BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA IN THE MATTER of the Application of SIERRA PACIFIC POWER COMPANY D/B/A NV ENERGY, seeking approval of the integrated resource plan, its three year Action Plan for , and its Energy Supply Plan for Docket No SIERRA PACIFIC POWER COMPANY D/B/A NV ENERGY VOLUME 4 OF 16 SUMMARY DESCRIPTION PAGE NUMBER Summary 2

2 SUMMARY Page 2 of 34

3 SECTION I - INTRODUCTION: NAC (2)(a) This triennial integrated resource plan ( IRP ) covering the planning period is filed by Sierra Pacific Power Company d/b/a NV Energy ( Sierra or the Company ). Sierra Pacific Power Company d/b/a NV Energy Described. Sierra is a wholly-owned subsidiary of NV Energy, Inc. ( NVE ). NVE has two utility subsidiaries: Sierra and Nevada Power Company ( Nevada Power, and together with Sierra, the Companies ). Figure S-1 shows a map of the Companies service territories. FIGURE S-1 NV ENERGY SERVICE TERRITORIES Sierra generates, transmits and distributes electric energy to over 330,000 customers and its electric service territory covers nearly 50,000 square miles of western, central and northeastern Nevada, including the cities of Reno, Sparks, Carson City, and Elko. Sierra also provides natural gas service to over 150,000 customers in service territory of about 800 square miles in Nevada s Reno/Sparks area. Sierra is regulated by the Public Utilities Commission of Nevada ( Commission ) and the 1 Page 3 of 34

4 Federal Energy Regulatory Commission. Sierra s primary place of business is at 6100 Neil Road, in Reno, Nevada. Resource Planning Described. Beginning in 1983, the Legislature gave the Commission oversight authority over Sierra s long-term planning process. Every three years, Sierra formulates and presents its Preferred Plan for meeting the long-term needs of its customers. Based on projections of customers load requirements, Sierra prepares a long-term IRP in which it lays out a plan to fill projected requirements with programs that reduce energy consumption (demand-side management or DSM ), by building or purchasing generation (from conventional and renewable energy sources), building or purchasing transmission, and purchasing fuel (natural gas and coal). IRP and Action Plan Period. This 2016 triennial IRP filing addresses the twenty-year planning period 2017 to 2036, and the thirty-year planning period 2017 to The Company s Preferred Plan and Alternative Plans are formulated and compared to different options using economic analysis. The IRP includes an Action Plan which details the steps that Sierra will take over the next three years to implement the recommended plan. This IRP addresses the three year Action Plan period January 1, 2017 to December 31, The Action Plan filed with this IRP includes a description of the costs, timeline, and planning activities for each recommended project. A more detailed description of each project is provided in detailed narratives that are included in the IRP. Sierra Triennial Integrated Resource Plan. Sierra s 2016 IRP is being filed at a time of rapid change in the electric energy industry. Driven largely by technological changes including advances in drilling and extraction technology, and production efficiency, natural gas prices are projected to remain relatively low over the Action Plan period. Technological advances in solar photovoltaic ( Solar PV ) installation and production have resulted in renewable energy prices in particular, utility-scale solar prices moving significantly lower over the past three years. As a result, shortrun wholesale electric prices are projected to remain low. The Company s open capacity position ( Open Position ) in 2017, and 2018 is projected to be above 300 MW and falls slightly below 300 MW in 2019 following the expiration of Sierra s contract to supply energy and capacity to California utility Liberty Utilities (CalPeco). This level of Open Position requires that Sierra take appropriate steps to secure resources in order to reduce this projected shortfall for meeting the needs of its customers. The Company developed a Preferred Plan that pursues actions that are reasonable under each of a range of potential load scenarios. By taking advantage of jointly planning for its needs along with Nevada Power, Sierra is proposing to add a portion of the South Point Energy Center to its portfolio of controlled generation resources. In short, the Company has the opportunity to participate in a low cost and efficient generating resource that ensures that the Company maintains the ability to provide safe, reliable electric service to customers in a cost effective manner. 2 Page 4 of 34

5 Load Forecast. Sierra has prepared a new load forecast for the 2016 IRP ( 2016 IRP Forecast ) which updates the previously approved 2015 Second Amendment Update Forecast ( nd Amendment Forecast ). The nd Amendment Forecast was completed in February 2015, filed with the Commission on August 15, 2015 in Docket No , and approved on December 23, The 2016 IRP Forecast was completed in late March Sierra seeks approval of the 2016 IRP Forecast for purposes of performing long-term integrated resource planning. Demand-Side Management Plan. The Open Position is calculated after taking into account the Company s Preferred DSM Plan. Sierra proposes to invest $39.9 million in utility-sponsored energy efficiency and capacity reducing programs over the Action Plan period. The proposed DSM budget for 2017 is equal to the approved 2016 budget and increases slightly in 2018 and 2019 to manage growing participation in demand response programs. The investment represented by the Preferred DSM Plan has total resource benefits-to-cost ratio of 1.55 and will bring net benefits of $25 million to the communities served by Sierra. Supply Side Alternative Plans. In each IRP, the Company analyzes resource options for the remaining Open Position (after consideration of the capacity and energy savings resulting from the Preferred DSM Plan) using at least two modeling techniques; production cost analysis is performed to determine the running cost of resource alternatives, and capital expense recovery modeling is performed to determine the fixed cost of resource alternatives. Together, production cost and capital expense recovery modeling provide the Company, the Commission and stakeholders with a basis for assessing the costs and benefits over time of different resource alternatives. Production cost and capital expense recovery models produce a stream of revenue requirements over time, which are then discounted using an established rate and method to provide a Present Worth of Revenue Requirement or PWRR. The Commission s regulations governing IRP filings are comprehensive. These regulations, found at NAC through , require the Company to establish multiple alternative supply side expansion plans or cases. The regulations also require the Company to perform sensitivity analyses for each alternative plan. The Company tests the alternative plans, or cases, under various load forecasts, fuel and purchased power price forecasts and environmental cost assumptions. The Company developed a set of four alternative cases for meeting customers demands for this IRP. Each case focuses on near-term decisions. In all cases the Company evaluates alternatives for meeting the projected system needs in the near term but leaves the need for large-scale future supply decisions to a later filing. 3 Page 5 of 34

6 The Action Plan seeks Commission approval of the actions necessary to meet immediate resource needs with resources that can be justified under all the load forecast scenarios. The four cases developed to address Sierra s capacity need are: South Point Split Case: This case includes leasing a 30 percent portion of the South Point Energy Center ( South Point ) from Nevada Power. Sierra s 30 percent share of South Point would amount to the addition of approximately 151 MW of planning capacity beginning in Low Carbon Case: This case includes the following resources, all with an in-service date of 2020: 1) a 100 MW PPA for a solar PV resource, 2) a Company-owned 35 MW solar PV generator, 3) a Company-owned 50 MW solar PV distributed generation facility, and 4) a single combustion turbine. This case provides a planning capacity of approximately 144 MW. CT Case: This case includes the construction of two Company-owned 74 MW combustion turbines in 2020 for a total of 148 MW of planning capacity. All Market Case: This case relies exclusively on the wholesale power market to meet capacity and energy needs to address the Open Positions in 2017 through Other Assumptions. The cases described above do not seek to address the resource decisions that may be needed beyond the 2020 time period to replace potential future resource retirements or load increases. The Company s Energy Supply Plan includes a strategy to utilize short-term market purchases to mitigate exposure as necessary for each year of the Action Plan period. Nevada s resource planning regulations require that Sierra designate a Preferred Plan and at least one Alternate Plan. The Company has selected South Point Split as its Preferred Plan and designated Low Carbon as the Alternate Plan. The Preferred Plan includes the lease of a portion of South Point beginning on January 1, More Details on the Open Position. Without adding new resources, Sierra s Open Position in the Base load forecast grows to more than 330 megawatts in 2017, more than 350 megawatts in 2018, and is almost 270 megawatts in Summary Figure S-2 below shows the Company s exposure under two scenarios: 1) no new additions and 2) the Company adds the South Point resource identified in the Preferred Plan of this 2016 IRP. 4 Page 6 of 34

7 FIGURE S-2: OPEN POSITION WITH NO NEW RESOURCE ADDITIONS VS. 30 PERCENT SOUTH POINT ADDITION 900 Sierra Open Position with/without South Point Sierra Open Position w/no new resources Sierra Open Position w/30% South Point Consistency with Strategic Plan. Sierra is guided by six core principles: customer service, employee commitment, environmental respect, regulatory integrity, operational excellence, and financial strength. Sierra s strategic plan is to provide clean, safe, reliable electricity to its customers at reasonable and predictable prices. In determining its Preferred Plan and preparing its Action Plan, the Company developed alternative cases for meeting customers demands, and tested them to determine how each performed across the range of potential load, fuel and purchase power prices and environmental cost scenarios. Each case focuses on near-term decisions only, while preserving, where necessary, future resource options. The Action Plan is consistent with Sierra s strategic plan and is supported and endorsed at the highest levels of NVE. Requested Approval. Sierra is requesting approval of the Commission to implement its Preferred Plan. The Preferred Plan includes these specific requests for approval in the Action Plan period, : 5 Page 7 of 34

8 DSM. The Company requests that pursuant to NRS and NAC (4), the Commission approve the DSM Plan as part of the Company s Action Plan. The Company is requesting specific acceptance of the budget for the DSM Preferred Plan for the Action Plan period, which totals $39.9 million. The DSM Preferred Plan represents a moderate expansion of Residential Services relative to the previously approved 2013 DSM Plan. The proposed budget for 2017 is equal to the approved 2016 budget and increases slightly in 2018 and 2019 to manage the growing Demand Response participation. The investment represented by the proposed DSM Plan has total resource benefits-to-cost ratio of 1.55 and will bring net benefits of $25 million to the communities served by Sierra. South Point Acquisition. The Company is seeking approval to lease a 30 percent interest in South Point from Nevada Power. Sierra will pay Nevada Power a lease payment designed to reflect a 30 percent share of Nevada Power s revenue requirement associated with its acquisition of the facility. Nevada Power expects to acquire the facility and obtain ownership by December 31, 2016, at the initial capital cost of $100,000,000, which includes a purchase price of $75,600,000, $3,600,000 of integration costs, and an estimated $20,800,000 of required investment costs. Additionally, since South Point is located beyond the Companies Balancing Authority Area ( BAA ), transmission will be purchased to bring the output of the South Point facility into the BAA. At current rates, the net present value cost of that transmission over the remaining life of the facility is $111,900,000. Pilot Subscription Solar Program. The Company is seeking Commission and stakeholder feedback to pursue a pilot subscription solar program that would provide customers who otherwise do not have the ability to do so, the opportunity to take advantage of additional solar resources and reduce their carbon footprints. Transmission Plan. The Company is seeking approval to continue appropriate transmission planning activities to ensure the safety and reliability of the transmission system, primarily through its participation in WestConnect. Sierra is requesting approval of approximately $81,000 each year in the Action Plan period to continue participation in WestConnect as part of the Company s Transmission Plan. Sierra is also requesting approval of a breaker addition at the Frontier 230 kv substation and the re-termination of the Austin to Frontier 230 kv line at Frontier substation to mitigate a NERC TPL system compliance violation at a total cost of $737,000 for the Action Plan period. The company is also requesting approval to defer the Bordertown to California Project in service date from 2016 to 6 Page 8 of 34

9 2019. Total project cost of $33,740,859 (increase over last filed budget of $30 million), with $29,671,820 to be expended during the current Action Plan period. Each of these requests was formulated with the Company s strategic plan in mind. SECTION II - FORECAST OF GROWTH: NAC (2)(b) Historical Data. The economy in Sierra s service territory continues to improve since the Great Recession began in late Even though mine expansions have ended for the foreseeable future due to low metals prices, residential customer growth of 1.1 percent year-over-year for both 2014 and 2015 was the highest since Data centers and the Tesla giga-factory are fueling growth in 2016 and the near future. While the economy is improving, improvements in end-use efficiency, new appliance and commercial end-use standards, photovoltaic market penetration, and DSM programs will continue to put downward pressure on long-term projections of customer usage. Residential average use is projected to decline 0.3 percent annually over the next 10 years and commercial average use (small and medium size commercial customers) is expected to remain flat over this period. In the nearterm (2017 to 2020) residential use per customer is forecast to decline 0.2 percent on average. The causes of the projected decline in use per customer are new efficiency standards and continued utility-sponsored DSM activity. New residential lighting standards have had the largest impact on use per customer as 100 watt and 75 watt incandescent light bulbs were phased out in 2013, and 60 watt and 40 watt incandescent light bulbs were phased out in Load Forecast. Overall, Sierra projects a decline in energy sales between 2015 and Sierra expects to see sales growth in the Residential and Small Commercial and Industrial ( Small C&I ) classes over the same period as the economy continues to improve and Sierra adds new customers. Residential and Small C&I sales are both expected to grow an average of 0.7 percent annually. Large Commercial and Industrial ( Large C&I ) sales are projected to increase on average 1.8 percent annually through June 1, Growth is not cosistent, however, with two years of significant growth (2017 and 2018), and several years of little or no sales growth (2020, 2021 and 2022). The 2016 IRP Forecast then assumes that Newmont loads will move to NRS Chapter 704B service on June 1, 2023, when the generation contract with Sierra expires. This assumption results in lower energy sales by the end of the period between 2015 and Population Growth. Global Insight ( GI ) projects northern Nevada population growth of 0.9 percent from 2015 to 2016 and 0.8 percent for 2016 to The State Demographer s October 2015 forecast has lower growth at 0.7 percent from 2015 to 2016, and slightly higher at 0.9 percent from 2016 to 2017 and an average annual growth rate ( AAGR ) of 0.8 percent from 2015 through As Sierra residential customer growth was 1.1 percent from 2014 to 2015, and the regression 7 Page 9 of 34

10 model elasticity of customer change with respect to a change in population is 0.998, the higher GI growth of 0.9 percent was used for 2015 to The population growth forecast from the State Demographer was used from 2017 through In 2026, the growth rate was flattened at 0.6 percent annually. For the 2016 IRP Forecast, based on a recommendation from the State Demographer that this historical series is more accurate than the certified series, Sierra has switched to the intercensal forecast estimates for 2010 and prior, and the certified estimates from 2011 through For 2014 and 2015 growth, the State Demographer shows 0.6 percent each year. This is 0.5 percent lower than Sierra customer growth rates of 1.1 percent for those years. Therefore, the GI growth rates of 0.9 percent for both years was used to create the end of the historical series. Employment and Output Trends. Sierra continues to experience economic recovery with a healthy 4.5 percent growth in non-manufacturing employment ( NMan Employ ) from 2014 to The GI forecast of NMan Employ growth is 2.2 percent from 2015 to 2016 and 1.7 percent from 2016 to The 10-year AAGR through 2025 is 1.3 percent for the 2016 IRP Forecast. Real output is expected to grow about 2.6 percent annually through 2025 for the 2016 IRP Forecast. Mining Industry. The mining industry peaked at 23.1 percent of Sierra s 2014 billed sales and fell to 22.7 percent in Mining load is expected to decline from 2015 through 2019 in absolute terms reducing the percentage of sales to 20.5 percent. The 2016 IRP Forecast assumes a decline of 34 GWH from 2015 to 2016 and another 21 GWH from 2016 to Long term, mine growth is forecasted to be flat to slightly declining, as now the Nevada Copper Pumpkin Hollow and Hycroft Mining expansions have been eliminated from the forecast. In addition, several mines have cut back their mining operations due to low metals prices. Total growth from 2016 through 2022 is a negative 80 GWh for the 2016 IRP Forecast. This forecast assumes that the Newmont mines elect 704B service, becoming balancing authority customers when the generation contract expires on June 1, Total mine load declines by 1,216 GWH compared to billed 2015 mine load. Other large customers. The 2016 IRP Forecast includes 85 MW and 567 GWH annually of new large data center load (Switch Communications and Apple), Crescent Dunes Solar Energy Facility station use and Tesla manufacturing load by Weather Assumption. The 2016 IRP Forecast is based on a 20-year normal weather period of January 1996 through December Normal weather concepts include monthly heating degreedays ( HDD ) and cooling degree-days ( CDD ), and peak day temperatures. DSM, DR and Net Metering. The incremental annual reductions in load attributed to DSM in the 2016 IRP Forecast are based on the 2016 DSM Plan filed with this 2016 IRP. The aggregated incremental DSM load reductions from 2016 through 2025 are expected to be 360 GWH. Demand 8 Page 10 of 34

11 Response energy reductions are expected to be 21 GWH through 2025, included the EcoFactor Thermostat optimization program. Peak reduction from controllable and non-controllable DR is expected to rise from 19 MW of avoided in 2016 to 59 MW by With respect to distributed solar PV production and partial requirements customer usage, Sierra assumes that all applications as of December 31, 2015 will be installed by the end of These installations include both Sierra s SolarGenerations rebated customers as well as nonrebated customers installing solar PV outside of the program. After 2016, 2 MW of small solar PV (< 1 MW installed capacity systems) is assumed to be installed each year of the forecast. Beginning in 2016, Sierra assumes that 5 MW will be installed annually for large solar PV systems (>= 1 MW installed capacity systems. Sierra expects 25 MW of incremental peak reduction and 128 GWH sales reductions by the end of Embedded DSM in the sales models. Due to increases in investments in DSM projects in recent years, it is probable that much of the incremental forecasted DSM is already accounted for in the sales regression models. Therefore, for the 2016 IRP Forecast, DSM savings that could be identified (e.g., cooling, heating, lighting, refrigeration, etc.) were used to modify the appliance end-use intensities underlying the sales regression models. This is the same methodology that was used in the 2015 IRP Second Amendment Forecast filed in August 2015 and other recent forecasts. Low, Base and High Scenarios. Consistent with prior practice (and Commission regulations), high and low load forecast scenarios were developed for the 2016 IRP Forecast. The high and low load forecast scenarios are based on different assumptions of economic, demographic and large customer growth than the base forecast. The assumptions for DSM, DR, EV and net metering were not varied in these forecasts. Required Figures. Figure S-3 shows the forecast of energy sales for each of the twenty years of planning period under the low, base, and high scenarios, both with and without DSM. Figure S-4 shows the forecast of peak demand for each of the twenty years in the planning period, also under the low, base, and high scenarios, also with and without DSM. Solar PV is not classified as DSM, so is included in the without DSM numbers. Figure S-5 shows DSM peak MW reductions by program. 9 Page 11 of 34

12 FIGURE S-3 LOW, BASE, AND HIGH SALES SCENARIOS WITH AND WITHOUT DSM SALES (GWH) WITH DSM/DR SALES (GWH) WITHOUT DSM/DR Year LOW BASE HIGH LOW BASE HIGH ,195 8,262 8,268 8,246 8,313 8, ,223 8,446 8,513 8,314 8,537 8, ,279 8,691 9,083 8,407 8,820 9, ,317 8,773 9,935 8,483 8,939 10, ,299 8,820 10,554 8,503 9,024 10, ,293 8,850 10,726 8,534 9,091 10, ,295 8,885 10,785 8,574 9,163 11, ,644 8,241 10,161 7,959 8,556 10, ,183 7,790 9,727 7,536 8,143 10, ,183 7,810 9,764 7,572 8,199 10, ,191 7,836 9,808 7,604 8,248 10, ,204 7,867 9,856 7,621 8,284 10, ,232 7,912 9,916 7,654 8,334 10, ,246 7,943 9,959 7,674 8,370 10, ,257 7,972 10,001 7,687 8,401 10, ,269 8,000 10,048 7,700 8,431 10, ,291 8,042 10,109 7,725 8,476 10, ,296 8,067 10,153 7,733 8,503 10, ,311 8,103 10,211 7,749 8,542 10, ,326 8,141 10,271 7,767 8,582 10, ,352 8,190 10,345 7,795 8,633 10, Page 12 of 34

13 FIGURE S-4 LOW, BASE, AND HIGH PEAK DEMAND SCENARIOS WITH AND WITHOUT DSM PEAK DEMAND (MW) WITH DSM/DR PEAK DEMAND (MW) WITHOUT DSM/DR Year LOW BASE HIGH LOW BASE HIGH ,655 1,666 1,667 1,674 1,685 1, ,641 1,675 1,689 1,671 1,705 1, ,632 1,697 1,755 1,672 1,737 1, ,632 1,705 1,940 1,682 1,755 1, ,626 1,716 2,011 1,680 1,770 2, ,630 1,729 2,035 1,686 1,786 2, ,632 1,738 2,045 1,692 1,799 2, ,508 1,616 1,929 1,569 1,679 1, ,507 1,620 1,938 1,568 1,684 2, ,514 1,631 1,953 1,574 1,695 2, ,519 1,649 1,965 1,579 1,705 2, ,527 1,655 1,983 1,589 1,720 2, ,536 1,667 1,998 1,597 1,731 2, ,542 1,679 2,014 1,602 1,741 2, ,549 1,691 2,029 1,609 1,754 2, ,557 1,702 2,045 1,617 1,766 2, ,564 1,725 2,062 1,628 1,783 2, ,571 1,728 2,079 1,635 1,795 2, ,578 1,739 2,095 1,638 1,803 2, ,583 1,751 2,112 1,642 1,814 2, ,591 1,765 2,132 1,651 1,829 2, Page 13 of 34

14 FIGURE S-5 DSM PEAK MW REDUCTIONS BY PROGRAM Aggregated Incremental DSM (MW) with losses Program Residential Lighting Residential Direct Install Home Energy Reports Refrigerator Recycling Commercial Program Subtotal DSM Demand Response Total MW With Losses, as included in the load forecast Residential (2) Commercial (2) Total DSM in the Load Forecast DR - Avoided Capacity (1) (1) The Demand Response is based on the avoided capacity as measured by the uninterrupted peak at 5 pm on the peak day less the final net system peak. (2) Hourly DSM estimate at 5 pm on the peak day as used in the IRP Load Forecast. Cumulative incremental savings beginning in SECTION III - DEMAND SIDE PLAN SUMMARY: NAC (2)(c) The proposed DSM Plan focuses on the three-year Action Plan period, January 2017 through December The DSM Plan represents a moderate expansion of Residential Services relative to the previously approved 2013 DSM Plan. The proposed budget for 2017 is equal to the approved 2016 budget and increases slightly in 2018 and 2019 to manage the growing DR participation. The investment represented by the proposed DSM Plan has total resource benefits-to-cost ratio of 1.55 and will bring net benefits of $25 million to the communities served by Sierra. The Company requests that pursuant to NRS and NAC (4), the Commission approve the DSM Plan as part of the Company s Action Plan. The Company is requesting specific acceptance of the budget for the DSM Preferred Plan for the Action Plan period. Pursuant to NAC (4)(b), the Company also requests that the Commission review and approve the monitoring and verification ( M&V ) reports for program year 2015 provided in Technical Appendix DSM-6 through DSM-15 for the DSM programs delivered in the 2015 program year. SECTION IV - SUMMARY OF THE PREFERRED PLAN: NAC (2)(d) Consistent with the methodologies set out in the Commission s IRP regulations, the 2016 IRP evaluates the PWRR and present worth of societal cost ( PWSC ) of various alternative plans in 12 Page 14 of 34

15 order to determine which alternative has the lowest PWRR and PWSC over 20 and 30-year planning horizons. The inputs to the economic model include Sierra s load forecast, fuel and purchased power price forecast, carbon cost assumptions, a renewable energy expansion plan calculated to meet Nevada s Renewable Portfolio Standard ( RPS ), forecasted project cost and construction schedules, and the characteristics of the resources being analyzed. The output of the model expresses the present value of the production cost and capital revenue requirements of each alternative. A comparison of the PWRR of the various alternatives shows which alternative results in the lowest cost plan for Sierra s customers. Sierra developed four alternative plans to address the Open Position in years 2017 through 2020 and beyond. In one alternative, an all market plan, Sierra is assumed to rely on wholesale purchases to meet its capacity need in each year of the Action Plan. For the remaining three alternatives, Sierra attempted to maintain comparable system reliability between cases by adding resources that produce similar Open Positions across all cases, approximately 150 MW of planning capacity to Sierra s system. Adding 150 MW during the Action Plan period reduces the Open Position and maintains system reliability. It should be noted that since different resource additions may have different in service dates, not all resources are available to start in Therefore, in the case matrix of alternative plans, resources may start at different times between 2017 and If a resource is not available to start in 2017, the Company assumed that it will rely on the market for capacity and energy needs until the resource is in service. The Company has chosen the South Point Split case as the Preferred Plan. The primary factors influencing the selection of the Preferred Plan were total PWRR, reliance on the wholesale energy market (which impacts reliability and exposure to price volatility), and certainty around the asset in question, both as to feasibility, cost and operational performance. Specifically, the Company sought the least cost PWRR solution, looked to avoid over-reliance on the wholesale energy market, and appreciated the advantages of avoiding the uncertainty inherent in a new construction. Reliability and the flexibility to address volatilities around load, fuel and purchase power, and carbon prices were also factors in selecting the Preferred Plan. The South Point Split case performed admirably across all scenarios with varying degrees of load, fuel and purchase power forecasts, and carbon forecasts, providing the lowest PWRR in all nine scenarios over a 20-year planning period and eight of nine scenarios over a 30-year planning period. Figures S-6 through S-10 show Sierra s projected loads and resources ( L&R Tables ) under the Preferred Plan, assuming base load conditions. The Company also developed high and low load sensitivities around the base load; the L&R Tables are presented in Technical Appendix Items ECON-6 thru ECON Page 15 of 34

16 FIGURE S-6: L&R TABLE SOUTH POINT SPLIT CASE ( ) 2 SIERRA PACIFIC POWER COMPANY 3 Sierra-South Point Split 4 5 Description GROSS SYSTEM PEAK LOAD FORECAST 1,805 1,846 1,793 1,817 1,842 1,862 1,749 1,763 1,782 1,799 1,820 1,833 1,848 1,865 1,880 7 DSM Customer Generation Demand Response SYSTEM PEAK LOAD FORECAST (March 2016 Load Forecast) 1,752 1,776 1,705 1,716 1,729 1,738 1,616 1,620 1,631 1,649 1,655 1,667 1,679 1,691 1, Sales Obligations NET SYSTEM PEAK LOAD 1,752 1,776 1,705 1,716 1,729 1,738 1,616 1,620 1,631 1,649 1,655 1,667 1,679 1,691 1, Planning Reserve Requirement (15%) REQUIRED RESOURCES 2,015 2,042 1,961 1,973 1,988 1,999 1,858 1,863 1,876 1,896 1,903 1,917 1,931 1,945 1, GENERATION RESOURCES (Itemized) (Retire Date, MM/YYYY) Existing Internal Generation Facilities 19 Clark Mountain 3 (12/2024) Clark Mountain 4 (12/2024) Ft. Churchill 1 (12/2025) Valmy 1 (12/2025) Valmy 2 (12/2025) Ft. Churchill 2 (12/2028) Tracy 3 (12/2028) Tracy 4/5 Power Block (12/2031) Tracy Power Block (12/2043) Total Existing Generation Resources 1,372 1,372 1,372 1,372 1,372 1,372 1,372 1,372 1, Planned Resources 33 TRN 1 - SPPC Share - South Point_ x1 CC NN 622 MW_ Common x1 CC NN 284 MW_ Common CT NN 74 MW_ x1 CC NN 622 MW_ Common Total Planned Generation Resources TOTAL GENERATION RESOURCES 1,523 1,517 1,517 1,517 1,523 1,523 1,523 1,523 1,391 1,639 1,639 1,639 1,418 1,418 1, Page 16 of 34

17 FIGURE S-7: L&R TABLE SOUTH POINT SPLIT CASE ( ) 2 SIERRA PACIFIC POWER COMPANY 3 Sierra-South Point Split 4 5 Description PURCHASE POWER AGREEMENTS (Itemized) (Exp Date - MM/YYYY) Non-Renewable 50 Kings Beach (12/2031) Newmont (5/2023) Total Non-Renewable Existing Renewables 56 HOMES1 (12/2017) SteamHL (2/2018) Steam1A (12/2018) SodaLake (8/2021) Brady (7/2022) Steam2 (12/2022) Steam3 (12/2022) Beowawe (12/2025) Burdett (12/2026) TRN NSO_SPPC (12/2027) TMWAflsh (6/2028) TMWAwash (6/2028) Gal3 (12/2028) TMWAverd (6/2029) TRN PLA_SPPC (12/2037) TRN BOLDR_II (12/2037) SanEmid (12/2037) TCID (6/2039) FtCh_PV (8/2040) MW_excess Total Existing Renewables Renewable Placeholders MW Geo_ MW Geo_ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW Geo_ MW PV _ MW PV _ Total Renewable Placeholders TOTAL PURCHASE POWER AGREEMENTS AVAILABLE RESOURCES 1,832 1,837 1,837 1,837 1,854 1,886 1,702 1,703 1,600 1,873 1,892 1,876 1,674 1,675 1, IMPNL OPEN POSITION LONG POSITION TRANSMISSION 111 Balancing Area Import Transmission Capacity (1) 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1, Balancing Area Customer Load (2) (3) System Import Transmission Capacity Import Capacity for other Native Load Requirements Import Capacity Requirement for Planned Generation Estimated Available Transmission Capacity (4) Page 17 of 34

18 FIGURE S-8: L&R TABLE SOUTH POINT SPLIT CASE ( ) 2 SIERRA PACIFIC POWER COMPANY 3 Sierra-South Point Split 4 5 Description GROSS SYSTEM PEAK LOAD FORECAST 1,904 1,919 1,928 1,943 1,962 1,978 1,999 2,018 2,030 2,049 2,067 2,086 2,109 2,124 2,155 7 DSM Customer Generation Demand Response SYSTEM PEAK LOAD FORECAST (March 2016 Load Forecast) 1,725 1,728 1,739 1,751 1,765 1,786 1,791 1,804 1,817 1,838 1,855 1,857 1,876 1,890 1, Sales Obligations NET SYSTEM PEAK LOAD 1,725 1,728 1,739 1,751 1,765 1,786 1,791 1,804 1,817 1,838 1,855 1,857 1,876 1,890 1, Planning Reserve Requirement (15%) REQUIRED RESOURCES 1,984 1,987 2,000 2,014 2,030 2,054 2,060 2,075 2,090 2,114 2,133 2,136 2,157 2,174 2, GENERATION RESOURCES (Itemized) (Retire Date, MM/YYYY) Existing Internal Generation Facilities 19 Clark Mountain 3 (12/2024) Clark Mountain 4 (12/2024) Ft. Churchill 1 (12/2025) Valmy 1 (12/2025) Valmy 2 (12/2025) Ft. Churchill 2 (12/2028) Tracy 3 (12/2028) Tracy 4/5 Power Block (12/2031) Tracy Power Block (12/2043) Total Existing Generation Resources Planned Resources 33 TRN 1 - SPPC Share - South Point_ x1 CC NN 622 MW_ Common x1 CC NN 284 MW_ Common CT NN 74 MW_ x1 CC NN 622 MW_ Common Total Planned Generation Resources 1,057 1,057 1,057 1,057 1,057 1,054 1,054 1,054 1,054 1,054 1,054 1,054 1,676 1,676 1, TOTAL GENERATION RESOURCES 1,598 1,598 1,598 1,598 1,598 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,676 1,676 1, Page 18 of 34

19 FIGURE S-9: L&R TABLE SOUTH POINT SPLIT CASE ( ) 2 SIERRA PACIFIC POWER COMPANY 3 Sierra-South Point Split 4 5 Description PURCHASE POWER AGREEMENTS (Itemized) (Exp Date - MM/YYYY) Non-Renewable 50 Kings Beach (12/2031) Newmont (5/2023) Total Non-Renewable Existing Renewables 56 HOMES1 (12/2017) SteamHL (2/2018) Steam1A (12/2018) SodaLake (8/2021) Brady (7/2022) Steam2 (12/2022) Steam3 (12/2022) Beowawe (12/2025) Burdett (12/2026) TRN NSO_SPPC (12/2027) TMWAflsh (6/2028) TMWAwash (6/2028) Gal3 (12/2028) TMWAverd (6/2029) TRN PLA_SPPC (12/2037) TRN BOLDR_II (12/2037) SanEmid (12/2037) TCID (6/2039) FtCh_PV (8/2040) MW_excess Total Existing Renewables Renewable Placeholders MW Geo_ MW Geo_ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW PV _ MW Geo_ MW PV _ MW PV _ Total Renewable Placeholders TOTAL PURCHASE POWER AGREEMENTS AVAILABLE RESOURCES 1,843 1,843 1,843 1,843 1,853 1,851 1,815 1,815 1,825 1,826 1,837 1,837 1,918 1,918 1, IMPNL OPEN POSITION LONG POSITION TRANSMISSION 111 Balancing Area Import Transmission Capacity (1) 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1, Balancing Area Customer Load (2) (3) System Import Transmission Capacity Import Capacity for other Native Load Requirements Import Capacity Requirement for Planned Generation Estimated Available Transmission Capacity (4) Page 19 of 34

20 Figure S-10 lists the individual projects and the associated budgets for the Action Plan period. FIGURE S-10 ACTION PLAN BUDGET (Millions excluding AFUDC) Action Plan Projects Total Pre Year Total Demand Side Outreach and Program Development $1.100 $1.100 $1.100 $3.300 Residential Services $4.600 $4.900 $5.200 $ Business Services $7.100 $7.400 $7.700 $ Sub-Total Demand Side $ $ $ $ Generation New Projects Solar Greenfield Site Development $0.200 Sub-Total Generation $0.000 $0.200 $0.000 $0.000 $0.000 Transmission New Projects Fontier Breaker Addition $0.110 $0.626 $0.736 West Connect (Sierra Portion) $0.081 $0.081 $0.081 $0.243 Previously Approved Projects Bordertown to CAL Transmission Project $4.069 $2.168 $ $0.386 $ Sub-Total Transmission $4.069 $2.359 $ $0.467 $ Total $4.069 $ $ $ $ Page 20 of 34

21 SECTION V SUMMARY OF THE RENEWABLE ENERGY PLAN: NAC (2)(e) Sierra s existing renewable energy portfolio is adequate to satisfy the RPS through the Action Plan period. The Renewable Plan embedded in the 2016 IRP describes the Company s plan for complying with Nevada s RPS. The renewable energy plan reviews Sierra s current renewable energy portfolio and outlines its strategy for meeting the RPS for the remainder of the planning period. The renewable energy expansion plan must accomplish compliance with the forecasted requirements of the RPS, and is itself an input into the economic analysis of supply alternatives performed further in the resource planning process. The renewable energy expansion plan continues Sierra s RPS compliance planning and the development of renewable energy resources to meet the renewable goals of the state. Although no new renewable energy projects for RPS requirements are presented for approval in this 2016 IRP, the Company is asking the Commission to consider and approve the actions described below: 1. Sierra is requesting Commission approval to spend $200,000 for Phase I of a development initiative for siting activities related to one or more prospective new Solar PV generating facilities. Sierra is requesting approval for a Solar PV greenfield site study to identify suitable greenfield locations for the positioning of new Solar PV projects of more than 50 MW per site. 2. The Company requests that the Commission and stakeholders provide feedback on a new credit-based Subscription Solar proposal so that the Company may incorporate that feedback into the Subscription Solar tariff to be filed in February Sierra proposes to utilize portfolio energy credits ( PCs ) earned from the Boulder Solar project located in southern Nevada as the source for the programs PCs. Boulder Solar is a 100 MW Solar PV resource selected in response to the 2015 RFP conducted pursuant to Nevada Power s Emissions Reduction Capacity Replacement plan. RENEWABLE GENERATING FACILITIES Nevada is fortunate to have significant and varying renewable resources, including some of the most abundant solar and geothermal potential in the country. Sierra currently has several longterm power purchase agreements ( PPA ) in place with many of Nevada s prime renewable resource developers. Collectively, these contracts have enabled Sierra to not just meet but to exceed the RPS since it was enacted. The following is a list of renewable facilities that are operating and contributing to the RPS credit requirement or are serving a Commission-approved Nevada GreenEnergy Rider ( NGR ) Option 2 agreement as of May 2016: 19 Page 21 of 34

22 1. Beowawe Geothermal Power Plant is a 17.7 MW geothermal facility located in Eureka County. 2. Brady Geothermal Power Plant is a 24.0 MW geothermal facility located in Churchill County northeast of Fernley, NV. 3. Burdette Geothermal Power Plant is a 26.0 MW geothermal project located in Washoe County. 4. Fort Churchill Solar Array is a 19.5 MW, advanced concentrating solar tracking array located in Lyon County, Nevada. 5. Galena 3 Geothermal Power Plant is a 26.5 MW geothermal project located in Washoe County. 6. Homestretch Geothermal Power Plant is a 5.58 MW geothermal project located in Lyon County. 7. Soda Lake 1 & 2 Geothermal Power Plants are a 23.1 MW geothermal project located in Churchill County. 8. Steamboat 2 Geothermal Power Plant is a 13.4 MW geothermal project located in Washoe County. 9. Steamboat 3 Geothermal Power Plant is a 13.4 MW geothermal project located in Washoe County. 10. Steamboat Hills Geothermal Power Plant is a MW geothermal project located in Washoe County. 11. USG San Emidio Geothermal Power Plant is an MW geothermal project located just inside the eastern border of Washoe County, NV. 12. Nevada Solar One is a 69 MW concentrating solar thermal plant located in Eldorado Valley near Boulder City, NV. Sierra purchases MW from the facility and has a related power purchase agreement to resell the energy to Nevada Power, which facilitates Sierra s compliance with its solar renewable portfolio requirement. 13. Fleish Hydro Power Plant is a 2.4 MW hydro-electric project located on the California/Nevada border southwest of Reno. 14. Frank Hooper Hydro Power Plant is a 0.75 MW hydro-electric project located in Elko, NV. 15. New Lahontan Truckee Carson Irrigation District Hydro Power Plant is a 4.0 MW hydroelectric plant located in Lahontan, NV. 16. Verdi Hydro Power Plant is a 2.4 MW hydro-electric project located in Washoe County, NV. 17. Washoe Hydro Power Plant is a 2.5 MW hydro-electric project located in Washoe County, NV. Renewable energy projects previously approved by the Commission are shown on Figure REN-1 below, which includes facilities contracted to Sierra. 20 Page 22 of 34

23 FIGURE S-11: NVE RENEWABLE ENERGY MAP 21 Page 23 of 34

24 SECTION VI - SUMMARY OF ENERGY SUPPLY PLAN: NAC (f) Pursuant to NAC , an Energy Supply Plan means a plan that: 1. Establishes the parameters of an energy supply portfolio for a utility for the three-year period covered by its Action Plan and which balances the objectives of: a) Minimizing the cost of supply; b) Minimizing retail price volatility; and c) Maximizing the reliability of energy supply over the term of the energy supply plan; and 2. Is composed of a purchased power procurement plan, fuel procurement plan and risk management strategy. Sierra s 2016 ESP will be filed concurrent with this 2016 IRP. The ESP provides the Company s recommended power procurement plan, fuel procurement plan, and risk management strategy based on current conditions and covers the period This ESP may need to be adjusted over the Action Plan period to adequately respond to changes in the market, changes in the Company s expected loads and resources, and other significant changes in circumstances. Pursuant to NAC , Sierra may deviate from the approved ESP to the extent necessary to respond adequately to any significant change in circumstances not contemplated by the Energy Supply Plan. If Sierra deviates from its approved ESP, it will inform the Commission s Regulatory Operations Staff ( Staff ) of the deviation as soon as practical. In addition, Sierra will include in its next annual deferred energy application a description of and justification for the deviation. If a deviation from the ESP is of a continuing nature, Sierra will seek authority from the Commission to deviate prospectively from the ESP in an update of the ESP filed pursuant to NAC , or by filing an amendment to the ESP pursuant to NAC (3). Pursuant to NAC (2) and , the Commission may determine that the elements of an ESP are prudent if the following requirements are met: The ESP balances the objectives of minimizing the cost of supply, minimizing retail price volatility and maximizing the reliability of supply over the term of the plan. The ESP optimizes the value of the overall supply portfolio of the utility for the benefit of its bundled retail customers. 22 Page 24 of 34