MidAmerican Energy Company s Path to Renewable Energy Development. Dean Crist Vice President, Regulation

Transcription

1 MidAmerican Energy Company s Path to Renewable Energy Development Dean Crist Vice President, Regulation

2 MidAmerican Energy Holdings Company United Kingdom Philippines $70.1 billion of assets $12.6 billion of revenue 8.4 million electric and natural gas customers worldwide 17,000 miles of natural gas pipeline 19,700 employees worldwide More than 33,000 MW of owned and contracted generation capacity 25% of this generation capacity is renewable or noncarbon

3 MidAmerican s Significant Renewable Energy Experience MidAmerican owns one of the largest renewable energy portfolios in the United States with over 6,400 MW of renewable capacity currently in operation or under construction MidAmerican Renewable Energy Project Map Philippines Geothermal 2 Biomass 3 Wind 4 5 Hydroelectric Solar Solar Star Solar Star Project, 579 MW * 11. Carroll, IA, 150 MW 22. Vienna, IA, 106 MW 33. Lewis River System, WA, 578 MW 1. Topaz Solar, CA, 550 MW * 12. Century, IA, 200 MW 23. Bishop Hill II, IL, 81 MW 34. Marengo I & II, WA, 210 MW 2. Agua Caliente, AZ, 142 MW * 13. Charles City, IA, 75 MW 24. Pinyon Pines I & II, CA, 300 MW 35. Dunlap Ranch I, WY, 111 MW 3. CE Turbo, CA, 5 MW 14. Intrepid, IA, 176 MW 25. Bear River System, ID, 105 MW 36. Foote Creek, WY, 32 MW 4. Del Ranch, CA, 19 MW 15. Pomeroy, IA, 286 MW 26. Klamath River System, OR, 170 MW 37. Glenrock I & III, WY, 138 MW 5. Elmore, CA, 19 MW 16. Rolling Hills, IA, 444 MW 27. Leaning Juniper 1, OR, 101 MW 38. High Plains, WY, 99 MW 6. Leathers, CA, 19 MW 17. Victory, IA, 99 MW 28. North Umpqua River, OR, 204 MW 39. McFadden Ridge I, WY, 28 MW 7. Salton Sea Projects I-V, CA, 85 MW 18. Walnut, IA, 153 MW 29. Rogue River System, OR, 52 MW 40. Rolling Hills, WY, 99 MW 8. Vulcan, CA, 17 MW 19. Laurel, IA, 120 MW 30. Blundell, UT, 34 MW 41. Seven Mile Hill I & II, WY, 119 MW 9. Wailuku, HI, 5 MW 20. Eclipse, IA, 200 MW 31. Camas Co-Gen, WA, 14 MW 42. Casecnan, Philippines, 128 MW 10. Adair, IA, 175 MW 21. Morning Light, IA, 101 MW 32. Goodnoe Hills, WA, 94 MW 43. Minor Hydroelectric Facilities, 39 MW * Denotes under construction.

4 Environmental Respect Prepare for the Future Pinyon Pines I and II 300 MW Topaz Solar Farms 550 MW AC Solar Star Projects 579 MW AC Bishop Hill II 81 MW Agua Caliente 290 MW AC

5 MidAmerican Energy Overview Headquartered in Des Moines, Iowa 3,500 employees S.D. Minn. Wis. 1.4 million electric and natural gas customers in four Midwestern states 8,014 MW of owned and contracted generation capacity Neb. Iowa Ill. Kan. Mo. MidAmerican Energy Service Territory Wind Projects Major Generating Facilities

6 Iowa s Legislative and Regulatory Environment Legislation passed in 2001 facilitates portfolio diversity by replacing the least-cost standard with a reasonable cost standard Legislation mitigates regulatory risk and market price risk by providing for binding regulatory review and determination of ratemaking principles for proposed generation investments prior to significant expenditures Prudence review occurs prior to investment rather than after considerable investment is made A similar process is provided for investments in environmental improvements to existing coal-fueled generation

7 MidAmerican Settlements MidAmerican is currently living under a series of settlements that: Provide ratemaking principles for nine major generation construction projects Walter Scott, Jr. Unit 4 (super critical coal unit), Greater Des Moines Energy Center (combined cycle natural gas unit) and seven wind power filings Allow returns above a certain level to be shared between the company and customers Customers share is used to offset the cost of generation No base rate increase Despite significant increase in fuel and other business expenses

8 Everyone Wins Customers enjoy reasonable and stable rates Customers face much smaller rate increases in the future Board has the legal authority to pre-approve without concerns about binding future Boards Significant generation (more than $7 billion) has been built in Iowa Significant economic benefit to Iowa

9 MidAmerican Energy Wind Projects Regulated Owned Wind Generation (MW) Total MidAmerican Energy , ,334.6 Investment (billions) $5.8

10 Why Wind Power? Environmental compliance Customer pricing Economic development Fuel diversity Energy and capacity

11 Wind Benefit Decreasing Carbon Footprint 35,000,000 CO 2 Emission Intensity 1,850 30,000,000 MWH Generated CO2 Emissions 1,800 1,750 25,000,000 1,700 MWh Generated 20,000,000 15,000,000 10,000,000 1,650 1,600 1,550 1,500 1,450 Lbs CO 2 / MWh 5,000,000 1,400 1, ,300

12 MidAmerican Energy Is a Low-Cost Provider $ $ $ $ $ $ $- MidAmerican IA West North Central Region National Average 2012 $/kwh 2013 MidAmerican-IA 2015 MidAmerican-IA 2016 MidAmerican-IA * West North Central includes IA, KS, MN, MO, ND, SD and NE.

13 Wind VIII 1,050 MW State of Iowa policy and strongly supported by governor Reduces carbon footprint by 10.3% Positive operating experience with current wind fleet Greater than 97% availability rate Expected capacity factors have been achieved Timing was right to expand wind facilities limited PTC Economical for customers benefits are greater than costs Partially offsets loss of energy from retired coal facilities Enhances fuel diversity 40% of capacity will be wind power

14 Wind VIII Overview On May 10, 2013, MidAmerican Energy Company filed with the Iowa Utilities Board for advance ratemaking principles for installation of up to 1,050 megawatts of incremental wind generation assets (Wind VIII) Settlement was reached with the Office of Consumer Advocate on key provisions of the filing An order from the Iowa Utilities Board was received August 9, 2013

15 Economic Development More on Wind VIII Largest single investment in the history of Iowa Property tax of approximately $360 million Landowner payments totaling $3.2 million per year Local and state expenditures could approach $330 million Estimated construction payroll is approximately $30 million 48 permanent jobs; $2.4 million payroll Constructing more wind facilities will lead to lower rates for customers before the facility it put into rates $3.3 million in 2015, $6.6 million in 2016 and $10 million in 2017 thereafter until the next rate case

16 Wind VIII Project Sites Lundgren Webster County 251 megawatts 2014 In-service Intrepid Victory Highland O Brien County 502 megawatts 2015 In-service Pomeroy Carroll Wellsburg Grundy County 140 megawatts 2014 In-service Century Charles City Vienna Vienna II Marshall County 44.6 megawatts 2013 In-service Eclipse Walnut Adair Rolling Hills Iowa State Fair Wind Turbine Morning Light Laurel Macksburg Madison County 113 megawatts 2014 In-service

17 Wind VIII Progress All major contracting requirements for site acquisition, turbine supply and balance of plant construction work are complete All discretionary county permits have been received Construction was completed in December 2013 for the 44- megawatt Vienna II site; construction at all other sites commenced Approximately 550 of the 1,050 megawatts is scheduled to be in-service by late 2014 including the Vienna II project placed in-service in late 2013 the remaining 500 megawatts will be complete in late 2015

18 Wind VIII Helps Replace Coal-Fueled Energy Due to Retirements MidAmerican Energy will retire four coal-fueled generation units in the timeframe Neal Energy Center Units 1 and 2 near Sioux City Walter Scott, Jr. Energy Center Units 1 and 2 near Council Bluffs Riverside Generating Station near Bettendorf will be converted to natural gas These retirements and changes are a result of EPA regulations MidAmerican Energy will continue to maintain a workforce and a major presence in the communities

19 Electric Generation Capacity by Fuel Type Natural Gas 18% June 2013 Expected June 2016 Nuclear 6% Other < 1% Wind 30% Natural Gas 18% Nuclear 6% Other 4% Wind 39% Coal 46% Coal 33% Note: Percentages are rounded to nearest whole number

20 MISO Map 15

21 Reliability Responsibilities Pre-MISO integration Responsible for balancing resources and loads Self-supplied operating reserves Challenged by increasing wind penetration and nonconforming load Post-MISO integration The system operator balances resources and loads for the entire market Operating reserves are supplied by the lowest cost resources across large reserve zones Entire market resource base available to absorb unexpected shifts in wind and load

22 A Day in the Market Offer generation assets into the MISO day-ahead market, and bid to purchase energy to serve customer load Adjust resource offers to accurately reflect any restrictions on unit capabilities Produce load forecast to determine how much energy to buy for customers Produce wind power forecast to offer expected output Review natural gas strategy Determine if 21 gas-fueled generation units are likely to clear the market Develop gas purchase strategy based on market view MISO day-ahead auction selects lowest cost resources among all participants offers to meet submitted demand requirements

23 The Market and Wind Resources Wind generation is forecast the day prior to the operating day and offered hourly into the MISO market Day-ahead wind forecasts typically have errors in the range of 15% to 20% mean absolute error The difference between the actual wind generation output and the forecast output is sold/purchased in the real-time market Negative prices can occur approximately 6% of the time, but wind resources are dispatched on an as-available basis, which contributes to lower variable costs

24 Additional Wind Power Considerations Additional wind increases the need for improved hourly and day-ahead forecasting accuracy Belonging to a regional transmission organization, such as MISO, offers the benefits to manage wind integration costs, such as generator interconnection agreements and transmission impact studies Backup resources do not necessarily make the grid less efficient especially if resources, such as combustion turbines and combinedcycle, are part of the generation portfolio already Battery storage options are available; however, they currently are costprohibitive and it is difficult to justify the investment until the ancillary services market designs that provide increased value are constructed

25 Additional Transmission Is Needed

26 Questions?