FLEXPOWER BUNDLE UPDATE

October 28, 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 Bonnin

VP, Energy Supply & Market Operations

INTRODUCTION BY:Dr. Cris Eugster

Chief Operating Officer (COO)

• PROVIDE OVERVIEW OF FLEXPOWER BUNDLE COMPONENTS & HOW IT WILL MEET OUR CAPACITY NEEDS

• PROVIDE LOOK AHEAD & NEXT STEPS

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OBJECTIVES & TAKEAWAYS

• CURRENT GENERATION PORTFOLIO

• PORFOLIO OVERVIEW: GAS STEAM UNITS

• FLEXPOWER BUNDLE OVERVIEW

• EXPECTED TIMING OF FLEXPOWER BUNDLE

• NEXT STEPS & LOOK AHEAD

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AGENDA

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DIVERSE GENERATION PORTFOLIO

AVR Plant492 MW

Gas

Spruce Plants1345 MW

Coal

Sommers Plants

830 MWGas

Braunig Plants

859 MWGas

Milton B Lee Plants

375 MWGas

Rio Nogales Plant

785 MWGas

CPS Energy Solar Plants (PPAs)

546 MWSolar

CPS Energy Wind Plants (PPAs)

1069 MWWind

Over 7000 MW of

Diverse Generation

to Serve our Community

South Texas Project1064 MWNuclear

• Our gas steam units are aging, built in the 60s & 70s

• Opportunity to strengthen reliability as we phase out older plants

• Our approach is to replace aging capacity with solar firmed up by battery storage & gas toll

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Today

Gas Steam Units

Nearly 1700 MW due to retire in the next

10 years

WHY: PORTFOLIO OVERVIEWAGING GAS STEAM UNITS

Sommers Plants

830 MWGas

Braunig Plants859 MW

Gas

2050 2060

VH Braunig 1 (217MW)

VH Braunig 2 (230MW)

OW Sommers 1 (420MW)

1960 1970 1980 1990 2000 2010

VH Braunig 3 (412MW)

OW Sommers 2 (410MW)

2020 2030 2040

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WHAT: FLEXIBLE PATH IN ACTIONMAJOR STEP FORWARD

Up to 900 MEGAWATTS (MW)

Up to 500 MEGAWATTS (MW)

Up to 50 MEGAWATTS (MW)

CPS ENERGY NEWSROOM, JULY 10, 2019

RIVARD REPORT, JULY 10, 2019

FLEXPOWER BUNDLE COMPONENTS FOR DISCUSSION

FLEXPOWER BUNDLE OPTIMIZING RESOURCES

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Gas toll & rest of fleet provides around-the-clock reliability

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

ne

rgy

Use

Hour of the Day

Typical Summer Day

Wind

Customer Demand

Demand Response

Gas Toll & Rest of Fleet

Storage

Solar

Intermittent solar & wind need to be

firmed up by gas toll & storage

FLEXPOWER BUNDLE PROTECTING OUR CUSTOMERS

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FlexPower Bundle protects our customers from high & volatile market prices

*Data in graph is based on 500 MW

*

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Pricing still needs to come

down

Lifecycle and capacities still

need to improve

ERCOT Market procedures are still in

development

BATTERY ENERGY STORAGE SYSTEMSWHY NOT ADD MORE NOW?

ECONOMICS TECHNOLOGY REGULATORY

We will continue to introduce battery energy storage systems in the future as economics, technology and regulatory status improves

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2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Solar (300 MW)

Battery Storage (25 MW)

Solar (400MW)

Battery Storage (10 MW)

Solar (200 MW)

Natural Gas-Based Power (250 MW)

Battery Storage (15 MW)

The proposal is to phase in solar, storage and gas toll over the next 4 years

PROPOSED TIMING FLEXPOWER BUNDLE

Natural Gas-Based Power (250 MW)

• Total Capacity: 1450 MW

• Effective Capacity: 845 MW at Summer Peak

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NEXT STEPS & LOOK AHEAD

We will continue to provide updates along the way

Complete Initial Customer

Feedback & Engagement

Release Solar + Battery Request

for Proposals

Begin Negotiating

Gas Toll

2019 2020

Receive Solar + Battery

Proposals

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

Thank You

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