Eugene Water & Electric Board. The Future of Utilities in the Pacific Northwest

Transcription

1 Eugene Water & Electric Board The Future of Utilities in the Pacific Northwest 1

2 Eugene Water & Electric Board The Future of Utilities in the Pacific Northwest Erin Erben Manager, Power & Strategic Planning

3 Industry Challenges 1. Forecast of energy prices continue to decline in the NW 2. Flat or modest load growth 3. Increasing RPS requirements (esp CA) 4. Integrating renewables and associated system carrying capacity 5. Technological advances in storage & DG 6. Changing customer priorities 7. Aging Infrastructure 8. Hydro Relicensing & BPA fish mitigation costs 9. Emissions trading & EPA Clean Power Rule 3

4 EWEB s Story 4

5 The Eugene Water & Electric Board Water Utility - 52,000 customers - McKenzie River - 26 Reservoirs Electric Utility - 89,000 customers - 70% power purchased from BPA - 23% owned & co-owned generation - 7% power contracts 5

6 Our Legacy We own 8 power projects, 4 of which are hydro. Been in the generation business since EWEB Owned, Co-Owned, BPA, & Contracted Resources 6% 7% Carmen Smith is EWEB s largest capacity hydro facility. It operates as a peaking and load-following facility. Built in 1963, the license expired in BPA 17% Carmen Smith 70% Owned & Co-Owned Contracted Resources 6

7 Global Climate Change 7

8 Oregon RPS Obligations 8

9 $/MWh $200 $180 Market Price Forecasts and Historic Hourly Prices $160 $140 $120 $100 $80 Historic Hourly Average 2008 Medium Forcast $60 $40 $20 $- 9

10 $/MWh $200 $180 $160 $140 Market Price Forecasts and Historic Hourly Prices Historic Hourly Average IERP Average Price Forecast March 2015 Low Carbon Price Forecast 2008 Medium Forcast $120 $100 $80 $60 $40 $20 $- 10

11 average megawatt hours Updated Annual Historical Load Residual Load Weyco Hynix Service Territory Adj Hynix adds 20 MWa Hynix drops 20 MWa IP drops 20 MWa Core load growth of 2.5% Core load drops MWa, or 5-10% in Core load growth of 1% Core load drops to 10 MWa to the 2009 to 2013 levels

12 amw Updated Monthly AVG Load and Expected Resource Balance Forecast (2014) Non-Firm Surplus Wind & Solar Biomass Natural Gas EWEB Hydro BPA Forecast Load 0 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 12

13 amw Updated Annual Forecasted Load Resource Balance ( ) Non-Firm Surplus Future Conservation Wind & Solar Biomass Natural Gas EWEB Hydro BPA Forecast Load 13

14 New Technology: Market & Regulatory Drivers Sensors & Devices Battery Storage Photovoltaics Two way communications & system automation Electric Vehicles 14

15 PNW: Wind Blows Natural Gas 16% Wind 5% Coal 15% Nuclear 4% Renewables 1% Hydro 59% CA: Sun Shines Source: Northwest RiverPartners 15

16 Energy Imbalance Markets Key elements include market focused (automated 15min energy market) and operations focused (centralized regulation reserve sharing group) initiatives: 1. Centrally Cleared Energy Dispatch (CCED) 2. Regulation Reserve Sharing Group (RRSG) 16

17 EWEB: A Long Way to Go HMMM Behind in Technology investment Surplus energy for the next decade Still short capacity for arctic events Flat load growth Costs higher than average Carmen Smith relicensing Organizational Change Readiness 17

18 So we d better start now PROS! Great people Low carbon portfolio Believe in our business model (public power) We have a plan! 18

19 Our Opportunity We are focused on creating a future where there are opportunities to enhance our community s vitality by developing new products & services consistent with the values of our customer-owners. 19

20 2011 IERP Recommended Strategies Pursue conservation to meet all forecast load growth Partner with customers to avoid new peaking power plants Continue to rely on and expand regional partnerships Pursue new large load strategy, if needed Review progress and key assumptions annually 20

21 EWEB R&D Community Solar Cold Storage Demand Response Water Heaters as Thermal Storage Time of Use Pricing Grid Edge (Microgrid) Demonstration Project 21

22 2013: Proposed Future Scenarios Faster Smaller Technological Change Climate Change Utility Market Share: Regulatory Oversight & Societal preferences Bigger Slower 22

23 EWEB s 5 Business Strategies 1. Leverage the power of our people - Train & encourage staff to be agile and fill gaps as the work needs change - Develop ability to shift focus quickly as drivers change 2. Redefine and price the products and services that today s customers value - Annual customer surveys - Rate redesign - R&D work, pilots 23

24 EWEB s 5 Business Strategies, cont. 3. Refine our focus - Stay aligned with the community - Transform the business 4. Increase customer value - Reduce costs - Benchmarking - Scenario based analyses 5. Increase organizational efficiency - Work smarter 24

25 Dollars Basic Charge Comparison (Residential) $38 $ $4 $7 $8 $11 $11 $11 $11 $12 $14 $15 $18 $20 $20 $20 $

26 New Large Single Loads New Customers over 10 MW cannot be served by Tier 1 BPA EWEB has acquired generation for loads that since disappeared leaving stranded assets for customers to bare Schedule G-4 now exists to clarify the requirement for NLSLs to buy market power and pay for own incremental RPS compliance costs 26

27 Embedded Costs & Proposed End-State Pricing Categories 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Energy Related Production Conservation Demand Related Production Transmission Demand Related Delivery Other Delivery Customer Related Delivery Customer Costs Embedded Energy Production (shared, variable) Generation Infrastructure (shared, fixed) Grid Services (shared, fixed) Customer Costs (dedicated, fixed) End State 27

28 Our Future Making decisions about how we are going to power our future requires strategy. Whether EWEB should remain in the generation and trading business is not a simple topic. EWEB has been in the generation business for decades. Most of that history has been tremendously positive for EWEB customers in terms of economic benefit, diversity of supply and local control. Can a utility our size afford to stay in the generation business going forward? 28

29 We Must Continue to Perform While We Transform Preparing for the future, or transforming the business, is the work we will do every day that will take us into the future. We must choose carefully and focus on only a few transformational objectives at time and then execute well. 29

30 Conclusion At the core of our business decisions are our customers; why we exist. Our intent in this work is to move EWEB from a historically asset-focused utility to a 30 much more customer-focused one!

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32 EWEB Generation Resource Portfolio (2015) Contracted Resources Owned & Co-Owned excludes BPA Carmen Smith & Trail Hydro Klondike III Wind Foote Creek 1 Wind Consumer Owned Local PV Harvest Wind Priest Rapids Hydro Grant PUD IP Co-Generation Seneca Leaburg Hydro Seneca Biomass Smith Creek Hydro Stateline Wind Stone Creek Hydro Walterville Hydro Wauna Co-generation 32

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