TPPA Update. TPPA Marketing and Customer Service Conference March 23, Walt Baum, Executive Director, TPPA

Transcription

1 TPPA Update TPPA Marketing and Customer Service Conference March 23, 2016 Walt Baum, Executive Director, TPPA

2 This Presentation 1. TPPA Overview 2. Changes in Texas Generation fleet Texas Legislature Bills that did not pass, highlighting proposals related to deregulation, municipal finance, the EPA CO2 rule, and electromagnetic pulse (EMP). Bills that did pass, highlighting new laws related to TMPA and external MOU transmission Interim Activites/Key Issues 5. Questions?

3 Public power DELIVERS an essential service. Public power PRODUCES community value. 72 MOUs provide power to 4.1 million Texans. Many have been serving their communities for over 50 years. MOUs are full service electric utilities that own poles and wires and often power plants. Local authorities set MOU rates and policies that are responsive to community priorities. MOUs have a local option on retail deregulation to date, none have taken the deregulation option. 3

4 Local Control and Community Value The separate model of local control is key to the success of MOUs, whose mission is providing community value. OWNERSHIP: Community ownership. MISSION: Reasonable rates and community value. Utility policies that are responsive to community priorities. GOVERNANCE: Local governance by elected city councils and also citizen boards, both accountable to citizen/ratepayers. Extensive public participation in the local utility governance process. Limited PUC regulation (for transmission costs, appeals, statewide market and reliability matters via ERCOT). INFRASTRUCTURE-BASED: MOUs own and operate utility infrastructure, including power plants and/or electric lines (unlike city aggregators who are just purchasing agents in deregulated areas). RATES: Set locally. Good value stable & at the low end of the scale. SERVICE QUALITY: Reliable, local, and consumer-friendly. FINANCE: Funded by utility revenues, not taxes. UTILITY PROCEEDS: Proceeds stay in the community. A portion of MOU revenues support general municipal services like public safety, roads, parks, libraries, and community services. 4

5 MOU Performance Customer satisfaction - high for fundamental reasons. MOUs are consumer owned and thus have a consumer orientation. Local employees, not remote call centers, interface with customers. Customers can participate local processes, public meetings, etc. Reliability. System Average Interruption Frequency Index (SAIFI): average of MOUs (per TPPA), average statewide (per PUC).* Creditworthy MOUs help deploy generation to support resource adequacy. Jobs and Economic Development: MOUs - significant employers in their communities 7,044 employees. MOUs are well situated to support local economic development activities a consolidated local approach with infrastructure deployment and rate policies that help retain and attract businesses. Bond ratings are among the best in the industry. Among the industry s most creditworthy. Rating agencies cite: focus on core mission, stable service areas, affordable rates, local control. Positive or stable outlooks for MOUs despite the economy. May, 2012 S&P ratings: Austin Energy A+ Garland (GP&L) AA- Bryan (BTU) A+ Greenville (GEUS) A+ Brownsville PUB A+ Lubbock (LP&L) AA- CPS Energy AA New Braunfels AA College Station A+ Seguin A+ Denton AA- 5 *Reliability information: PUC Project 40078, TPPA. While comparisons may be indicative, the purpose of SAIFI and other indices is to measure individual utility performance.

6 ERCOT s Changing Resource Mix Installed Capacity by Unit Type Late 1990s 2015

7 ERCOT Wind Generation MW MW MW MW MW ERCOT Wind Installations by Year (as of December 31, 2015) Cumulative MW Installed IA Signed-Financial Security Posted IA Signed-No Financial Security Texas is #1 in Wind Capacity Our capacity is more than twice the amount of #2 (Iowa) If ERCOT were a separate country they would be #6 in the world in wind generation capacity (2015) 8,005 8,916 9,400 9,604 10,407 11,065 12,470 15,764 24,068 3,092 5,212 26,154 5,178 5,212 15,764 15,764 15, MW 0 MW ,173 1, ,173 1,385 1,854 1,854 2,875 2,875 4,785 4,785 8,005 8,916 9,400 9, The data presented here is based upon the latest registration data provided to ERCOT by the resource owners and can change without notice. Any capacity changes will be reflected in current and subsequent years' totals. Scheduling delays will also be reflected in the planned projects as that information isreceived. This chart reflects planned units in the calendar year of submission rather than installations by peak of year shown. Financial security posted for funding interconnection facilities does not include CREZ security deposits, which are refunded to the Interconnecting Entity when an IA is signed. 10,407 11,065 12,470

8 ERCOT Utility Scale Solar Generation Year-End MW ERCOT Solar Installations by Year (as of December 31, 2015) 2500 MW Cumulative MW Installed IA Signed-Financial Security Posted IA Signed-No Financial Security 2000 MW 1,947 2, MW MW MW 0 MW The data presented here is based upon the latest registration data provided to ERCOT by the resource owners and can change without notice. Any capacity changes will be reflected in current and subsequent years' totals. Scheduling delays will also be reflected in the planned projects as that information is received. This chart reflects planned units in the calendar year of submission rather than installations by peak of year shown.

9 GENERATION ADEQUACY ERCOT May 2013 CDR Report % 10.5% 9.4% 7.4% 6.5% 6.0% 5.2% 4.5% ERCOT Dec 2015 CDR Report % 20.7% 25.7% 22.9% 21.8% 21.1% 19.9% 18.8% 17.7% 16.6%

10 ERCOT Current Records Feb. 19, 2016 Peak Demand Record: 69,877 megawatts (MW) 69,877 MW, August 10, 2015 Weekend Record 66,530 MW, Saturday, August 8, 2015 Winter Peak Record: 57,265 MW 57,265 MW, February 10, 2011 Wind Generation Records (instantaneous) 14,023 MW, February 18, 2016, 9:20 p.m. - Non-Coastal Wind Output = 12,193 MW - Coastal Wind Output = 1,690 MW - Supplying 39.5% of the load - Active Wind Capacity = 16,246 MW 45.14% Wind Penetration, Febraury 18, 2016, p.m. - Total Wind Output = 13,907 MW - Total Load = 30, 809 MW Summer 2015 monthly peaks June: 61,732 MW (June 10) July: 67,650 MW (July 30 new July record) August: 69,877 MW (Aug. 10 new all-time record)

11 Environmental Regulations There are several proposed and recently finalized environmental regulations that could impact grid reliability in ERCOT: Costs to: Coal units Cross- Mercury State Air and Air Clean Regional Pollution Toxics Ash Water Act Haze Clean Rule Standards Disposal Section Federal Power (CSAPR) (MATS) Rule 316(b) Plan Plan Natural gas units Compliance Jan 2015; 2017* April 2015 July ** ; 2030 Date: Addresses Sets limits on Places Requires Requires Sets carbon cross-state air hazardous air requirements controls to limit controls on air dioxide pollution pollutant on disposal of impacts to emissions to emissions through a cap emissions at coal ash aquatic life at improve limits for and trade power plants cooling water visibility in existing units program intake national parks structures Color key: No costs Low costs Moderate costs High Costs *Proposed CSAPR update rule would take effect beginning in January **Longer timeframes for facilities required to close. Does not include the Steam Electric Effluent Limitation Guidelines (ELG) rule, which has compliance dates between

12 Potential Impacts of Environmental Regulations In December 2014, ERCOT reviewed potential impacts of new and pending environmental regulations on grid reliability. Included CSAPR, MATS, Regional Haze, Clean Water Act Section 316(b), Ash Disposal Regulations & Clean Power Plan (as proposed) In October 2015, ERCOT updated its analysis of the Clean Power Plan based on the final rule released on August 3, The results indicate: At least 4,000 MW of coal-fired generation capacity is likely to retire due to the Clean Power Plan alone. When Regional Haze is also considered, there could be additional unit retirements, likely to occur before the Clean Power Plan compliance timelines. Retirement of units serving urban areas may result in localized reliability issues. Growth in renewable resources may require development of new or additional generation and transmission facilities and technologies to manage operational issues (e.g., ramping, inertia, etc.). Costs of compliance could drive up consumer energy costs as much as 16%. o Does not include costs of transmission upgrades or other investments to support grid reliability

13 Continuing the Trend: Newer, More Conservative Legislators. The past two election cycles have seen significant turnover in the membership of the Texas Legislature. HOUSE: 43% of the 150 State Representatives have one session or less experience. 24 freshmen 41 sophomores At least 14 new House members for SENATE: 42% of the 31 Senators have one session or less experience. 8 freshmen 5 are sophomores 2 new Senators for

14 Senate Trending Republican 14

15 House Trending Republican 15

16 Successful 2015 Session for Public Power Bills negative to public power were either opposed by TPPA and failed to pass, or they were favorably modified. Several bills supported by TPPA were approved. TPPA s team effort: Board of Directors and its Legislative Committee legal and government relations professionals from major public power systems.

17 Opposed by TPPA, and Did Not Pass Deregulation: SB-1945, by Fraser would have deregulated Austin Energy (AE) industrial customers or groups of smaller customers after they petitioned the PUC. Municipal Finance: HB-3958, by Workman would have capped the AE general fund transfer. Power Contracts: HBs-2715 and 2716, by Keffer would have required the public disclosure of MOUs commercially sensitive wholesale power agreements. The bills originated with a rate controversy in Coleman. Other: Legislation that would have: prematurely taken state action on the EPA s pending CO2 rules, allowed smart-meter opt out, mandated electromagnetic pulse (EMP) protection, disrupted the ERCOT wholesale market via reserve margin prohibitions and modifications to congestion rules, mandated continuity of service to a decedent s property, and others.

18 Supported by TPPA and Passed. TMPA and Transmission: SB-776, by Kacal and Fraser addressed the structure and efficiency of the Texas Municipal Power Agency (TMPA) partnership of Bryan, Denton, Garland, and Greenville, and also provided for new PUC CCN regulation of the siting and routing of certain external MOU transmission lines. Metal Theft: HB-2187, by Smith, strengthens the regulation of metal recyclers, restricting cash payments for scrap metal (potentially including stolen electric utility materials). Other: Among the bills that passed with modifications advocated by TPPA and positive to public power included legislation that will: specify the painting and marking of certain towers but not those of electric utilities and public power systems, require a state agency conducting prescribed burns to notify utilities and be liable to damage to utilities including public power systems, regulate drone flight above critical infrastructure but not the drones of an electric utility or public power system overflying their facilities.

19 Interim Activities affecting our industry SENATE: PUC/PURA jurisdiction moved to Senate Business and Commerce Committee: Chair: Hancock; VC: Creighton; Ellis, Huffines, Schwertner, Seliger, Taylor, Watson, Whitmire Environmental Issues will go to Senate Natural Resources Chaired by Estes Senate Business and Commerce Hearing March 30: PUC and ERCOT testimony. HOUSE: State Affairs still has jurisdiction. Cook, Chair Interim Charges: State Affairs has charges on metering devices and customer representation at PUC. House has several on cyber security. Both Chambers have interim studies on Clean Power Plan House Hearing on March 29th 19

20 Potential 2017 Legislative Issues for the Electric Utility Industry and MOUs: EPA s proposed CO2 rule. Grid/Cyber Security MOU-Related Issues:. General fund transfers. Outside city ratepayers. Governance Municipal opt-in or partial opt-in to deregulation. Resource adequacy Solar Issues RPS and Rooftop REPs, pricing, new marketing standards, customer service charge. 20

21 Questions? 21