FLEXPOWER BUNDLE UPDATE

November 18, 2019

I n f o r m a t i o n a l U p d a t e

P R E S E N T E D B Y :John BonninVice President

Energy Supply & Market Operations

• PROVIDE OUTLOOK OF OUR CAPACITY NEEDS OVER THE NEXT DECADE

• PROVIDE OVERVIEW OF OUR PROCESS TO EVALUATE THE ADDITION OF MORE RENEWABLES TO OUR PORTFOLIO

• PROVIDE LOOK AHEAD & NEXT STEPS

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OBJECTIVES & TAKEAWAYS

3

AGENDA

• OVERVIEW OF GENERATION ASSETS: CAPACITY & AGE

• COMPARE OUR TOTAL CAPACITY WITH LOAD FORECAST OVER THE NEXT 10 YEARS, WITH & WITHOUT FLEXPOWER BUNDLE

• OPTIMIZING OUR RESOURCES TO MEET PEAK DEMAND

• PROCESS FOR EXPLORING OUR OPTIONS

• LOOK AHEAD & NEXT STEPS

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OUR PLANTS ARE AGING

5715

976

1454

560

1036

1242

447

0

1000

2000

3000

4000

5000

6000

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

Capacity)

Almost 30% of our capacity comes from plants that are

40+ years old

MLB 5-8Spruce 2

MLB 1-4Rio NogalesAvR

Spruce 1 STP 1STP 2

Sommers 1Sommers 2Braunig 3

Braunig 1 Braunig 2

Our team does a great job keeping our plants running. Reliability of our plants continues to be a top priority.

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LOAD FORECAST VS AGING CAPACITY

Aging units comprise our entire reserve margin & are needed to meet our load requirements

0

2,000

4,000

6,000

8,000

MW

Calendar Year

Rest of Fleet Aging Capacity Peak Demand

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LOAD FORECAST VS AGING CAPACITYWITH FLEXPOWER BUNDLE

0

2,000

4,000

6,000

8,000

MW

Calendar Year

Rest of Fleet FlexPower BundleGas

FlexPower BundleSolar + Storage

Aging Capacity Peak Demand

FLEXIBLE PATH IN ACTIONFLEXPOWER BUNDLE

Up to 900 MEGAWATTS (MW)

Up to 500 MEGAWATTS (MW)

Up to 50 MEGAWATTS (MW)

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We are going through a process to evaluate adding more renewables

Our approach will:

• Align with our Flexible Path Strategy

• Consider options available to ensure

reliability, resiliency & affordability

• Include firming capacity like storage &

gas-fired generation

• Strengthen reliability for aging assets

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FLEXPOWER BUNDLE OPTIMIZING RESOURCES

0

1,000

2,000

3,000

4,000

5,000

6,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

San

An

ton

io E

ner

gy U

se (

MW

)

Hour of the Day

Summer Day

Wind

CustomerDemand

DemandResponse

Gas Toll & Rest of Fleet

Storage

Solar

0

1,000

2,000

3,000

4,000

5,000

6,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

San

An

ton

io E

ner

gy U

se (

MW

)

Hour of the Day

Winter Day

Wind

CustomerDemand

Gas Toll & Rest of Fleet

Storage

Solar

Intermittent solar & wind need to be firmed up with conventional

power sources to provide around-the-clock reliability

100%

58%

15%

33%

100%

43%

20%

1%0%

20%

40%

60%

80%

100%

Conventional Coastal Wind West TX Wind Solar Conventional Coastal Wind West TX Wind Solar

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RESOURCE PEAK AVAILABILITY

Summer Peak: August 6- 7 p.m. Winter Peak: February 7- 8 a.m.

Only a portion of renewable capacity is available to meet summer & winter peak

Using a Request For Proposal (RFP) process we will:

•Explore current pricing for solar & storage

• Identify market availability & timeline

•Evaluate & recommend viable candidates

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ADDING SOLAR & STORAGEOUR APPROCH TO THE PROCESS

The team expects hundreds of submissions for this offer.

Explore options with qualified companies that currently provide reliable & efficient power in the ERCOT market

• We will consider:

• Our seasonal & hourly needs to firm our existing & any new renewable resources

• Pricing available for power purchased

• Asset performance history

• Location of resource to mitigate exposure to congestion

• Availability & timing

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ADDING FIRMING CAPACITYOUR APPROACH TO THE PROCESS

Options for firming up renewables & enhancing reliability of the fleet are being explored

NEXT STEPS & LOOK AHEAD

We will continue to provide updates along the way

Complete Initial Customer

Feedback & Engagement

Release Solar + Battery Request

for Proposals

Explore Gas Firming Capacity Options

2019 2020

Receive Solar + Battery Proposals,Evaluate & recommend

Execute FlexPower

Bundle

We are here

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WE HAVE A BALANCED APPROACHTHESE CONSIDERATIONS ARE IMPORTANT

As we work through the FlexPower Bundle, we will ensure that we keep our value pillars at the forefront

SECURITY

CUSTOMERAFFORDABILITY

RELIABILITY ENVIRONMENTALLY RESPONSIBLE

RESILIENCY SAFETY

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Thank You

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Appendix

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BUNDLED APPROACHTO ADD FUTURE PEAK CAPACITY

SOURCES OF GENERATION

SOLAR STORAGE GAS

BENEFITS

• Aligns with our load• Costs continue to decrease• Zero emission source• Low maintenance• Improving technologies

• Great back-up source of power

• Reduces need for increased peak generation capacity

• Zero emission source

• Abundant supply• Consistently dependable

source of energy• Affordable• Mature technology

CHALLENGES

• Weather & time dependentresource

• Requires back-up generation

• Uses a lot of real estate• Unknown environmental

impacts

• Expensive• Shorter lifespan than other

sources• Unknown environmental

impacts• Immature technology

• Carbon-emitting• Higher maintenance costs• Forced outage risk• Useful life may extend

beyond market value

While there is no perfect solution, each technology has its benefits. More value is created through bundling.

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