Representative of the Texas General Land Office State Power Program. Duncanville ISD Electricity Overview 10 October 2017

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1 Representative of the Texas General Land Office State Power Program Duncanville ISD Electricity Overview 10 October 2017

2 Executive Summary An opportunity exists for the District to extend the Interlocal Agreement with the GLO to capture 25% savings and extend budget certainty beyond 2019 The Texas General Land Office, an agency of the State of Texas, provides the District competitive electricity supply via Interlocal Agreement The GLO serves approximately 180 school districts throughout the State The coincidence of sustained relatively-low natural gas prices, expanded renewable supplies and perceived easing of EPA policy on coal and nuclear generation has facilitated lower forward market prices for energy The current wholesale electricity values for 2019 onward are within the 97 th percentile, meaning less than 3% of the forward price quotes since 2008 have been lower for Recent developments in the Texas supply-demand forecast, EPA, and natural gas price levels have all contributed to lower overall prices being available for future years The current opportunity equates to ~$300,000 annual savings for the District beginning FY 2019 versus FY 2017 run rate CONFIDENTIAL 2

3 Duncanville Electricity Rate History $60.00 District s 5 yr. historical avg. rate $50.00 $ % Rate Reduction Potential 25% Rate Reduction ~$300,000 annual savings $30.00 $20.00 $10.00 $0.00 2/2014-1/2016 2/2016-1/2019 2/2019-1/2024 CONFIDENTIAL 3

4 Duncanville ISD District Summary Interlocal Agreement with fixed rate through January 2019 Annual Electricity usage of approximately 20,000,000 kilowatt hours (20,000 megawatt hours) Consumption at 85 meter locations Current electricity rate of $ kilowatt hour ($52.97 megawatt hour) Total Energy cost approximately $ kilowatt hour (57% energy, 43% regulated Oncor charges) Secure online energy management portal Unlike other retailers, GLO does not pass-through charges related to reimbursement of PUC and GRT expenses, saving the District an additional $36,000 annually GLO product structure includes liberal site add/delete and usage flexibility which reduces risk of misalignment with District operations on longer-dated tenor agreements Contract Price and Term can be accomplished via amendment to the interlocal agreement Contract Price $MWh CONFIDENTIAL Planning and Executive Briefing Term Savings vs Run Rate Comparative Annual February 2019 Commencement Rate $ MWh Savings 12 Month $37.20 $35.42 $309, $309, Month $37.67 $35.90 $299, $599, Month $38.15 $36.35 $290, $871, Month $38.60 $36.80 $281, $1,126, Month $39.00 $37.20 $273, $1,369, Month $39.25 $37.45 $268, $1,613,

5 $90.00 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $0.00 Many market based and policy factors influence the District s total electricity related expenditure Market Factors Evolve BULLISH FACTORS: Age/Regulatory driven generating plant retirements tighten electricity costs Onset of normal to below-normal winter weather stresses deliverability/supply Natural Gas Exports to Mexico and LNG shipments increase demand and raise power generation fuel costs Expiration of renewable incentives slow expansion Regulatory changes to improve price signaling for system operators to keep generation online Local Distribution company rate increases for modernization and changes to rate design BEARISH FACTORS: Continued expansion of renewable energy EPA neutrality on coal and nuclear generation and related emissions extend generating plant lifecycle Warm winter weather and resulting robust gas storage Oncor GLO Expansion of associated gas supply from increased crude oil development lowers increases gas supplies and lowers price Marcellus and Utica expansion and offtake pipelines create competition for demand along Gulf Coast CONFIDENTIAL Planning and Executive Briefing 5

6 Current Opportunity in Perspective ERCOT North Zone (DFW Region) Wholesale Power Generation Quotes as of 9/15/ Megawatt Hour Calendar 2019 Calendar 2020 Calendar 2021 Calendar 2022 Current Wholesale Block $31.32 $31.70 $31.82 $31.65 Minimum $30.53 $30.92 $30.95 $30.93 Maximum $81.41 $50.48 $51.25 $ th Percentile $33.65 $33.05 $34.06 $ th Percentile $49.50 $37.77 $38.66 $ th Percentile $61.32 $40.89 $40.94 $45.34 Current vs. Minimum $0.79 $0.78 $0.87 $0.72 Current vs. Maximum -$ $ $ $21.84 District's Exposure at Min vs. Current $15,800 $15,600 $17,400 $14,400 District's Exposure at Max vs. Current -$1,001,800 -$375,600 -$388,600 -$436,800 Wholesale Energy Market Underlying District s Energy Supply Near Historic Low Prices Creating Statistically Attractive Decision Point Available Rates equate to 25% rate reduction vs. Current $300,000 annual savings versus 2017 run-rate plus provide extended period of energy budget certainty Unique GLO savings from reduced pass-through costs equate to additional $36,000 annual savings Product structure and tools accommodate the District s energy management plans and facility changes over the term Confidential - Sales Planning and Executive Briefing 6

7 Secure Energy Rate Reduction & Focus on Energy Conservation $ $90.00 $ MWh A target for the District s extension not to exceed $ kwh for term up to 60 months positions you to capture savings when/if market conditions align $80.00 $70.00 $60.00 At target extension rate, the District s energy expenditure composition shifts from 57% energy 43% Oncor Regulated, to 49% energy 51% Oncor Regulated $50.00 $40.00 Contract extension secures extended budget certainty at historically low unit price range $30.00 $20.00 $10.00 Focus District s energy management program toward expansion of energy efficiency to address the increased Oncor exposure/charges $0.00 Energy Rate (GLO) TDSP (Oncor) GLO offers tools to complement the District s energy management efforts to reduce Oncor and demand related charges Confidential - Sales Planning and Executive Briefing 7

8 Why GLO, Why Now? GLO: No Aggregator or Cooperative Fee Unique Savings from eliminated pass-thru items, an incremental $36,000 annual value Interlocal Agreement Flexible product structure to accommodate usage changes, renewables, and meter changes across the extended term Agreement that easily accommodates onsite renewables, facility changes, and demand response as the District evolves its energy management plan GLO competitively evaluates its supplier and each contract supply is competitively shopped in the wholesale market Timing: GLO competitively evaluates supply costs for the District Current wholesale energy costs underlying the District s offer are near all-time lows Extension proposal ensures additional budget certainty and ~$300,000 annual savings beginning 2019 versus 2017 run rate The favorable intersection of low generation fuel costs (natural gas), relaxed EPA uncertainty, and renewable adoption will evolve Prices available to the District will fluctuate until fixed via contract or contract extension Current offer is 97 th percentile, meaning less than 3% of time wholesale rates have been lower Confidential - Planning and Executive Briefing 8

9 State Power Program only available to Public Retail Consumers (PRC) such as: Independent School Districts Public Universities Community Colleges Cities Counties Utility Districts (MUD, PUD, UD) Political Subdivisions of Texas Federal Military Bases Veteran s Facilities Benefits to Public Education: Program proceeds deposited into the Permanent School Fund (PSF) PSF has guaranteed nearly $60 billion in ISD bonds providing low interest financing to ISD s Distributes up to $1.1 billion annually to Public Education from Available School Fund GLO offers a full-suite of retail products: Fixed Price Index Price Hybrid Product (Block and Index, Product Stacking within single agreement) Heat Rate Managed Product Demand Response Renewable Energy Purchase excess output from onsite generation, e.g. onsite renewable resource output from PRC GLO Contract Price is more inclusive with less pass-through costs: - No separate pass-through of fees related to GRT and PUCA - No standing charges or meter fees - Invoice on actual volume. Does not gross-up for line losses or nodal basis The State Power Program Confidential - Planning and Executive Briefing 9

10 General Land Office The State Power Program enabled in 1999 (SB 7) to serve only government entities in Texas (GLO does not compete in the private sector) Provides public entities direct access to competitive energy supplies via interlocal/ interagency purchasing and agreements Through a public-private partnership, the GLO leverages State of Texas financial and natural resources for the direct benefit of public entities Delivered first electricity in Serves 400+ distinct government entities, across 26,000 meters. Has been serving retail natural gas since 1983 Annual deliveries over 6 billion kwh, making the program one of the State s largest competitive retailers. Serves approximately 180 ISDs GLO agreement and product structure are more inclusive - providing public entities greater contract flexibility, enhanced budget certainty, and security of contracting with the State of Texas CONFIDENTIAL 10

11 GLO State Energy Marketing Customer Footprint Updated By GLO Periodically. Last Update 3/2017 Confidential - Planning and Executive Briefing 11

12 GLO serves many high-profile PRCs Independent School Districts (ISD) Houston ISD Midland ISD Killeen ISD Spring Branch ISD Nacogdoches ISD Clear Creek ISD Harlingen ISD San Juan-Pharr-Alamo ISD Goose Creek ISD Lewisville ISD Pearland ISD Lamar CISD Eagle Mountain Saginaw ISD Galveston ISD San Angelo ISD Mansfield ISD Corpus Christi ISD Ector County ISD State Colleges / University Systems University of Texas M.D. Anderson, Health Science Center, Southwester Medical Center Dallas, Arlington, San Antonio, Tyler, Permian Basin Medical Branch Galveston Dallas County Community College Houston Community College Austin Community College Lone Star College Collin College University of North Texas Texas A&M System Cities / Counties City of Fort Worth Harris County Missouri City City of Weatherford City of Edinburg Denton County McLennan County Zapata County Collin County City of Cleburne Dallas County City of Richardson City of Farmers Branch Ector County Tarrant County City of Friendswood Dallas/Fort Worth Airport System Port of Houston Dallas Area Rapid Transit (DART) Fort Worth Transportation (The T ) Coastal Water Authority San Jacinto River Authority Laguna Madre Water District Transportation / Other Confidential - Planning and Executive Briefing 12

Project Plan and Financing Plan for Reinvestment Zone Number Two,

Project Plan and Financing Plan for Reinvestment Zone Number Two, City of Richardson, Texas (Program for Tax Increment Financing) Revised November 2012 Stein Planning, LLC by for the City of Richardson