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Pasadena Water & Power

Power Integrated Resource PlanPWP Presentation

Community Meeting #3Jackie Robinson Center

October 30, 2018


2018 IRP BACKGROUND & GOALS

POWER INTEGRATED RESOURCES PLAN

2

Presenter

Presentation Notes

I will be going through this analysis briefly


What is an IRP?

• IRP Details> The IRP serves as a blueprint for PWP to deliver reliable,

environmentally responsible electricity service at competitive rates over a 20-year planning period

> Recent Past IRPs City Council adopted 2009 IRP 3/16/2009 City Council adopted 2012 IRP 3/5/2012 City Council adopted 2015 IRP 6/22/2015

• IRP Development> IRPs are evolving documents IRP will be updated every 3-5 years

> Resources not considered or picked up today might be picked up in future IRPs

3

Presenter

Presentation Notes

IRP are used to plan for future procurement needs. It is important to remember, that this IRP is a planning document and we will develop another IRP in the coming years. So resources or technologies not considered in this iteration, will be re-evaluated in future years.


IRP Objectives

• Need to find a balance between:> Reliability> Cost> Environment

4

Environmental

ReliabilityEconomic

Feasible Viable

CostEffective

Presenter

Presentation Notes

Per our website as well Find a balance between reliability, stability, cost and environmental stewardship Reliability: ensure that PWP meets the compliance requirement of the California System Operation (“CAISO”) and any to prevent any system blackouts. Need to meet a 15% reserve margin (meaning, need to procure 15% above out forecasted peak, on a monthly basis. If our forecasted peak was 300 MW, must procure 345 MW month ahead), Flexible RA (to mitigate renewable integration) and Local Capacity Requirement- to ensure enough local supply. Flex RA: variable by month. Highest month is February at 61.72 MW System RA: 15 % Reserve Margin LCR: 123.74, fortunately our local plants cover that by providing 174 MW of load Goal is to keep the lights on and minimize any service disruption to our customers Cost: ensure that PWP provides quality service at a reasonable cost, which is comparable to neighboring utilities. Preserving competitive rates is a common objective for utilities. Stability: maintain stable rates. Portfolios that can mitigate significant market swings can achieve higher rate stability over time for PWP’s customers. Portfolios were evaluated against a range of key market drivers, like natural gas prices, energy demand, and power market prices as summarized in the section on MarketLink Scenarios. In this context, portfolios were evaluated based on the difference between the high and low cost outcomes across these range of market drivers. This represents a metric of how wide the distribution of costs can get for each portfolio. The lower the difference, the less exposed the portfolio is to market volatility. [per 2011 IRP definition] Environmental Stewardship: ensure that PWP takes into consideration every viable alternative to fossil fuel, before signing any long term contracts.


2018 IRP vs. Previous IRPs

5

Previous IRPs 2018 IRPNot mandated by State andused to develop to plan for future energy needs

SB 350 Mandate with prescriptive requirements

Developed with Community Input

Developed with Community Input

No strict timeline Due by January 1, 2019Updated every two-three years Mandatory five-year updateFinal product was either a detailed presentation or a report

Mandatory detailed report, specific considerations, and prescribed tables

Presenter

Presentation Notes

Understanding the differences between this and previous IRPS Prescriptive Requirements: [TE, DR, ES, EE, RPS, GHG, etc.]


Key Issues for 2018 IRP

• SB 350 compliance> GHG emission reduction goals/alternatives> RPS goals/alternatives> Impact of transportation electrification> Impact on Disadvantaged Communities Meet reliability requirements

• Determine whether PWP remains part of the Intermountain Power Plant (“IPP”) Natural Gas Renewal Contract

• Delivery Constraints• Review of cost effective energy storage, demand

response, energy efficiency, etc.

6

Presenter

Presentation Notes

The CEC developed a set of IRP Submission Guidelines. The guideless were finalized on 9/5/17, with updates in April of 2018. Changes are still being made to the requirements. As part of the requirements, we have to: SB 350 Requirements, which will be discussed in detail in this presentation Mandates an IRP for utilities with load > 700 GWh Due (and approved) before 1/1/19 IRP written document/report Similar to 2009 and 2012 IRP Will address all of the SB 350 Requirements 4 Required Tables Supplemental Information Compliance with PUC 9621 40% reduction in greenhouse gases by 2030 50% RPS by 2030 http://www.energy.ca.gov/sb350/ Local generation needs Other options to meet local capacity requirements Local resource alternatives and incentives Solar, distributed generation, energy efficiency, demand response Potential cost effective energy storage Balanced Scorecard Balancing these important issues with reliability, cost and environmental stewardship Choosing the most optimal scenario for Pasadena


Timeline

7


COMMUNITY OUTREACH EFFORTS


8

Presenter

Presentation Notes



History of Meetings

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Meeting Date DetailsMSC 9/12/17 Provide an Update on the 2015 IRPEAC 2/13/ Provide an Update on the 2018 IRP ProcessSTAG Meeting #1 4/11/18 Discussion of IRP, Energy Market and Roles and

Responsibilities of STAG, Staff and ConsultantSTAG Meeting #2 5/31/18 Discussion of the modeling approach and data

assumptionSTAG Meeting #3 6/21/18 Discussion of the preliminary base case

EAC/MSC 7/10/18 Update on 2018 IRP Progress

Community Meeting #1 7/18/18 Overview of the IRP Process

Community Meting #2 8/23/18 Discussion of IRP ScenariosSTAG meeting #4 9/13/18 Discussion of all ScenariosSTAG Meeting #5 9/20/18 Discussion of Scorecard and Results

STAG Meeting #6 10/8/18 Discussion of Final IRP Recommendations and Next Steps

Community Meeting #3 10/30/18 Discussion of Final IRP Recommendations

Presenter

Presentation Notes

The IRP was also advertised via print media and social media (newspapers, CM newsletter, bill inserts, etc.) . There was a survey on IRP issues and 296 online responses received.


SCENARIOSPOWER INTEGRATED RESOURCES PLAN

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Presenter

Presentation Notes



Scenarios Description

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Scenario # Name Details Status

1 Base Case (“BC”) SB 350 Compliance Complete

2 Social Cost of Carbon(“SCC”)

BC+ Higher cost of carbon as a dispatch penalty for incremental natural gas resources

Complete

3 SB 100 + SCC SCC+ RPS of 60% post 2030 Complete

4 SB 100 + BC BC+ RPS of 60% post 2030 Complete

5 (PWP developed using Scenario #3)

SB 100 + SCC+Sell IPP Scenario #3, and selling IPP at $0 and replacing with Renewable and receiving a carbon credit

Complete

6 Diversification + SB 100 + SCC

Diversification of resource types, location and duration + RPS of 60% post 2030 + SCC

Complete


Diversification + SB 100 + SCC+biogas

Scenario #6, biogas at Magnolia and Glenarm starting 2030 and selling IPP at $0 and replacing with Renewable and receiving a carbon credit

Complete


Diversification + SB 100 + SCC+biogas+Sell IPP

Scenario #6, biogas at Magnolia and Glenarm starting 2030 and selling IPP at $0 and replacing with Renewable and receiving a carbon credit

Complete


SCORECARD & RESULTSPWP IRP UPDATE

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Overall Results

All Future Long Term Resource Commitments Renewable Reliability requirements will met through Capacity Markets and Glenarm Units

No New Long Term Fossil Fuel CommitmentsIntermountain Power Plant not selected as supply after 2027 (no participation in the gas repower option)

90%+ GHG Reduction (2030): Exceed CARB GHG Planning target of 75% reduction60%+ RPS (2030): meeting SB 100 requirements

13

Presenter

Presentation Notes

Before going into the details, we wanted to highlight the outcomes of the base case for the IRP, which shows SB 350 compliance. As you can see: All future resources are renewable No additional long term fossil fuel resources are part of the portfolio (post 2027, when the IPP contract expires) And we exceed our environmental mandates of 50% RPS and 40% ghg emissions reductions


Scorecard

Item Details WeightCost/Ratepayer Impacts

Customer cost impacts of overall portfolio, as compared to the base case

40%

Compliance Reliability and SB 100 Compliance 35%

Environmental Stewardship

Meeting and exceeding state mandates for carbon reductions

20%

Diversity Type of resource, length/contract termof resources, type of technologies, location of resources, etc.

5%

14

Presenter

Presentation Notes

Scorecard was approved by Stakeholders in early August, through an internal survey.


Scorecard Results

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HIGH SCOREAVERAGE SCORE

LOW SCORE

Presenter

Presentation Notes

Note: adjusted RPS based on retails sales, NOT system load. Previous data had it based on system load. It adjusted all the data upwards of 3%.


Summary Comparison (SB 100 cases only)

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RPS is at 60% for all Scenarios

Scenarios BC +SB 100

SCC + SB 100

SCC + SB 100 + Sell

IPP

Diversify Diversify+ Biogas

Diversify+ Biogas

+Sell IPP

New RenewableMW by 2039 200 200 255 250 250 305

New Renewable Resources in 2023 50 75 75 55 55 55

Avg GHG Reduction vs 1990 78% 83% 96% 83% 84% 96%

Avg Portfolio Cost Increase vs BC ($M/year)*

$1.3 $2.7 $11.2 $7.0 $13.9 $22.5

Bill Impact 2.2% 2.7% 5.7% 4.5% 7.1% 10.1%

Bill Impact $ (on 500 KWh bill) $2.01 $2.52 $5.34 $4.23 $6.67 $9.53

Presenter

Presentation Notes

Rate increase adjusted using average rates, as posted online. Avg. GHG reduction is based on the 20 years average, compared to 1990 emission of (an estimated) 918,622 MT


Ratepayer Costs

17

$1.55 $1.58 $1.57 $1.60 $1.77 $1.69 $1.83 $2.00

$0.10

$0.60

$1.10

$1.60

$2.10

$ B

ILLI

ON

S

Total PWP Ratepayer Costs (PWP Ratepayers)

Presenter

Presentation Notes

These are estimates on all of the scenarios


$1.55 $1.58 $1.57 $1.60$1.77 $1.69

$1.83$2.00

$0.37 $0.26 $0.37 $0.26$0.08 $0.26

$0.24$0.05

$1.00

$1.25

$1.50

$1.75

$2.00

$ BI

LLIO

NS

TOTAL 20 YEAR COSTS (RATEPAYER COSTS AND SCC*)

Total PWP Ratepayer Costs Total Emission Cost

Scenarios: Ratepayer Cost+ Social Cost

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*Social Cost of Carbon is not a rate impact, but the potential costs to society.

Presenter

Presentation Notes

Updated estimates using correct Aurora values on 10/4/18


1.6% 2.2% 2.1% 2.7%5.7% 4.5%

7.1%10.1%

0%

5%

10%

15%

Potential Rate Impact(Due to Energy Charge Impact Only)

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This analysis assumes average summer rates, as posted online. All impacts are an estimate only.

PREFERRED SCENARIO

Do not meet SB 100

Presenter

Presentation Notes

This is potential rate impacts, if you keep all others items constant and only impact the Energy Charge Copy and paste from: \\svrwp-file3\users\MSamra\Documents\PWP Files\CEC\IRP\2018\Northwest Econ\Model Runs\Rate Tool Finance Finance (All Scenarios)


SCC+SB 100 Rate Impacts by Customer Type & Usage

Customer Type

Usage (KWh)

Summer Bill

New Bill with IRP

Difference % Increase

Residential 500 $94.19 $96.71 $2.52 2.68%Residential 1,000 $214.24 $219.28 $5.04 2.35%Commercial 5,000 $888.02 $912.78 $24.76 2.79%Commercial 10,000 $1,825.60 $1,877.49 $51.89 2.84%Commercial 50,000 $8,229.90 $8,489.33 $259.43 3.15%Commercial 100,000 $18,042.41 $18,603.59 $561.18 3.11%Commercial 300,000 $48,986.40 $50,669.95 $1,683.55 3.44%

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• This analysis assumes average rates (2018 summer rates), as posted online. All impacts are an estimate only.

• 2018 Summer bill rates are before taxes and surcharges. Based on Energy Charge impacts only.


NEXT STEPSPOWER INTEGRATED RESOURCES PLAN

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Schedule

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• Discuss Preferred Scenario and Next Steps

Community Meeting: 10/30/18

• Support of IRP and Preferred Scenario

EAC 11/13/18• Seek to

Recommend Approval of IRP Report and Preferred Scenario

MSC 11/27/18

• Approval of IRP Report and Preferred Scenario

City Council 12/3/18

• IRP Final Report

• IRP Supplemental Documents

CEC Submittal

Presenter

Presentation Notes

At the July 18th IRP, the Community Asked many questions. The ones you see on these slides were brought up a few times. We wanted to take this opportunity to address some of the concerns that were brought up. Emissions from natural gas is 2-3% and leakage is a fraction of our overall NG usage. So overall, this would add


BACK-UP SLIDES


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Scorecard Results

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Actual cumulative rate impact may be higher

Presenter

Presentation Notes



Other 3.3% $.0036

Estimated Energy Charge Cost Breakdown by kWh FY 19

25

The results of the IRP impact the Energy Charge portion of the PWP bill, which makes up >50% of the bill

Energy Charge$0.1094

Distribution and Customer

Charge $0.0604

Transmission Charge$0.0252

$-

$0.0500

$0.1000

$0.1500

$0.2000

$/kW

h

Public Benefits Charge$.0072

O&M and Other Costs 43.3%$.0474

IRP Related Costs56.7%$.0620 En

ergy

Cha

rge

Presenter

Presentation Notes

The IRP impacts will be addressed via the energy charge. There are many accounts and items that go into this charge, including the cost of long term power. Clearly defined: O&M: labor at the power plants, debt service and gft $ The Energy Charge is about ½ of what makes up a current bill. As a reminder, when we surveyed customers, their willingness was a 5-10% rate impacts, which translated to a 2.5-5% impact to the Energy Charge,


Energy Charge (made up of the IRP, O&M and

Other Charges)$0.1094 54.10%

Distribution and Customer Charge

$0.0604 29.87%

Transmission Charge

$0.0252 , 12.46%

$-

$0.0500

$0.1000

$0.1500

$0.2000

$/kW

h

Public Benefits Charge

$.0072 , 3.56%

PWP Costs Per KWh FY 2019

26

$.2022Total

Presenter

Presentation Notes

Energy Charge is what we focus on. This chart shows the actual costs- this is not what you see in rates today, because there are supplemental programs that mitigate some of this cost. Avg. rate is about .18cents/kwh


Ratepayer Costs

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$2.52 $5.04 $2.48 $4.95 $24.76 $51.89

$259.43

$561.18

$1.00$1.00

$101.00

$201.00

$301.00

$401.00

$501.00

500 KWhResidential

1000 KWhResidential

500 KWhCommercial

1,000 KWhCommercial

5,000 KWhCommercial

10,000 KWhCommercial

50,000 KWhCommercial

100,000 KWHCommerical

TOTAL 20 YEAR COSTS (RATEPAYER COSTS AND SCC OF CARBON*)

Bill Impact #REF!

Presenter

Presentation Notes

These are estimates on all of the scenarios


Scorecard

Item Details WeightCost/Ratepayer Impacts

Customer cost impacts of overall portfolio, as compared to the base case

40%

Compliance Reliability and SB 100 Compliance 35%

Environmental Stewardship

Meeting and exceeding state mandates for carbon reductions

20%

Diversity Type of resource, length/contract termof resources, type of technologies, location of resources, etc.

5%

28

Presenter

Presentation Notes

Scorecard was approved by Stakeholders in early August, through an internal survey.


Scorecard Results

29

Actual cumulative rate impact may be higher

Presenter

Presentation Notes



History of Meetings

30

NOVMAR APR MAY JUNE JULY AUG SEPT OCT DEC

• Hire Consultant• Assumptions for

Model

• STAG Meeting #1 • Model Runs

• Hire Consultant• Assumptions for

Model


IRP Objectives

• Need to find a balance between:> Reliability> Cost> Environment

31

Environmental

ReliabilityEconomic

Feasible Viable

CostEffective

Presenter

Presentation Notes

Per our website as well Find a balance between reliability, stability, cost and environmental stewardship Reliability: ensure that PWP meets the compliance requirement of the California System Operation (“CAISO”) and any to prevent any system blackouts. Need to meet a 15% reserve margin (meaning, need to procure 15% above out forecasted peak, on a monthly basis. If our forecasted peak was 300 MW, must procure 345 MW month ahead), Flexible RA (to mitigate renewable integration) and Local Capacity Requirement- to ensure enough local supply. Flex RA: variable by month. Highest month is February at 61.72 MW System RA: 15 % Reserve Margin LCR: 123.74, fortunately our local plants cover that by providing 174 MW of load Goal is to keep the lights on and minimize any service disruption to our customers Cost: ensure that PWP provides quality service at a reasonable cost, which is comparable to neighboring utilities. Preserving competitive rates is a common objective for utilities. Stability: maintain stable rates. Portfolios that can mitigate significant market swings can achieve higher rate stability over time for PWP’s customers. Portfolios were evaluated against a range of key market drivers, like natural gas prices, energy demand, and power market prices as summarized in the section on MarketLink Scenarios. In this context, portfolios were evaluated based on the difference between the high and low cost outcomes across these range of market drivers. This represents a metric of how wide the distribution of costs can get for each portfolio. The lower the difference, the less exposed the portfolio is to market volatility. [per 2011 IRP definition] Environmental Stewardship: ensure that PWP takes into consideration every viable alternative to fossil fuel, before signing any long term contracts.