NV Energy IRP ENERGY SUPPLY PLAN TESTIMONY, NARRATIVE
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BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA Application of NEVADA POWER COMPANY d/b/a NV Energy and SIERRA PACIFIC POWER COMPANY d/b/a NV Energy, seeking approval to add 1,001 MW of renewable power purchase agreements and 100 MW of energy storage Docket No. 18-06___ capacity, among other items, as part of their joint 2019-2038 integrated resource plan, for the three year Action Plan period 2019-2021, and the Energy Supply Plan period 2019-2021 VOLUME 18 OF 18 ENERGY SUPPLY PLAN TESTIMONY, NARRATIVE AND TECHNICAL APPENDIX ITEM DESCRIPTION PAGE NUMBER TESTIMONY Marc Reyes 2 Dave Ulozas 23 Michael Cole 35 Vernon Taylor 53 Terry Baxter 65 Patricia Rodriguez 77 Joseph Brignola 89 Elena Mello 97 Narrative – Energy Supply Plan REDACTED 106 Technical Appendix POWER-1 Forward Power Sales Procedures REDACTED 196 GAS-1 Gas Hedging Analysis 222 GAS-2 Projected BTER and DEAA Rates 227 GAS-3 Gas Hedge Workshop Presentations REDACTED 232 ECON-1 2019-2021 NPC ESP – Base Fuel and Purchased 301 Power Costs CONFIDENTIAL RM-1 Risk Management and Control Policy 303 RM-2 Energy Risk Management and Control Policy 316 RM-3 Credit Risk Management and Control Policy 341 MARC D. REYES Page 2 of 361 1 BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA 2 Nevada Power Company d/b/a NV Energy Sierra Pacific Power Company d/b/a NV Energy 3 2018 Joint Energy Supply Plan (2019-2021) 4 Docket No. 18-06___ 5 PREPARED DIRECT TESTIMONY OF 6 Marc D. Reyes 7 8 I. INTRODUCTION OF WITNESS 9 1. Q. PLEASE STATE YOUR NAME, JOB TITLE, EMPLOYER, BUSINESS 10 ADDRESS AND PARTY FOR WHOM YOU ARE FILING TESTIMONY. 11 A. My name is Marc D. Reyes. I am the Director, Resource Planning and Analysis Power Company 12 for Nevada Power Company d/b/a NV Energy (“Nevada Power”) and Sierra Power Company Company Power 13 Pacific Power Company d/b/a NV Energy (“Sierra” and together with Nevada d/b/a NV Energy evada evada 14 Power, the “Companies” or “NV Energy”). My business address is 6226 West N Sierra Pacific Sierra and 15 Sahara Avenue, Las Vegas, Nevada. I am filing testimony on behalf of the 16 Companies. 17 18 2. Q. PLEASE DESCRIBE YOUR PROFESSIONAL BACKGROUND AND 19 EXPERIENCE. 20 A. I have been employed by the Companies since May 2007 and have served as 21 Director of Resource Planning and Analysis since July 2017. Prior to my current 22 role, I was the Manager of Market Fundamentals from May 2011 to July 2017. 23 As the Manager of Market Fundamentals, I was responsible for the development 24 of the market price forecasts for natural gas and wholesale purchase power. I 25 was also responsible for the regional market fundamental analysis supporting the 26 energy supply and resource planning functions. 27 28 Reyes-ESP DIRECT 1 Page 3 of 361 1 From May 2007 to May 2011, I was a Power Trader for the Companies, where I 2 performed analysis and negotiated short-term wholesale transactions to optimize 3 the Companies’ economic dispatch. Before joining the Companies, I was 4 employed as a Wholesale Power Trader for El Paso Electric Company. More 5 details regarding my professional background and experience are set forth in my 6 Statement of Qualifications, included as Exhibit Reyes-Direct 1. 7 8 3. Q. WHAT ARE YOUR RESPONSIBILITIES AS DIRECTOR, RESOURCE 9 PLANNING AND ANALYSIS? 10 A. In my current position, I lead a staff of economists, planners, engineers and 11 analysts to develop the Companies’ Integrated Resource Plans (“IRP”) and Power Company 12 amendments, and Energy Supply Plans (“ESP”) and ESP updates. In addition, Power Company Company Power 13 working with other groups in the Companies, the Resource Planning and d/b/a NV Energy evada evada 14 Analysis department develops and supports supply strategies, presents them to N Sierra Pacific Sierra and 15 management for approval, and facilitates ongoing communication of the status 16 of the supply plans. 17 18 4. Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE THE PUBLIC 19 UTILITIES COMMISSION OF NEVADA (“COMMISSION”)? 20 A. Yes. I have provided testimony in IRP dockets and ESP dockets before the 21 Commission, most recently in the second amendment to Sierra’s 2017-2036 IRP, 22 Docket No. 17-11003 and the third amendment to Nevada Power’s 2016-2035 23 IRP, Docket No. 17-11004. 24 25 26 27 28 Reyes-ESP DIRECT 2 Page 4 of 361 1 II. PURPOSE OF TESTIMONY 2 5. Q. WHAT IS THE PURPOSE OF YOUR PREPARED DIRECT 3 TESTIMONY IN THIS PROCEEDING? 4 A. First, as the ESP policy witness, I introduce the Companies’ witnesses, describe 5 the preparation of the ESP, and describe and give an overview of the ESP. I also 6 sponsor the following sections in the Companies’ ESP for 2019-2021 (“2018 7 ESP”): 8 • Section 2.B (“Capacity Requirements”); 9 • Section 2.C (“Energy Requirements”); • 10 Section 3.A. (“Power Fundamentals”); • 11 Section 3.B. (“Natural Gas Fundamentals”); Power Company • 12 Section 3.D.1. (“Natural Gas Price Forecast”); Power Company Company Power • 13 Section 3.D.2. (“Power Price Forecast”); d/b/a NV Energy evada evada • 14 Section 4 (“Power Procurement Plan”); N Sierra Pacific Sierra and 15 • Section 5.C (“Recommended Gas Hedging Plan”); 16 • Section 8 (“Determination of Prudence under Nevada Administrative 17 Code (“NAC”) §§ 704.9508(2) and 704.9494”), including the 2019-2021 18 cost-to-serve estimates for the Companies; 19 • Section 9 (“Commission Directives”); and 20 • Technical Appendix items FPP-1 (IRP), ECON-1 and GAS-1. 21 22 The fuel and purchased power price forecast for the ESP period from 2019 23 through 2021 is identical to the IRP forecast contained in IRP Technical 24 Appendix FPP-1. For administrative efficiency this Technical Appendix is 25 physically contained only once in the filing, in the Technical Appendices 26 accompanying the fuel and purchased power narrative for the IRP. ECON-1 and 27 28 Reyes-ESP DIRECT 3 Page 5 of 361 1 GAS-1 contain information related to the ESP only, and so are located in the 2 ESP Technical Appendices. 3 4 III. INTRODUCTION OF OTHER WITNESSES 5 6. Q. PLEASE IDENTIFY THE WITNESSES WHO WILL TESTIFY IN THE 6 COMPANY’S DIRECT CASE. 7 A. In addition to me, the following witnesses will testify in the Companies’ direct 8 case: 9 10 David Ulozas, Senior Vice President, Renewable Resources. Mr. Ulozas, 11 sponsors the Renewable Energy Planning section, Section 2.D. Power Company 12 Power Company Company Power 13 Michael Cole, Treasurer. Mr. Cole sponsors Section 7 of the 2018 ESP, which d/b/a NV Energy evada evada 14 relates to the Risk Control organization and strategy. Mr. Cole describes the role N Sierra Pacific Sierra and 15 of the Risk Control organization in managing energy supply risk. In addition Mr. 16 Cole co-sponsors portions of the 2018 ESP, namely a part of Section 8. Mr. Cole 17 also sponsors Technical Appendix Items RM-1 through RM-3. 18 19 Vernon W. Taylor, Director, Market Analytics. Mr. Taylor sponsors Sections 20 4.A.4 and 4.A.5 of the 2018 ESP. Those sections relate to Current Portfolio 21 Optimization Procedures and Continuous Monitoring and Optimization of the 22 Power Portfolio. Additionally, Mr. Taylor sponsors those portions of Section 8 23 of the 2018 ESP that relate to the optimization of the overall supply portfolio for 24 the benefit of bundled retail customers and Technical Appendix Items POWER- 25 1. 26 27 28 Reyes-ESP DIRECT 4 Page 6 of 361 1 Terry A. Baxter, Manager of Load Forecasting. Mr. Baxter sponsors the 2018 2 ESP load forecast, which is found in Section 2.A. of the 2018 ESP and Technical 3 Appendix Items LF-1 through LF-7. 4 5 Patricia Rodriguez, Manager, Gas Transportation Planning. Ms. Rodriguez 6 sponsors 2018 ESP Section 2.E, Section 2.F, Section 2.G, Section 5.A, and 7 Section 5.B Ms. Rodriguez also sponsors Technical Appendix Item GAS-3. 8 9 Joseph R. Brignola, Manager, Coal Procurement & Operations. Mr. 10 Brignola sponsors Section 2.H, Section 3.C, the portions of Section 3.D. that 11 relate to coal, and Section 6. Mr. Brignola also co-sponsors Technical Appendix Power Company 12 Item FPP-1; specifically, Mr. Brignola sponsors the portions of Technical Power Company Company Power 13 Appendix Item FPP-1 that relate to the Companies’ coal price forecast. d/b/a NV Energy evada evada 14 N Sierra Pacific Sierra and 15 Elena P. Mello, Manager, Revenue Requirements & FERC. Ms. Mello 16 sponsors Technical Appendix Item GAS-2, which provides actual and forecasted 17 Base Tariff Energy Rates (“BTER”) and Deferred Energy Accounting 18 Adjustment (“DEAA”) components as well as the estimated carrying charges 19 under the gas hedging plan. 20 21 IV. PREPARATION OF ESP 22 7. Q. HOW DO THE COMPANIES PREPARE ESPS? 23 A. The preparation of an ESP or an ESP update starts with the load forecast. The 24 Companies use the load forecast to project customers’ energy needs, including 25 appropriate reserve margins. Once those needs are known, the Companies then 26 assess the options available to meet those needs. The process includes an 27 examination of market fundamentals in the region, including the outlook for 28 Reyes-ESP DIRECT 5 Page 7 of 361 1 change over the planning horizon. The Companies then identify resource options 2 such as market purchases, including the type or mix of products, NV Energy- 3 owned resources, and long-term purchase power agreements that are available 4 to meet identified needs.