Pasadena Water & Power PWP 2015 IRP Update Item 18 June 22, 2015.

Pasadena Water & Power

PWP 2015 IRP Update

Item 18June 22, 2015


Foundation – Earlier IRPs

Environmental Stewardship

System ReliabilityFiscal Responsibility

2

Cost Effective

Feasible

Viable

Sustainable

This IRP Update builds on concepts &

action plans from 2009 & 2012 IRPs.


IRP Process

3

Identify Needs•Load Forecast•Resources (Supply and Demand)

•Regulatory Requirements

•Reliability Requirements

Identify & Evaluate Resource Portfolios•Supply & Reliability Adequacy

•Regulatory Compliance

•Contractual Compliance

•Least Cost•Environmental Impact

•Societal Factors•Flexibility

Updates & Uncertainty Analysis•Scenarios & Sensitivities

•Changes in Market•Changes in Law•Changes in Contracts

•Changes in Load Profile

Public / Stakeholder Involvement•Advisory Group•Public Meetings•Website•Social Media•Survey

Action Plan•Short-Term Recommendations

Sustainable 20-Year Strategic Resource PlanUpdated Every 2-3 Years

Balances: • Reliability, • Fiscal Responsibility, • Environmental Steward-

ship


IDENTIFY NEEDS2015 PWP IRP


Billed Sales Forecast

5


Balancing Capacity/Energy

6


PWP Power Supplies

7


RPS Progress

8


IDENTIFY & EVALUATE RESOURCE PORTFOLIOS

2015 PWP IRP


IRP Terminology

10

Portfolios

1Stay the Course

(Preferred Portfolio)

2IPP (Coal) Reduction

40% RPS (by 2020)

350% Renewable

Portfolio Standard (by 2025)

470% Renewable

Portfolio Standard (by 2030)

5Carbon (GHG) Neutral

(by 2030)

Scenarios

Base CaseB&V Energy Market

Perspective

High Gas Prices

Low Gas Prices

“Green” Market Influence

Higher Carbon Pricing

Sensitivities

Higher Energy Efficiency

IPP (Coal) Economic Dispatch

(slightly higher generation than Business As Usual)

IPP Early Retirement in 2025

(original contract expires in 2027)

Groups of Power Supply

Resources

Sets of Market Assumptions

Basic Model Variations


Reducing IPP Generation(under current contract)

11

2014 Average Generation = 70 MW


Base Case Portfolio Scorecards: Financial (Fiscal Responsibility) Measures

12

60% GHG Reduction(Preferred Portfolio)

$1,377

$101.1

$91.90

IPP 2025 Retirement

$1,419

$103.9

$94.06

Reduced IPP

Dispatch

$1,437

$104.9

$95.85

50% RPS by 2025

$1,477

$108.1

$98.57

70% RPS by 2030

$1,524

$112.2

$101.74

Carbon Neutral

$1,743

$129.2

$115.53

Total System Cost NPV

($Millions)

Avg. 20-Year Portfolio

Cost ($Millions/Yr

)

Levelized Direct Electric

Cost 2015 ($/MWh)


Base Case Portfolio Scorecards: System Reliability Measures

13

60% GHG Reduction (Preferred Portfolio)

21%

9%

53

23%

5%

IPP 2025 Retirement

20%

9%

53

21%

5%

Reduced IPP

Dispatch

21%

9%

53

11%

6%

50% RPS by 2025

24%

9%

78

12%

6%

70% RPS by 2030

29%

9%

78

17%

5%

Carbon Neutral

29%

9%

78

7%

0%

Average Reserve

Margin (%)

Minimum Reserve

Margin (%)

Incremental FRAC from 2015 (MW)

20-Year Avg. Wholesale Sales (%)

20-Year Avg. Wholesale Purchases

(%)


Base Case Portfolio Scorecards: Environmental Stewardship Measures

14

60% GHG Reduction(Preferred Portfolio)

13,003

-64%

N/A

1,070

45,629

59,610

IPP 2025 Retirement

12,167

-64%

$110

1,014

40,581

62,763

Reduced IPP

Dispatch

9,416

-64%

$37

876

23,807

73,532

50% RPS by 2025

9,088

-68%

$56

837

23,757

67,857

70% RPS by 2030

8,783

-74%

$77

792

23,755

63,352

Carbon Neutral

5,838

-100%

$113

572

28,270

48,642

CO2 Emissions (thousand

metric tons)2030 GHG Reduction from 2008

(%)Realized

GHG Emission

Cost ($/metric

ton)

20 year Avg GHG

Intensity (lbs/MWh)

Coal Burned (thousand

tons)

Natural Gas Burned (Gbtu)


Portfolio Cost Comparison($2015)

15


Portfolio Cost Comparison

16

PORTFOLIO

Expected Increase from

Starting (Today’s) Cost

to 20-Year Levelized

Increase from Status Quo (2008) or Stay the

Course (2015)

Total Portfolio Cost Increase

2008 IRP ($2008) 28% 6% 34%

1A – Stay the Course ($2015) 27.7% N/A 27.7%

2A – Reduce IPP ($2015) 27.7% 4.3% 32.0%

3A – 50% RPS ($2015) 27.7% 7.3% 35.0%

4A – 70% RPS ($2015) 27.7% 10.7% 38.4%

5A – GHG Neutral ($2015) 27.7% 26.8% 54.5%


What Portion of PWP Costs Are We Addressing in the IRP?

17

The IRP Modeling addresses only the Direct Cost component of the Energy Service Charge.

Analyses of the economic impact of various alternatives under the IRP on customer rates/bills assume that all other components of the power bill and rate structure remain unchanged from FY2017.

It is reasonable to assume that there will be increases in these other components as well over the next 20 years.* It is very difficult to accurately predict all components of rates over a 20 year horizon.

* For example, the CAISO is forecasting significant increases in its transmission access charge.


Portfolio Portfolio Name 500 kWh

1000 kWh

Current Annual Average Monthly Bill – As of March 2015 $84.95 $189.78

20-Year Levelized (2015$)

1 Stay the Course (Preferred Portfolio)Economic IPP Dispatch + carbon premium40% RPS by 2020

$96.31 $216.03

2 Reduced IPP OutputReduce IPP to Min starting in 201540% RPS by 2020

$100.77 $224.93

3 Blended – 50% RPSReduce IPP to Min starting in 201550% RPS by 2025 (Solar/Wind/Base Mix)

$102.01 $227.42

4 Blended – 70% RPSReduce IPP to Min starting in 201550% RPS by 2025 & 70% by 2030 (Solar/Wind/Base Mix)

$103.47 $230.34

5 Carbon (GHG) NeutralStarting in 2015: Reduce IPP to Min, no power market purchases, natural gas plants burn 100% biomethane. 50% RPS by 2025 & 100% Carbon-Free by 2030 (e.g., 88% Renewable and 12% existing large hydro/nuclear)

$110.24 $243.88

Estimated Impact of Direct Electricity Cost Only – Monthly Residential Bill (by Usage)

18

Assumes no changes to other cost components or rate structure from FY 2017 approved rates


Portfolio Portfolio Name 2,000 kWh

10,000 kWh

50,000kWh

100,000 kWh

Current Annual Average Monthly Bill – As of March 2015 $327 $1,664 $7,563 $14,875

20-Year Levelized (2015$)

1 Stay the Course (Preferred Portfolio)Economic IPP Dispatch + carbon premium40% RPS by 2020

$372 $1,898 $8,630 $16,965

2 Reduced IPP OutputReduce IPP to Min starting in 201540% RPS by 2020

$390 $1,988 $9,081 $17,847

3 Blended – 50% RPSReduce IPP to Min starting in 201550% RPS by 2025 (Solar/Wind/Base Mix)

$395 $2,014 $9,208 $18,093

4 Blended – 70% RPSReduce IPP to Min starting in 201550% RPS by 2025 & 70% by 2030 (Solar/Wind/Base Mix)

$401 $2,043 $9,355 $18,382

5 Carbon (GHG) NeutralStarting in 2015: Reduce IPP to Min, no power market purchases, natural gas plants burn 100% biomethane. 50% RPS by 2025 & 100% Carbon-Free by 2030 (e.g., 88% Renewable and 12% existing large hydro/nuclear)

$427 $2,181 $10,042 $19,722

Estimated Impact of Direct Electricity Cost Changes on Monthly General Service Bill (by Usage)

19

Assumes no changes to other cost components or rate structure from FY 2017 approved rates


PUBLIC / STAKEHOLDER INVOLVEMENT

2015 PWP IRP


Stakeholder Technical Advisory Group

21

Member Representing

Margaret McAustin Pasadena City Council / MSC

George Falardeau Art Center College of Design

Brian Killett Citizens Climate Lobby

Paul Little Chamber of Commerce

Dennis Murphy Pasadena Resident

John Onderdonk Cal Tech

Tom Romeyn Huntington Hospital

Reuben Smith Pasadena City College

Morey Wolfson Environmental Advisory Commission

Michael Beck Pasadena City Manager

Julie Gutierrez Pasadena Asst. City Manager

Laura Dahl Pasadena Planning Dept.

Phyllis Currie PWP General Manager

Eric Klinkner PWP Asst. General Manager (alt)

Sandra Ell Environmental Adv. Commission (alt)

Pedro Pizarro Cal Tech Board (first few meetings)


Customer and Stakeholder Involvement

• Stakeholder Technical Advisory Group> 15 members appointed by Mayor> 8 meetings

• MSC and EAC Briefings• 3 Open Public Meetings• Electronic Updates

> PWP Website> Email> Social Media

• Survey• Video


Some Key Customer Survey Observations

• Top Priorities:> Reliability> Low Cost> Environmental Responsibility

• Everything is a Priority!• Higher RPS Supported by Many• Cost/Rates = Major Concern• Coal = Major Concern• Many Interesting & Valuable Comments.

See at www.pwpweb.com/irp23

http://www.pwpweb.com/irp


UPDATES & UNCERTAINTY ANALYSIS

2015 PWP IRP


Key Issues/Changes

• CAISO Reliability Requirements> Local & Flexible Resource Adequacy Capacity (“FRAC”)

• Energy Imbalance Market (“EIM”)• The “Duck Curve”

> Changing Net Load Profile alters timing of “peak” and “off-peak” loads/prices> Over-generation> Need for fast-ramping, flexible resources

• Retail Load> Increasing penetration of distributed generation (e.g., rooftop solar,

microgrids) which reduce load, and EV charging would increase load> Change hourly and seasonal shape and load factor

• Cap-and-Trade> Will it continue past 2020, or be replaced by federal carbon tax or some other

program?

25


The Duck Curve

26

FIGURE 1: THE DUCK CURVE

Ne

t Lo

ad (

Loa

d m

inus

Sol

ar

and

Win

d G

ene

ratio

n)

Overgeneration and ramping need increases over time as the amount of solar in the middle of the day increases over time (annual projections shown here)


Key Issues/Changes (con’t)

• GHG Emission Levels> 1990 levels by 2020 (AB32 – The Global Warming Solutions Act)> 80% GHG reduction below 1990 levels by 2050 (Schwarzenegger’s

Executive Order S-3-05)> 40% GHG reduction below 1990 levels by 2030 (Brown’s Executive Order B-

30-15, issued 4-29-15)

• California’s RPS> At least 33% by 2020 (AB32)> Brown’s “Golden State Standards (aka: the 50/50/50 plan): 50% RPS by

2030

• Renewable Resources and Energy Storage> Costs expected to continue to decline> Technology still evolving> Tax incentives, legislative changes and reliability requirements uncertain

• Intermountain Power Project Contract

27


Intermountain Power Project (“IPP”)

28

IPP is the largest contributor of GHG emissions in the PWP generation portfolio.*

* Percentages using current CARB GHG reporting

methodology for electric utilities


PWP Carbon Emissions to Date

29

Emission Source 2008 2009 2010 2011 2012 2013 2014

Local Generation 82,724 73,355 74,590 80,551 139,828 59,603 64,217

Imports (incl. IPP Coal) 672,321 666,596 629,755 642,935 514,443 536,241 546,314

Magnolia* 38,553 36,285 40,727 19,169 5,723 4,540 12,073

Net Market Purchases* 111,720 106,925 65,898 74,751 97,901 63,304 85,656

Total Emissions/ (2008 Method)

Reduction from 2008

905,317

N/A

883,161

2.4%

810,970

10.4%

817,406

9.7%

757,895

16.3%

663,687

26.7%

708,261

21.8%

Total Emissions/ (Current Method)

Reduction from 2008

755,045

N/A

739,951

2.0%

704,345

6.7%

723,486

4.2%

654,271

13.3%

595,844

21.1%

610,531

19.1%

*In 2008, Magnolia & Net Market Purchases were included in PWP Emissions. Current Method excludes them because they are counted by other entities (Burbank for Magnolia; Generation owners or first importers for CAISO market purchases). Switching from natural gas to biomethane at Magnolia produces RPS RECs but does not show up as PWP carbon emission reduction under current CARB methodology.


PWP Carbon Emissions vs. 1990

30

1990 PWP Carbon

Emissions(MT)

2014 Actual

Emissions(MT)

40% Reduction

(MT)

60% Reduction

(MT)

80% Reduction

(MT)

918,622 708,261 551,173 367,488 183,724


ACTION PLAN2015 PWP IRP


Recommendations

• GHG reduction of at least 60% from 1990 levels by 2030 (to approx. 367,500 MT)> Eliminate coal fired generation no later than

6/16/2027.▪ Preserve IPP related transmission rights.▪ Have an option to reduce or opt out of any IPP

natural gas repowering no later than 2019.▪ Until IPP is repowered, reduce IPP coal-fired

generation when operationally & economically practicable.

32


Recommendations (con’t)

• Continue to acquire all cost-effective and viable energy efficiency.

> At least 1% of annual net energy load (12,750 MWh/year) and 0.7% of annual peak demand 2.3 MW/year) through 2023.

> Update recommendations to City Council in 2017.

• Continue to acquire cost effective renewable energy.> Renewable Portfolio Standard Policy & Annual Procurement Plan> Pasadena target = 40% RPS by 2020> State target = at least 33% RPS by 2020; may increase to 50% RPS

by 2030

• Support local renewable energy resources and community solar efforts.

> Establish Feed-in Tariff by the end of 2016.> Launch a Community Solar pilot project by the end of 2016.

33


Recommendations (con’t)

• Continue to ensure reliability and flexibility to respond to electric industry changes.> Explore and procure viable, cost-effective new

technologies and efficient conventional technologies as needed to meet reliability and flexibility requirements.▪ Including distributed generation and energy

storage.• Preserve existing local generation.

> Evaluate repair and/or replacement options for Glenarm Unit 2.

34


Why “Stay the Course?”

• Reaffirms Pasadena’s Aggressive 2012 IRP Commitments

• Achieves a 60% GHG Reduction from 1990 Levels by 2030

> Ahead of California statewide goal to reduce GHG 40% by 2030 under Governor Brown’s Executive Order B-30-15

• Meets or Exceeds All of PWP’s Current Requirements

> Legal, Regulatory, Reliability and Environmental• Provides Flexibility to Adapt to Changing

Conditions• Least Cost Option Considered

35


Preferred Portfolio: Stay the Course = 60% GHG Reduction by 2030

36

Eliminate Coal

Energy Efficiency

Renewable Energy

Local & CommunityRenewable Programs

60 % GHG REDUCTION FROM 1990 LEVELS BY 20301

1 Statewide GHG targets are 40% reduction by 2030 & 80% by 2050 from from 1990 levels.

STAY THE COURSE


SUPPORTING MATERIALS2015 IRP Update

37


Average New Renewable Technology IRP Cost Assumptions

38

No PWP program in place yet – generic assumption is higher than most other utility programs.

Assumes reduction in federal Investment Tax Credit post 2016. Current solar PV offers are significantly less.

Net Metering


Average PWP Generation Cost by Resource

39


Expected PWP Gas-Fired Generation Cost

40


Assumptions – Natural Gas Prices

41


Assumptions – Electricity Prices

42


Assumptions – Carbon Prices

43


2030 Total Power Supply Content Comparison by Portfolio

44

Baseload Renewables

include Geothermal and Biogas/ Biomethane.


Power Supply Changes Over Time – Stay the Course

45

Baseload Renewables

include Geothermal and Biogas/ Biomethane.


Base Case Portfolio GHG Comparison

46

Carbon (GHG) Intensity = GHG Emissions / Sales

Average over 20 years

One-year (2030) GHG emissions compared to 2008


How much does the 40% RPS portfolio (above and beyond the SBX1-2 33% mandate) cost rate payers?

47

Reduce Renewable Portfolio Standard from 40% to 33%

Fiscal Year 2015

Fiscal Year 2016

Fiscal Year 2017

Fiscal Year 2018

System Average Rate per kWh 16.150¢ 17.120¢ 18.030¢ 18.030¢

Change in ¢ per kWh n/a (0.035¢) (0.027¢) (0.053¢)

New System Average Rate per kWh 16.150¢ 17.085¢ 18.003¢ 17.977¢

Annual Savings for 500 kWh per month Customer n/a $2.10 $1.58 $3.18

Annual Savings for 1000 kWh per month Customer n/a $4.20 $3.24 $6.36

Annual Savings for 10,000 kWh per month Customer n/a $42.00 $32.40 $63.60

Annual Savings for 100,000 kWh per month Customer

n/a $420.00 $320.40 $636.00

During the last rate case, PWP explored the potential impact on rates of reducing the local RPS from 40% to the state mandated 33%. As the table below shows, the savings would be very small.


Power Supply FTE: 52

48

Energy Charge (Adjusted by formula)


Progress Toward 2012 IRP Recommendations

49

Recommendation Target Status

Renewable Energy: RPS 40% by 2020; Meet/exceed state mandated level of 33% by 2020

On Track; 28% for 2014; Well on our way to 40% by 2020

Renewable Energy: Local Solar

15 MW by 2020; 19 MW by 2024 Approximately 6.2 MW installed

Coal Power Displacement Reduce coal purchases by at least 35 MW by 2016 (via power sale to non-California public entity buyers)

No willing/qualified buyers; Sales blocked by CARB Resource Shuffling Rules. Able to achieve some reduced output w/economic dispatch + additional carbon premium.

New Local Gas-Fired Generation

Replace Broadway power plant with a comparably sized new combined cycle plant by 2014

GT-5 Under Construction; Commercial Operation expected June 2016

Energy Savings Incorporate adopted 2010 Energy Efficiency Goals Adopted 2013 Energy Efficiency Goals: 12,750 MWh, 2.3 MW = ~ 1% per year (energy), 0.7% (demand)

Additional Demand Response

Additional 5 MW by 2012 through incentives and programs

None identified to date. Under review pending development of smart grid strategy.

GHG Emissions Reductions

25% by 2015; 40% by 2020 (from 2008 levels) 19.1% as of 2014

Upgrades of Existing Generation

Continue to maintain and upgrade Glenarm Units 1 and 2 to extend their lives through 2030

Unit 1 complete. Unit 2 still being evaluated. Separate staff recommendation pending.


Customer Survey

• 470 responses to 24 questions between August 2014 & May 2015

• Respondents self-selected & not restricted as to the number of times they could respond to the survey.

• 83.5% indicated that they live in Pasadena.• 48.1% indicated that they work or own a business

in Pasadena. • 82.8% indicated that they were answering from a

residential customer perspective.• Not necessarily statistically significant. • Summary data on the responses, charts, and lists of

additional comments received, if any available on PWP IRP website.

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Pasadena Water & Power PWP 2015 IRP Update Item 18 June 22, 2015.

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Transcript of Pasadena Water & Power PWP 2015 IRP Update Item 18 June 22, 2015.