp Architecture Camp Sketch Problem Plan Alternatives Concept Plan Documentation PRPA Review A B C Vision/Goals/Objectives

41 Guiding Principles - Create a Headquarters Campus that meets or exceeds current regulatory compliance standards. - Incorporate collaborative spaces that help bridge departments and work teams to promote knowledge transfer. - Provide attractive, flexible space with planned expansion for long term growth. - Maximize campus for employee wellness. (trails, flexible work space, etc) - Provide opportunities for public interaction, and education on core business. - Create a headquarters building that showcases the state-of-the-art Platte River infrastructure. - Honor the Platte River Power Authority history. Project Goals - Be good stewards of the environment - Improved ingress/egress through the campus - Separation between secure and non-secure environments - Substation and fleet traffic isolated from other traffic and pedestrians - Improved redundancy for critical infrastructure - Evaluate tech thru lifecycle costing, implement where it fits best

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44 AERIAL VIEWS

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47 MARKETS SECURITY COMMUNICATIONS CUSTOMER SERVICE PSP GROWTH IT IT SUPPORT ADMIN FUELS HR COMPLIANCE FINANCE LEGAL EXECUTIVE PHYSICAL SECURITY PERMITER

48 TRANSMISSIONS CONTROL SCADA SCADA DATA COMM ROOM PSP SUBSTATION TECHS TELECOM FIBER OPTIC LEGAL ENGINEERING COMPLIANCE SUPPORT FITNESS TRAINING ROOMS BOARD ROOM PUBLIC PHYSICAL SECURITY PERMITER LEVEL 1

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50 ext Steps March 30 th : Design Update April 27 th : Design Update May 25 th : Schematic Design Approval Platte River Power Authority Board of Directors Meeting 23 February 2017 New Headquarters Campus

51 Platte River Power Authority Board of Directors Meeting 23 February 2017 New Headquarters Campus

52 Board of Directors Meeting February 23, 2017

53 Community Solar February 23, 2017

54 Purpose Today Review customer motivations/expectations Review solar economics Factors that affect solar price Wholesale system value of solar Discuss next steps Upcoming board presentations

55 Customer Motivations 2014 Solar Energy Evolution and Diffusion Studies (SEEDS), NREL / DOE Sunshot Initiative 3 surveys of ~3600 customers: adopters, non-adopters/considerers, general population Red text indicates where there is a statistically significant difference between adopters and considerers.

56 Customer Motivations

57 Customer Motivations U.S. Homeowners on Clean Energy: A National Survey, Zogby, 2015 (for SolarCity and Clean Edge).

58 Customer Expectations U.S. Homeowners on Clean Energy: A National Survey, Zogby, 2015 (for SolarCity and Clean Edge).

59 Customer Expectations E Source Solar Strategy Market Research (2016) 68% of people think solar costs less than other sources of electricity What happens to electric system costs when customers generate their own power? 61% say costs go down 29% say no change 10% say costs go up U.S. Homeowners on Clean Energy: A National Survey, Zogby, 2015 (for SolarCity and Clean Edge).

60 Energy Rate ($/kwh) Solar Costs and Savings Wholesale premium ($/kwh): $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $0.00 $0.024 $0.034 $0.043 $0.073 $0.10 Negative premium possible with higher avoided costs 5 MW 2 MW 1 MW 100 kw 5 kw residential solar (3rd party) Community Solar Options Lower premium relative to retail net energy metering (NEM) rate Levelized cost of solar High retail NEM Low retail NEM Wholesale system benefits Community solar costs do not include cost of acquiring land within the communities, which could add ~$0.025/kWh.

61 Project & Program Cost ($/W) Simple Payback Period (years) CapEx and Simple Payback Paybacks based on wholesale solar value unless otherwise indicated. Escalating value assumed 2% value escalation and 0.5% output degradation. Neglects O&M costs. Initial cost ($/W) Payback-fixed solar value Payback-escalating solar value $ $4.00 $3.00 $2.00 $ $ MW 2 MW 1 MW 100 kw 5 kw residential solar (3rd Party) Community Solar Options 0 Residential solar simple payback period years at $0.08/kWh net metering Community solar costs do not include cost of acquiring land within the communities

62 Percent of Wholesale Value Average Wholesale Value Wholesale System Benefits Energy value based on hourly maximum marginal dispatch costs when solar is generating Solar energy value (2016) = $26.70/MWh (net) = $27.90/MWh (retail) 80% 70% $40 $35 60% 50% 40% 30% 20% 10% $30 $25 $20 $15 $10 $5 % Energy % Value $/MWh 0% Surplus sales Craig fuel Purchase Peaker fuel $0

63 Load (MW) Solar (MW) Wholesale System Benefits Generation capacity value based on avoided peaker capacity using 25.5% of solar nameplate (dc rating) $9/MWh (net) or $9.40/MWh (retail) Solar reduction at load peak = 2.5 MW (25% of nominal dc capacity) Load Solar MW dc Time (hour ending) Total solar value = $35.70/MWh (net) = $37.30/MWh (retail)

64 System Benefits: Uncertainties Future energy value Regional market Increasing solar Generation capacity value Delay capacity or accelerate it (e.g., storage capacity)? Transmission capacity value No additional capacity needed Ancillary services GHG/carbon value Distribution capacity value Muni by muni decision Assumed to be $0 (for now)

65 Next Steps: Customer Survey Consumer choice modeling Tests consumer acceptance across a range of product prices and features Examples: Monthly bill increase or decrease Example 1 Example 2 Example 3 Example 4 Example 5 $16 increase $35 increase $16 increase $25 decrease $13 decrease Initial payment $0 $0 $0 $8,000* $4,000 Portion of electric provided Project location Term 100% 100% 45% 100% 50% 25 mi N of Fort Collins Month to month In town In town 25 mi N of Fort Collins Month to month Month to month 25 mi N of Fort Collins 20 years 20 years * Can ask both with and without financing

66 Next Steps: RMI RFP Rocky Mountain Institute (RMI) Shine Initiative Goal is to accelerate community solar Support munis and coops in developing community-scale solar projects RMI develops and issues RFP with utility participation Aggregates buying power Provides technical support Utilities choose winning developer Utilities choose individually whether to proceed RMI compensated only if PPA is signed Initial bids could be available late spring

67 Next Steps Complete customer survey (March/April) Consider RMI partnership (Feb) Develop & issue RFP (March/April) April Board Meeting discuss community solar options May Board Meeting narrow focus on likely program options

68 Questions?

69 Potential Annual Program Costs Size (kw dc) Total program cost ($/kwh) Wholesale premium ($/kwh) Total Annual Premium / Number Residential Customers Estes Park Fort Collins Longmont Loveland ($) (#) ($) (#) ($) (#) ($) (#) 100 kw/muni* $0.11 $0.073 $11, $11, $11, $11, MW shared $0.080 $0.043 $2, $32, $16, $15, MW shared $0.070 $0.034 $4, $51, $27, $24, MW shared $0.060 $0.024 $7, $91, $47, $44, * Assumes one 100-kW project per municipality, due to the small size of the project. All other projects assume a single project that is shared among the municipalities, with an equitable portion for each municipality.

70 Board of Directors Meeting February 23, 2017

71 Energy Efficiency Funding Policy Board of Directors February 23, 2017

72 MWh Common EE: History & Forecast 2001 IRP 2007 IRP 2012 IRP 2016 IRP 60,000 50,000 40,000 $15,000,000 $12,500,000 $10,000,000 30,000 $7,500,000 20,000 $5,000,000 10,000 $2,500,000 0 $0 forecast PRPA spending ($) Muni spending ($) Incremental energy savings (MWh) Municipality funding provided under DSM & DER IGA

73 Policy Overview Purpose: EE Programs have matured and continued to grow Appropriate to have a policy that governs how funding levels and goals are set and how programs are evaluated Scope limited to EE for now: policy for DER to be developed as these programs grow Policy is to make prudent investments in EE requires a means by which: Overall budget & goals are determined balance costs & benefits for participants and non-participants Individual EE programs are selected EE programs are evaluated Directs GM/CEO to direct staff to develop & maintain EE guidelines Demand Side Management Energy Efficiency Funding Reference Document

74 EE Funding Reference Document Portfolio-level goals & budgets How much energy savings at what cost? Program-level goals & budgets Which programs should we offer? Financial controls, procurement, and program evaluation How do we know our programs are effective?

75 EE Funding Reference Document Portfolio goals & budgets EE potential study: how much EE can we achieve, at what rate, and at what cost? Technical potential: all known EE technologies applied at once Economic potential: Tech potential that costs less than long-run marginal cost of generation and transmission Achievable potential Attempts to predict customer response with rebates Typically evaluate rebates paying 33%, 50%, 75% and 100% of EE cost Other factors to consider Historical performance/ ramping Staff resources Avoiding utility cost share extremes Funding equity among municipalities

76 EE Funding Reference Document Program-level goals and budgets What is an EE program? An area of activity intended to result in energy savings from a particular customer class, through one or more energy saving technologies, through one or more interventions (e.g., rebates, education, etc.) Factors considered when choosing programs Ability to contribute to portfolio-level goals (e.g., $/MWh) Municipalities objectives & input Other utilities experience & best practices Consistency & collaboration Customer interest & trade ally interest History Each customer class (including low income) Meets customer needs Meets trade ally needs Consistent funding over time Diversity of EE technologies

77 EE Funding Reference Document Financial controls & procurements process Written policies and procedures governing financial transactions Purchasing Policy & Purchasing Manual Other EE-specific delegations of authority and procedures Program Evaluation (and Measurement & Verifications) How well are programs working?

78 EE Funding Reference Document Program Evaluation Track energy & demand savings By technology, project, and program Sources: engineering estimates, product data, documentation from customers & trade allies Verification Check that as-built projects match project documentation Sampling typically >10% of projects Review utility best practices (Tech Reference Manuals, 3 rd party evaluations) Customer surveys

79 Evaluation Internal audit completed 2016/2017 Audited Efficiency Works commercial rebates 2015 results: 800 projects ~$2,000,000 Verified that program procedures were followed in determining and processing rebate payments Found that rebate payments were calculated and paid in accordance with procedures Recommended a few areas where better documentation should be maintained Implementing these recommendations now 3 rd Party evaluation starting

80 Questions/Discussion

81 Board of Directors Meeting February 23, 2017

82 Water Resources Update Board of Directors Meeting February 23, 2017

83 Agenda 1. Water Policy Review 2. Overview of Windy Gap Request for Proposal Process 3. Status of On-Going Negotiations, Potential Outcomes 4. Next Steps

84 Platte River s Water Resource Policy Direction from board in July 2016 to work towards increasing Platte River s participation level in the Windy Gap Firming Project, and make up to 60 units of Windy Gap available for sale Water Policy and Resolution presented to the board in October 2016 Water Policy and Resolution adopted by board in December 2016

85 Platte River s Request for Proposal Windy Gap Direction to increase participation level, sell units RFP Process Discussions and Negotiations with select bidders Apr 2016 Jul 2016 Jul - Oct 2016 Oct - Dec 2016 Jan - Mar 2017 Finalized Water Resources Reference Document April 2016 Windy Gap Unit Valuation - Consultant Water Policy and Resolution Adopted December 2016

86 Platte River s Request for Proposal Windy Gap Results of Request for Proposal (RFP) o o o Responses from six entities (seven proposals) Responses were creative, unique and specific Moving forward and negotiating with four entities Windy Gap Firming Project unsubscribed allocation o o o During this process, the unsubscribed capacity of 3,820 AF has been allocated All participants with the exception of one requested their pro-rata share Platte River s pro-rata share is 602 AF, which increases storage total to 12,602 AF

87 Platte River s Request for Proposal Windy Gap Potential Outcomes o o o o o Achieve minimum target storage level of at least 14,000 AF (started at 12,000 AF) Sell a number of Windy Gap units, but still maintain well in excess of 100 units Generate revenue reduce firming project costs/debt service Work with multiple entities, build partnerships Facilitate a process through which other participants and the project as a whole will benefit

88 Platte River s Request for Proposal Windy Gap Next Steps o o o o o o Continue negotiations and finalize the terms of the transactions Work with Northern Water to re-allocate storage with involved entities, so that the upcoming interim agreement reflects final participation levels Draft and finalize agreements Complete offer to assigning municipalities to satisfy their first right of refusal Execute agreements and complete/finalize transfers of storage and units through Northern Water Municipal Subdistrict Update board on final results once all agreements are signed

89 Questions/Discussion?

90 Board of Directors Meeting February 23, 2017

91 January Operational Results Category January Variance YTD Variance Municipal Demand 2.8% 2.8% Municipal Energy 0.0% 0.0% Baseload Generation 5.6% 5.6% Wind Generation (13.1%) (13.1%) Solar Generation (16.5%) (16.5%) Surplus Sales Volume 14.6% 14.6% Surplus Sales Price (8.1%) (8.1%) Dispatch Cost (6.4%) (6.4%) Variance Key: Favorable: >2% Near budget: +/- 2% Unfavorable: <-2%

92 Board of Directors Meeting February 23, 2017

93 Financial Summary Category January Variance from Budget ($ in millions) Net Income $1.5 Debt Coverage 0.52x Revenues $0.3 Operating Expenses $1.2 Capital Additions $2.6 > 2% Favorable 2% to -2% At or Near Budget < -2% Unfavorable

94 Board of Directors Meeting February 23, 2017