SUMMER OPERATIONS RECAP

INTRODUCTION BY:

Cris Eugster

Chief Operating Officer (COO)

PRESENTED BY:

Operations Executives

October 29, 2018

Informat ional Update

2

AGENDA

• RECORD SUMMER TEMPERATURES

• GREAT PLANT PERFORMANCE

• MARKET & FINANCIAL PERFORMANCE

• DELIVERY & RELIABILITY PERFORMANCE

• GAS SYSTEM

OPERATIONS TEAM

3

Cris EugsterChief Operating Officer (COO)

Kim StokerSr. Director

Benny EthridgeSr. Vice Pres

John BonninVice Pres

ESMO

Don StantonSr. DirectorGas Delivery

Paul BarhamSr. Vice Pres

DEIPST

Larry BlaylockSr. Director

Frank AlmarazSr. Vice Pres

Rudy GarzaSr. Vice Pres

Distrib Svs & Ops

Energy Delivery ServicesCommercial OperationsPower Generation

Environmental Planning & Compliance

Angela RodriguezDirector

Climate & Sustainability

Speaking Today

Nuclear Oversight

Krista DavisDirector

CSI Program

4

STARS ALIGNEDSTRONG OPERATIONAL & FINANCIAL PERFORMANCE

The Market

Plants & Resources

Our People

95

5

RECORD SUMMER TEMPERATURES

1 2 3 4

5 6 7 8 9 10 11

12 13 14 15 16 17 18

19 20 21 22 23 24 25

26 27 28 29 30 31

August 2018

S

93° 97° 96° 98° 99° 95° 88°

M T W T F S

99° 96° 97° 97°

99°

100° 97° 100° 101° 100° 100° 100°

83° 96° 97° 98° 100° 100°

99° 100° 100° 100° 98° 96°

Indicates record for that day

1 2

3 4 5 6 7 8 9

10 11 12 13 14 15 16

17 18 19 20 21 22 23

24 25 26 27 28 29 30

June 2018

S M T W T F S

95° 100° 101° 99° 98°

96° 92° 80° 86° 93° 98°

101°

99° 94° 98° 100° 98° 99° 100

100°

99°

97°

99° 98° 98° 96° 97° 96° 95°

99° • 27 days above 100°

• 85 days above 95°

• July was 3.8° hotter than average

1 2 3 4 5

6 7 8 9 10 11 12

13 14 15 16 17 18 19

20 21 22 23 24 25 26

27 28 29 30 31

S

May 2018

S M T W T F

85°

90° 90° 89° 88° 89° 90° 93°

84° 87° 90° 75°

99°

95°

87° 89° 92° 91° 93° 94° 98°

91° 90° 91° 94° 96° 97°

97° 97° 97° 98°

1 2 3 4 5 6 7

8 9 10 11 12 13 14

15 16 17 18 19 20 21

22 23 24 25 26 27 28

29 30 31

July 2018

S M T W T F S

98°

95° 97° 97° 99° 99° 100° 99°

103° 105° 102° 98° 97° 98°

95°

102° 100° 100° 100° 92° 96° 93°

93° 80° 93° 93° 95° 94°

100° 100° 93°

95° to <100°100° or above

6

CPS ENERGY & ERCOT HIT RECORD USAGE

Both ERCOT and CPS Energy broke all-time peak demand records in July 2018

Previous demand records broken

44,000

49,000

54,000

59,000

64,000

69,000

74,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

4,400

4,500

4,600

4,700

4,800

4,900

5,000

5,100

5,200

ERC

OT

Pe

ak D

em

and

-M

W

CP

S En

erg

y P

eak

De

man

d -

MW

CPSE Peak Demand MW ERCOT Peak Demand MW

7

REDUCING THE PEAKTHROUGH DEMAND RESPONSE

4,200

4,400

4,600

4,800

5,000

5,200

5,400

7/3 7/19 7/23 8/16 8/17 8/23

MW

CPS Energy Peak Load Demand Response

CPS Energy successfully partnered with 140,000 residential & 560 Commercial & Industrial customers across our community

to manage demand during the hottest days

8

GENERATION PERSPECTIVE

PRESENTED BY:

Benny Ethridge

Senior Vice President, Power Generation

9

STRONG DIVERSITY DELIVERING OPERATIONS EXCELLENCE

AVR Plant492 MW

Gas

Spruce Plants1,345 MW

Coal

Sommers Plants830 MW

Gas

Deely Plants840 MW

Coal

Braunig Plants859 MW

Gas

Milton B Lee Plants373 MW

Gas

Rio Nogales Plant785 MW

Gas

CPS Solar Plants (PPAs)

550 MWSolar

CPS Wind Plants (PPA)

1,059 MWWind

Plants delivered during the Summer

run

GENERATION AVAILABILITY

• Reliability-Centered Maintenance• Budget management & controls • Asset 360 monitoring program – JKS

• O&M Procedures & Checklists

• Behavioral Based Safety

• Near-miss Reporting & Review

10

MAY THRU SEPTEMBER PERFORMANCE

Plant Benchmarks:• Top Decile: 96.7%• Top Quartile: 92.5%• Median: 85.5%

92.7%99.0%

86.9%97.6%

92.9%

28.2% 30.6%

92.5%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Solar Wind Coal CombinedCycle

Gas Steam

GT Peakers

TraditionalFleet

Traditional Fleet Renewables Top Quartile

We also delivered when market prices were high with Summer

Portfolio Commercial Availability at 94.5%

976

1,459

1,093

531

2,082447 6,579

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

MW

s

0 - 9 10 - 19 20 - 29 30 - 39 40 - 49 50 + All Years (Total Capacity)

MLB 5-8Spruce 2

MLB 1-4RioAVR

Spruce 1STP 2

STP 1 Deely 1 & 2Sommers 1 & 2Braunig 3

Braunig 1 & 2

Years in Service

11

OUR PLANTS ARE AGING

Almost 40% of our capacity comes from plants that are

40+ years old

Proactive maintenance and solid budget controls are required to effectively manage investments in aging units

Safe &

consistent work

practices

• On-line monitoring

• Condition-based

maintenance

• Strategic outages

• Plant-centric structure

• Subject matter experts

• Enhanced training

• Procedures & checklists

• Work management system

• Behavioral-based safety

• Peer-to-peer checks

Accountability

& execution

Reliability

PEOPLE

PROCESS

PLANT

12

Reliable, competitively priced power to meet the needs of our Customers

2018 SUMMER DRIVING OPERATIONS EXCELLENCE

13

MARKET PERSPECTIVE

PRESENTED BY:

John Bonnin

Vice President, Energy Supply & Market Operations (ESMO)

14

POWER GENERATION AND ESMO PARTNERSHIP

ENERGY SUPPLY & MARKET OPERATIONS (ESMO)

POWER GENERATION

15

2018 SUMMER AVAILABILITY WHEN PRICES RISING

91%

100%96%

88%

72%

25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

COAL GAS CC GAS PEAKERS GAS STEAM SOLAR WIND

Plant Availability When Prices Exceed $75 per MWh

16

FINANCIAL RESULTS

$42.8$52.3

$123.6

0

20

40

60

80

100

120

140

FY2017 FY2018 FY2019 Forecast

$ (

Mill

ion

s)

Wholesale Revenue net Fuel ($M)

0

50

100

150

200

250

300

350

400

1-J

un

8-J

un

15

-Ju

n

22

-Ju

n

29

-Ju

n

6-J

ul

13

-Ju

l

20

-Ju

l

27

-Ju

l

3-A

ug

10

-Au

g

17

-Au

g

24

-Au

g

31

-Au

g

7-S

ep

14

-Se

p

21

-Se

p

28

-Se

p

$/M

WH

ERCOT Daily Average Prices

High prices in the ERCOT market provided opportunity to earn revenue from off system sales

FY2019 LE

17

DIVERSITY = RESILIENCE

Our diverse generation portfolio protects customers from high prices caused by the tight reserves position.

Peak load is reduced by demand response programs.

*Demand Response programs: 197 MW; without it peak would have been 5,134 MW in hour 4-5 PM

We work to ensure our

transmission lines and

power plants are online &

available when usage is

highest22% 21% 20% 21%

16% 14% 12% 13%

39% 41%33%

42%

23% 24% 35%24%

0

1,000

2,000

3,000

4,000

5,000

6,000

May 31st 5-6 PM June 5th 5-6 PM July 23rd 6-7 PM August 22nd 5-6 PM

MW

Highest Usage Hour

Nuclear Renewables Coal Gas

4,744 4,9005,080*

4,968

18

ELECTRIC DELIVERY PERSPECTIVE

PRESENTED BY:

Paul Barham

Senior Vice President, Delivery Engineering, Integrated Planning, Substation & Transmission

&

Rudy Garza

Senior Vice President, Distribution Services & Operations

19

Safety Training Operational Equipment/Vehicle

SUMMER PREPAREDNESS ACTIVITIES

SUMMER READINESS

Preparation for high heat levels reinforced system performance in the Summer months.

• Snake bite awareness• Heat Stress• Hydration

• Inventory checks• Personal voltage detector checks• Vehicle checks

• Inspections & testing• Load shed plan updates• Load flow analysis

TRANSMISSION PERFORMANCE

• Close coordination with ERCOT during Summer months

• No events impacted customer load

• Good performance through Summer storms

20

Transmission crewre-insulating a tower

Cagnon-Kendall Transmission Line

DISTRIBUTION 24/7/365

• Summer heat stressed the system

• Hot summer transitioned into September storms

• System reliability was challenged

21

Service Restoration repairing damaged pole top equipment

Service Restoration climbing poles to restore power

Overall system performance is favorable.

RELIABILITY METRICS SEPTEMBER LIGHTNING & RAIN IMPACT

22

Month Rainfall SAIDI SAIFI

Sep. FY18 2.8 in 4.67 0.07

Sep. FY19 16.82 in 8.41 0.12

Metric % Increase 80% 71%

Sept. Lightning Strikes FY18 127FY19 10,000

Weather headlines retrieved from http://www.ksat.com

Combined Benchmarking First Quartile & Southern Company 2016 Data

53.97 54.75

5.00

15.00

25.00

35.00

45.00

55.00

65.00

75.00

FY18 FY19 Projection

SAIDI# of minutes

Top Decile

0.83

0.87

0.81

0.82

0.83

0.84

0.85

0.86

0.87

0.88

FY18 FY19 Projection

SAIFI

SAIFI reliability metric is at risk due to weather impacts

Top Quartile

Metric Target = .86

Metric Target = 61.00

23

USING TECHNOLOGY TO IMPROVE RESTORATION

VIDEO

24

GAS PERSPECTIVE

PRESENTED BY:

Frank Almaraz

Senior Vice President, Commercial Operations

25

2018 SUMMERCOMMUNITY SAFETY & PREVENTATIVE MAINTENANCE

As construction activity increases in the summer, Gas Delivery focuses on Public & Employee Safety Awareness & preventative maintenance activities

Trench safety for contractors

Lunch truck “Loncheras”Safety meetings

26

GAS DELIVERYCONTINUOUSLY IMPROVING COMMUNITY SAFETY

87.3% 87.8%89.44%

70.0%

75.0%

80.0%

85.0%

90.0%

95.0%

CY16 CY17 YTD CY18

Response Time to Odor Complaints (% < 30 Mins)

Top Decile

Source: 2017 American Gas Association Annual Benchmark Study

CPS Energy ranks #1 among our Big 4 peers in Texasin Response Time metric performance

System

27

People Operations Equipment

WINTER PREPAREDNESS ACTIVITIES

WINTER IS GAS PEAK SEASON

Gas Delivery is currently underway with seasonal preparedness activities for their winter peak season

28

GREAT EXECUTION = SUCCESSFUL PERFORMANCE

The Market

Plants & Resources

Our People

Thank You