2017 Integrated Resource Plan Tucson Electric Power Company 2017 Integrated Resource Plan April 3, 2017 Page - 1 Tucson Electric Power Page - 2 2017 Integrated Resource Plan Acknowledgements Tucson Electric Power Company IRP Team Jeff Yockey, Manager, Environmental and Long-Term Planning Victor Aguirre, Manager, Resource Planning Kevin Battaglia, Lead Resource Planner Luc Thiltges, Lead Resource Planner Lee Alter, Senior Resource Planner Ernesto Blanco Jr, Fuels, Senior Portfolio Analyst Henry Cattan, Fuels and Resource Planning Greg Strang, Lead Forecasting Analyst Stephanie Browne-Schlack, Senior Forecasting Analyst Debbie Lindeman, Supervisor, Energy Efficiency Planning Analysis & Reporting Ron Belval, Manager, Regional Transmission Planning Gary Trent, Manager, Transmission Planning Christopher Lindsey, Manager, Distribution Engineering & Technical Energy Services Richard Bachmeier, Principal Rate Designer, Rates & Revenue Requirements Lauren Briggs, Manager, Balancing Authority Function Sam Rugel, Director, System Control & Reliability Michael Bowling, Director, Wholesale Marketing Nicole Bell, Renewable Forecasting and Trading Analyst Michael Baruch Supervisor, Residential Energy Efficiency Programs & Services Jeff Krauss, Manager, Renewable Energy Ted Burhans, Manager, Renewable Energy Joe Barrios, Supervisor, Media Relations & Regulatory Communications Carmine Tilghman, Senior Director, Energy Supply & Renewable Energy Erik Bakken, Senior Director, Transmission and Environmental Services Mike Sheehan, Senior Director, Fuels and Resource Planning IRP Consultants and Forecasting Services Pace Global http://www.paceglobal.com/ Gary W. Vicinus, Executive Vice President - Consulting Services Melissa Haugh - Consulting Services Anant Kumar - Consulting Services Brian Kwak – Consulting Service Chuck Fan – Consulting Services Wood Mackenzie - Consulting Services http://public.woodmac.com/public/home EPIS - AuroraXMP Software Consulting Services http://epis.com/ Page - 3 Tucson Electric Power Table of Contents ACKNOWLEDGEMENTS ....................................................................................................................... 3 Tucson Electric Power Company IRP Team ........................................................................................................................................ 3 IRP Consultants and Forecasting Services........................................................................................................................................... 3 ACRONYMS ............................................................................................................................................ 13 FORWARD .............................................................................................................................................. 17 CHAPTER 1 ............................................................................................................................................ 19 EXECUTIVE SUMMARY....................................................................................................................... 19 Introduction .................................................................................................................................................................................................... 19 Coal Plant Retirements ............................................................................................................................................................................... 20 Renewable Energy Integration and Diversification ...................................................................................................................... 21 Grid Balancing Resources ......................................................................................................................................................................... 22 Smart Grid Operations ................................................................................................................................................................................ 22 Regional Infrastructure Projects ............................................................................................................................................................ 2 3 Transformation of Desert Southwest Wholesale Power Markets ........................................................................................... 23 Regional Transmission Organizations ................................................................................................................................................. 24 Market Fundementals ................................................................................................................................................................................. 24 Energy Efficiency .......................................................................................................................................................................................... 25 A New Integration Approach to Resource Planning ...................................................................................................................... 26 Summary of the 2017 IRP Reference Case Plan .............................................................................................................................. 27 Planned Coal Plant Retirements ............................................................................................................................................................. 27 Planned Renewable Resource Additions ........................................................................................................................................... 27 Planned Grid Balancing Resources ....................................................................................................................................................... 27 Planned Energy Efficiency Commitments .......................................................................................................................................... 27 TEP’s 2017 IRP Reference Case Plan ................................................................................................................................................... 28 CHAPTER 2 ............................................................................................................................................ 31 ENERGY DEMAND AND USE PATTERNS ....................................................................................... 31 Load Forecast ................................................................................................................................................................................................. 31 Geographical Location and Customer Base ....................................................................................................................................... 32 Customer Growth .......................................................................................................................................................................................... 33 Retail Sales by Rate Class .......................................................................................................................................................................... 34 Reference Case Forecast ............................................................................................................................................................................ 35 Methodology ................................................................................................................................................................................................... 35 Reference Case Retail Energy Forecast ............................................................................................................................................... 36 Reference Case Retail Energy Forecast by Rate Class .................................................................................................................. 37 Reference Case Peak Demand Forecast .............................................................................................................................................. 38 Data Sources Used in Forecasting Process ........................................................................................................................................ 39 Risks to Reference Case Forecast and Risk Modeling ................................................................................................................... 39 Firm Wholesale Energy Forecast ........................................................................................................................................................... 40 Summary of Reference Case Load Forecast ...................................................................................................................................... 41 Future Drivers that May Influence the Long-Term Load Forecast ......................................................................................... 42 Electric Vehicles ............................................................................................................................................................................................ 43 Future Adoption Rate Influencers ........................................................................................................................................................