Key Account Customer Meeting – March 2018

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Key Account Customer Meeting – March 2018 Key Accounts Meeting Spring 2018 Wednesday, March 21, 2018 Key Accounts Spring Meeting Welcome & Safety Minute Jackie Sargent, P.E. General Manager Downed Power Line Safety Filename, Version Stay Safe When a Power Line Is Down • Consider all wires energized and dangerous • Never Touch a Downed Power Line or anything or anyone in contact with a power line • Stay at least 35 feet away from downed lines • Do not come near or touch a tree limb, structure, any other object that comes into contact with downed line • Do not try to rescue someone who makes contact with a downed power line • Never use any object to move a downed power line • Rubber gloves and rubber-soled shoes will not protect you from electrocution Call Austin Energy at 512-322-9100 and report the location 5 When a Vehicle Comes in Contact • Call 9-1-1 immediately • Warn others not to touch the vehicle • Do not leave the vehicle unless it becomes unsafe due to immediate dangers, such as fire or smoke • If you must leave the vehicle – Jump as far away from the vehicle as possible – Land with both feet on the ground at the same time – Never touch the vehicle and the ground at the same time – After exiting the vehicle, keep your feet together, hop, and don’t run 6 Visit Austin Energy’s Website Agenda • PSA & Regulatory Charge update • Solar power purchase agreement • Commercial Value of Solar • Repowering downtown & meter exchange program • Customer collaboration • Open discussion 8 Power Supply Adjustment And Regulatory Charge Update for Fiscal Year 2018 Power Supply Adjustment Costs Components Twelve Months Ending January 2018 Difference between Load Zone and Power Supply Cost - $10M Cost $500 $391 $400 $381 $300 $200 $139 $ Millions $ $100 $0 ($23) ($6) ($100) ($120) Revenue ($200) Load Zone Costs Owned Assets Net Revenue Contracted Assets Net Cost GreenChoice & Value of Solar Bilateral & Hedging Net Power Supply Costs Customers have benefited by $10M from generation and hedging 10 Power Supply Adjustment History $700 Load zone cost Drop in load zone Rising load zone cost didn’t maintain costs results in shows need to keep downward trend; $600 over-collection PSA stable results in under- Millions collection $500 $400 $300 $200 $100 $0 FY13 FY14 FY15 FY16 FY17 -$100 -$200 Load zone cost trending up Load zone cost trending down Load zone cost stable -$300 Owned Asset Load Zone Costs Contracted Assets Total Power Costs PSA Revenue Decreasing load zone costs and over collection caused price volatility 11 PSA Over (Under) Balance $100 2.72¢ 3.07¢ $80 2.71¢ Millions $60 Starting in Nov-16, monthly natural gas prices increased 56%, 2.90¢ $40 contract assets Los Vientos IV and Roserock increased MWh production by 30%, and congestion $20 costs increased by 25% due to contracted assets. $0 -$20 3.63¢ 3.86¢ -$40 1/13 4/13 7/13 1/14 4/14 7/14 1/15 4/15 7/15 1/16 4/16 7/16 1/17 4/17 7/17 1/18 10/12 10/13 10/14 10/15 10/16 10/17 O/U Balance PSA Change (Primary) PSA adjusted to return over collection to customers 12 Power Supply Adjustment System Average Rate 0.045 0.040 10.0% 0.035 6.4% 7.1% 0.030 -0.5% 0.025 0.020 Cents per KWh per Cents 0.015 -11.4% 0.010 0.005 -20.4% 0.03356 0.03691 0.03926 0.03124 0.02769 0.02755 0.02950 0.000 Oct 12 Nov 13 Nov 14 Nov 15 Apr 16 Nov 16 Nov 17 PSA % Chg from prior year Linear (PSA) Increase in PSA for FY18 reflects a stable power market 13 ERCOT South Peak Forward Prices $200.00 Oct. 6th - Vistra Energy announces 1,800 MW Monticello $180.00 retirement Oct. 13th - Vistra Energy announces 2,300 MW at Sandow $160.00 and Big Brown retirement Dec. 18th - ERCOT reports tightening electricity reserve $140.00 margins $120.00 Jan. 23rd - ERCOT real time prices hit $9,000 per MWh for first time $100.00 Mar.1st - ERCOT predicts record-breaking peak summer usage $80.00 $60.00 $40.00 $20.00 $- Jan.18 Feb.18 Mar.18 Apr.18 May.18 Jun.18 Jul.18 Aug.18 Sep.18 Oct.18 Power prices have risen due to changes in supply and demand 14 Postage Stamp Rate Trend in ERCOT $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 Postage Stamp Rate $20.00 $10.00 $- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Historical Low Range Forecast Likely Forecast (Used) High Range Forecast Transmission system expansion and tax laws impact forecast 15 PSA and Regulatory Observations • The PSA is expected to return the over-collection to customers by October 2018 which would indict an upward price correction. • Price volatility emerging in ERCOT market due to recent retirements and load growth. • Austin Energy positioned to manage price risk with generation and hedging. • Austin Energy’s Regulatory Charge is expected to increase mimicking the trend in the Postage Stamp Rate. • Effects of changes in corporate tax rates and timing of rate filings by transmission providers will impact future Postage Stamp Rates. 16 Solar Purchase Power Agreement & ERCOT Emergency Policies Key Account Customer Meeting March 21, 2018 2017 Solar RFP • RFP Closed May 31st • ERCOT Regional Split • 45 Respondents 3% West • 82 Projects 23% South 52% Panhandle 6% • Approx. 400 Proposals North 16% Houston 18 Intersect Power Highlights Terms • Top ranked project • Size: 150 MW • Model shows solar farm helps – Option to increase facility size by 30MW offset congestion for existing solar assets • Term: 15 years • Benefits from projected load growth in the area • Commercial Operation Date • Planned 345 kV transmission (COD): 2020 projects later in contract term – $12.2 Million reduction in contract provide increased export costs versus 2019 COD capacity • 2021 PSA Year estimated • Location produces later into reduction of 1.02% the day Achieve 51% renewable at COD 19 AE Utility Solar Portfolio in ERCOT Market Contract COD Project Capacity 2017 Date (MWs) 2009 2010 Webberville 30 2014 2016 Roserock 157.5 AE 2015 2017 Bootleg 118.5 2015 2017 Upton 157.5 Balance of 2015 2018 Midway 182.5 ERCOT 2017 2020 Proposed 150 Total 796 20 Emergency Operations in ERCOT Before and at Emergency Energy Emergency Alert Condition (EEA) • Operating Condition Notice • EEA1 – Serves as a market notice to TOs and – Maintain total of 2300 PRC QSEs about possible adverse (physical responsive capacity) conditions • Advisory • EEA2 – Conditions are developing – Maintain system frequency at 60 Hz – Notifications go out or maintain total of 1750 PRC • Watch – Conditions have developed such that • EEA3 Emergency Condition exists or is imminent – Maintain system frequency at 59.8 – Notifications go out Hz or greater • Emergency Condition – Firm load shed in 100 MW blocks – ERCOT is an insecure state per load shed table (AE 3.85 MWs) – Notifications go out ERCOT can jump to EEA3 if needed. It is not required to call EEA 1 & 2 first. Load Shedding is a reliability requirement and therefore not a paid service. 21 AE’s Load Shed Table Transmission & Distribution Operators maintain the table on their desks at all times • Table is reviewed each year for updates and necessary changes • Critical load identified (load that cannot be shed, military, hospitals) • Load that is difficult to restore identified • Load that remains takes turns as operators have a process of shedding load for 15 – 30 minutes, rolling the shedding process throughout the service area • The cost associated with this activity is not allocated • The utility does not recover the lost revenue 22 Commercial Solar and VOS Key Accounts Meeting March 21, 2018 Filename, Version 23 Commercial Solar • Since 2004, over 450 commercial customers have installed a total 20 MW of solar in Austin, including: . 2021 E 5th Street Ltd . Oracle . Apple . Seton Healthcare . Applied Materials . St Edwards University . Austin Community College . State Parks & Wildlife . Austin Housing Authority . Texas Military Dept . Austin, Eanes, Lake Travis , . The Overlook at Rob Roy Pflugerville, Round Rock ISDs . Travis County . HEB . TMF Health Quality Institute . Huston Tillotson College . University of Texas . IRS . US GSA . LCRA . Westlake Medical Center 24 Commercial Performance Based Incentives • Commercial Solar projects are eligible for Performance Based Incentives (PBIs) – PBIs are monthly bill credits based on actual solar production, credited for the first 10 yrs of the system’s life – Must be installed by an AE Participating Contractor – Incentives ramp down as capacity is installed • Incentive Caps: – 2.8MW cap per customer – 1 MW per interconnection – PBI rate depends on system size, current level at time of application 25 Commercial PBI Incentive Levels Small Commercial & Non-Profit AE Commercial PBI Ramp Down Step PBI Capacity $0.09 # ($/kWh) (MW-ac) Small Commercial 1 $0.08 0.5 $0.08 Incentive 2 $0.07 1.0 $0.07 Medium Commercial 3 $0.06 1.5 Incentive 4 $0.05 2.0 $0.06 Large Commercial Medium Commercial Incentive $0.05 Step PBI Capacity # ($/kWh) (MW-ac) $0.04 PBI ($/kWh) 1 $0.06 1.5 $0.03 2 $0.05 1.5 3 $0.04 1.5 $0.02 4 $0.03 1.5 $0.01 Large Commercial $0.00 Step PBI Capacity 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 # ($/kWh) (MW-ac) Program Capacity (MWac) 1 $0.04 4.0 2 $0.03 4.0 Current incentive levels are available at www.austinenergy.com/go/currentsolar 3 $0.02 4.0 Subject to change due to budget limitations or market changes that warrant incentive level review.
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