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Pasadena Water & Power
PWP 2015 IRP Update
Item 18June 22, 2015
Pasadena Water & Power
Foundation – Earlier IRPs
Environmental Stewardship
System ReliabilityFiscal Responsibility
2
Cost Effective
Feasible
Viable
Sustainable
This IRP Update builds on concepts &
action plans from 2009 & 2012 IRPs.
Pasadena Water & Power
IRP Process
3
Identify Needs•Load Forecast•Resources (Supply and Demand)
•Regulatory Requirements
•Reliability Requirements
Identify & Evaluate Resource Portfolios•Supply & Reliability Adequacy
•Regulatory Compliance
•Contractual Compliance
•Least Cost•Environmental Impact
•Societal Factors•Flexibility
Updates & Uncertainty Analysis•Scenarios & Sensitivities
•Changes in Market•Changes in Law•Changes in Contracts
•Changes in Load Profile
Public / Stakeholder Involvement•Advisory Group•Public Meetings•Website•Social Media•Survey
Action Plan•Short-Term Recommendations
Sustainable 20-Year Strategic Resource PlanUpdated Every 2-3 Years
Balances: • Reliability, • Fiscal Responsibility, • Environmental Steward-
ship
Pasadena Water & Power
IDENTIFY NEEDS2015 PWP IRP
Pasadena Water & Power
Billed Sales Forecast
5
Pasadena Water & Power
Balancing Capacity/Energy
6
Pasadena Water & Power
PWP Power Supplies
7
Pasadena Water & Power
RPS Progress
8
Pasadena Water & Power
IDENTIFY & EVALUATE RESOURCE PORTFOLIOS
2015 PWP IRP
Pasadena Water & Power
IRP Terminology
10
Portfolios
1Stay the Course
(Preferred Portfolio)
2IPP (Coal) Reduction
40% RPS (by 2020)
350% Renewable
Portfolio Standard (by 2025)
470% Renewable
Portfolio Standard (by 2030)
5Carbon (GHG) Neutral
(by 2030)
Scenarios
Base CaseB&V Energy Market
Perspective
High Gas Prices
Low Gas Prices
“Green” Market Influence
Higher Carbon Pricing
Sensitivities
Higher Energy Efficiency
IPP (Coal) Economic Dispatch
(slightly higher generation than Business As Usual)
IPP Early Retirement in 2025
(original contract expires in 2027)
Groups of Power Supply
Resources
Sets of Market Assumptions
Basic Model Variations
Pasadena Water & Power
Reducing IPP Generation(under current contract)
11
2014 Average Generation = 70 MW
Pasadena Water & Power
Base Case Portfolio Scorecards: Financial (Fiscal Responsibility) Measures
12
60% GHG Reduction(Preferred Portfolio)
$1,377
$101.1
$91.90
IPP 2025 Retirement
$1,419
$103.9
$94.06
Reduced IPP
Dispatch
$1,437
$104.9
$95.85
50% RPS by 2025
$1,477
$108.1
$98.57
70% RPS by 2030
$1,524
$112.2
$101.74
Carbon Neutral
$1,743
$129.2
$115.53
Total System Cost NPV
($Millions)
Avg. 20-Year Portfolio
Cost ($Millions/Yr
)
Levelized Direct Electric
Cost 2015 ($/MWh)
Pasadena Water & Power
Base Case Portfolio Scorecards: System Reliability Measures
13
60% GHG Reduction (Preferred Portfolio)
21%
9%
53
23%
5%
IPP 2025 Retirement
20%
9%
53
21%
5%
Reduced IPP
Dispatch
21%
9%
53
11%
6%
50% RPS by 2025
24%
9%
78
12%
6%
70% RPS by 2030
29%
9%
78
17%
5%
Carbon Neutral
29%
9%
78
7%
0%
Average Reserve
Margin (%)
Minimum Reserve
Margin (%)
Incremental FRAC from 2015 (MW)
20-Year Avg. Wholesale Sales (%)
20-Year Avg. Wholesale Purchases
(%)
Pasadena Water & Power
Base Case Portfolio Scorecards: Environmental Stewardship Measures
14
60% GHG Reduction(Preferred Portfolio)
13,003
-64%
N/A
1,070
45,629
59,610
IPP 2025 Retirement
12,167
-64%
$110
1,014
40,581
62,763
Reduced IPP
Dispatch
9,416
-64%
$37
876
23,807
73,532
50% RPS by 2025
9,088
-68%
$56
837
23,757
67,857
70% RPS by 2030
8,783
-74%
$77
792
23,755
63,352
Carbon Neutral
5,838
-100%
$113
572
28,270
48,642
CO2 Emissions (thousand
metric tons)2030 GHG Reduction from 2008
(%)Realized
GHG Emission
Cost ($/metric
ton)
20 year Avg GHG
Intensity (lbs/MWh)
Coal Burned (thousand
tons)
Natural Gas Burned (Gbtu)
Pasadena Water & Power
Portfolio Cost Comparison($2015)
15
Pasadena Water & Power
Portfolio Cost Comparison
16
PORTFOLIO
Expected Increase from
Starting (Today’s) Cost
to 20-Year Levelized
Increase from Status Quo (2008) or Stay the
Course (2015)
Total Portfolio Cost Increase
2008 IRP ($2008) 28% 6% 34%
1A – Stay the Course ($2015) 27.7% N/A 27.7%
2A – Reduce IPP ($2015) 27.7% 4.3% 32.0%
3A – 50% RPS ($2015) 27.7% 7.3% 35.0%
4A – 70% RPS ($2015) 27.7% 10.7% 38.4%
5A – GHG Neutral ($2015) 27.7% 26.8% 54.5%
Pasadena Water & Power
What Portion of PWP Costs Are We Addressing in the IRP?
17
The IRP Modeling addresses only the Direct Cost component of the Energy Service Charge.
Analyses of the economic impact of various alternatives under the IRP on customer rates/bills assume that all other components of the power bill and rate structure remain unchanged from FY2017.
It is reasonable to assume that there will be increases in these other components as well over the next 20 years.* It is very difficult to accurately predict all components of rates over a 20 year horizon.
* For example, the CAISO is forecasting significant increases in its transmission access charge.
Pasadena Water & Power
Portfolio Portfolio Name 500 kWh
1000 kWh
Current Annual Average Monthly Bill – As of March 2015 $84.95 $189.78
20-Year Levelized (2015$)
1 Stay the Course (Preferred Portfolio)Economic IPP Dispatch + carbon premium40% RPS by 2020
$96.31 $216.03
2 Reduced IPP OutputReduce IPP to Min starting in 201540% RPS by 2020
$100.77 $224.93
3 Blended – 50% RPSReduce IPP to Min starting in 201550% RPS by 2025 (Solar/Wind/Base Mix)
$102.01 $227.42
4 Blended – 70% RPSReduce IPP to Min starting in 201550% RPS by 2025 & 70% by 2030 (Solar/Wind/Base Mix)
$103.47 $230.34
5 Carbon (GHG) NeutralStarting in 2015: Reduce IPP to Min, no power market purchases, natural gas plants burn 100% biomethane. 50% RPS by 2025 & 100% Carbon-Free by 2030 (e.g., 88% Renewable and 12% existing large hydro/nuclear)
$110.24 $243.88
Estimated Impact of Direct Electricity Cost Only – Monthly Residential Bill (by Usage)
18
Assumes no changes to other cost components or rate structure from FY 2017 approved rates
Pasadena Water & Power
Portfolio Portfolio Name 2,000 kWh
10,000 kWh
50,000kWh
100,000 kWh
Current Annual Average Monthly Bill – As of March 2015 $327 $1,664 $7,563 $14,875
20-Year Levelized (2015$)
1 Stay the Course (Preferred Portfolio)Economic IPP Dispatch + carbon premium40% RPS by 2020
$372 $1,898 $8,630 $16,965
2 Reduced IPP OutputReduce IPP to Min starting in 201540% RPS by 2020
$390 $1,988 $9,081 $17,847
3 Blended – 50% RPSReduce IPP to Min starting in 201550% RPS by 2025 (Solar/Wind/Base Mix)
$395 $2,014 $9,208 $18,093
4 Blended – 70% RPSReduce IPP to Min starting in 201550% RPS by 2025 & 70% by 2030 (Solar/Wind/Base Mix)
$401 $2,043 $9,355 $18,382
5 Carbon (GHG) NeutralStarting in 2015: Reduce IPP to Min, no power market purchases, natural gas plants burn 100% biomethane. 50% RPS by 2025 & 100% Carbon-Free by 2030 (e.g., 88% Renewable and 12% existing large hydro/nuclear)
$427 $2,181 $10,042 $19,722
Estimated Impact of Direct Electricity Cost Changes on Monthly General Service Bill (by Usage)
19
Assumes no changes to other cost components or rate structure from FY 2017 approved rates
Pasadena Water & Power
PUBLIC / STAKEHOLDER INVOLVEMENT
2015 PWP IRP
Pasadena Water & Power
Stakeholder Technical Advisory Group
21
Member Representing
Margaret McAustin Pasadena City Council / MSC
George Falardeau Art Center College of Design
Brian Killett Citizens Climate Lobby
Paul Little Chamber of Commerce
Dennis Murphy Pasadena Resident
John Onderdonk Cal Tech
Tom Romeyn Huntington Hospital
Reuben Smith Pasadena City College
Morey Wolfson Environmental Advisory Commission
Michael Beck Pasadena City Manager
Julie Gutierrez Pasadena Asst. City Manager
Laura Dahl Pasadena Planning Dept.
Phyllis Currie PWP General Manager
Eric Klinkner PWP Asst. General Manager (alt)
Sandra Ell Environmental Adv. Commission (alt)
Pedro Pizarro Cal Tech Board (first few meetings)
Pasadena Water & Power
Customer and Stakeholder Involvement
• Stakeholder Technical Advisory Group> 15 members appointed by Mayor> 8 meetings
• MSC and EAC Briefings• 3 Open Public Meetings• Electronic Updates
> PWP Website> Email> Social Media
• Survey• Video
Pasadena Water & Power
Some Key Customer Survey Observations
• Top Priorities:> Reliability> Low Cost> Environmental Responsibility
• Everything is a Priority!• Higher RPS Supported by Many• Cost/Rates = Major Concern• Coal = Major Concern• Many Interesting & Valuable Comments.
See at www.pwpweb.com/irp23
Pasadena Water & Power
UPDATES & UNCERTAINTY ANALYSIS
2015 PWP IRP
Pasadena Water & Power
Key Issues/Changes
• CAISO Reliability Requirements> Local & Flexible Resource Adequacy Capacity (“FRAC”)
• Energy Imbalance Market (“EIM”)• The “Duck Curve”
> Changing Net Load Profile alters timing of “peak” and “off-peak” loads/prices> Over-generation> Need for fast-ramping, flexible resources
• Retail Load> Increasing penetration of distributed generation (e.g., rooftop solar,
microgrids) which reduce load, and EV charging would increase load> Change hourly and seasonal shape and load factor
• Cap-and-Trade> Will it continue past 2020, or be replaced by federal carbon tax or some other
program?
25
Pasadena Water & Power
The Duck Curve
26
FIGURE 1: THE DUCK CURVE
Ne
t Lo
ad (
Loa
d m
inus
Sol
ar
and
Win
d G
ene
ratio
n)
Overgeneration and ramping need increases over time as the amount of solar in the middle of the day increases over time (annual projections shown here)
Pasadena Water & Power
Key Issues/Changes (con’t)
• GHG Emission Levels> 1990 levels by 2020 (AB32 – The Global Warming Solutions Act)> 80% GHG reduction below 1990 levels by 2050 (Schwarzenegger’s
Executive Order S-3-05)> 40% GHG reduction below 1990 levels by 2030 (Brown’s Executive Order B-
30-15, issued 4-29-15)
• California’s RPS> At least 33% by 2020 (AB32)> Brown’s “Golden State Standards (aka: the 50/50/50 plan): 50% RPS by
2030
• Renewable Resources and Energy Storage> Costs expected to continue to decline> Technology still evolving> Tax incentives, legislative changes and reliability requirements uncertain
• Intermountain Power Project Contract
27
Pasadena Water & Power
Intermountain Power Project (“IPP”)
28
IPP is the largest contributor of GHG emissions in the PWP generation portfolio.*
* Percentages using current CARB GHG reporting
methodology for electric utilities
Pasadena Water & Power
PWP Carbon Emissions to Date
29
Emission Source 2008 2009 2010 2011 2012 2013 2014
Local Generation 82,724 73,355 74,590 80,551 139,828 59,603 64,217
Imports (incl. IPP Coal) 672,321 666,596 629,755 642,935 514,443 536,241 546,314
Magnolia* 38,553 36,285 40,727 19,169 5,723 4,540 12,073
Net Market Purchases* 111,720 106,925 65,898 74,751 97,901 63,304 85,656
Total Emissions/ (2008 Method)
Reduction from 2008
905,317
N/A
883,161
2.4%
810,970
10.4%
817,406
9.7%
757,895
16.3%
663,687
26.7%
708,261
21.8%
Total Emissions/ (Current Method)
Reduction from 2008
755,045
N/A
739,951
2.0%
704,345
6.7%
723,486
4.2%
654,271
13.3%
595,844
21.1%
610,531
19.1%
*In 2008, Magnolia & Net Market Purchases were included in PWP Emissions. Current Method excludes them because they are counted by other entities (Burbank for Magnolia; Generation owners or first importers for CAISO market purchases). Switching from natural gas to biomethane at Magnolia produces RPS RECs but does not show up as PWP carbon emission reduction under current CARB methodology.
Pasadena Water & Power
PWP Carbon Emissions vs. 1990
30
1990 PWP Carbon
Emissions(MT)
2014 Actual
Emissions(MT)
40% Reduction
(MT)
60% Reduction
(MT)
80% Reduction
(MT)
918,622 708,261 551,173 367,488 183,724
Pasadena Water & Power
ACTION PLAN2015 PWP IRP
Pasadena Water & Power
Recommendations
• GHG reduction of at least 60% from 1990 levels by 2030 (to approx. 367,500 MT)> Eliminate coal fired generation no later than
6/16/2027.▪ Preserve IPP related transmission rights.▪ Have an option to reduce or opt out of any IPP
natural gas repowering no later than 2019.▪ Until IPP is repowered, reduce IPP coal-fired
generation when operationally & economically practicable.
32
Pasadena Water & Power
Recommendations (con’t)
• Continue to acquire all cost-effective and viable energy efficiency.
> At least 1% of annual net energy load (12,750 MWh/year) and 0.7% of annual peak demand 2.3 MW/year) through 2023.
> Update recommendations to City Council in 2017.
• Continue to acquire cost effective renewable energy.> Renewable Portfolio Standard Policy & Annual Procurement Plan> Pasadena target = 40% RPS by 2020> State target = at least 33% RPS by 2020; may increase to 50% RPS
by 2030
• Support local renewable energy resources and community solar efforts.
> Establish Feed-in Tariff by the end of 2016.> Launch a Community Solar pilot project by the end of 2016.
33
Pasadena Water & Power
Recommendations (con’t)
• Continue to ensure reliability and flexibility to respond to electric industry changes.> Explore and procure viable, cost-effective new
technologies and efficient conventional technologies as needed to meet reliability and flexibility requirements.▪ Including distributed generation and energy
storage.• Preserve existing local generation.
> Evaluate repair and/or replacement options for Glenarm Unit 2.
34
Pasadena Water & Power
Why “Stay the Course?”
• Reaffirms Pasadena’s Aggressive 2012 IRP Commitments
• Achieves a 60% GHG Reduction from 1990 Levels by 2030
> Ahead of California statewide goal to reduce GHG 40% by 2030 under Governor Brown’s Executive Order B-30-15
• Meets or Exceeds All of PWP’s Current Requirements
> Legal, Regulatory, Reliability and Environmental• Provides Flexibility to Adapt to Changing
Conditions• Least Cost Option Considered
35
Pasadena Water & Power
Preferred Portfolio: Stay the Course = 60% GHG Reduction by 2030
36
Eliminate Coal
Energy Efficiency
Renewable Energy
Local & CommunityRenewable Programs
60 % GHG REDUCTION FROM 1990 LEVELS BY 20301
1 Statewide GHG targets are 40% reduction by 2030 & 80% by 2050 from from 1990 levels.
STAY THE COURSE
Pasadena Water & Power
SUPPORTING MATERIALS2015 IRP Update
37
Pasadena Water & Power
Average New Renewable Technology IRP Cost Assumptions
38
No PWP program in place yet – generic assumption is higher than most other utility programs.
Assumes reduction in federal Investment Tax Credit post 2016. Current solar PV offers are significantly less.
Net Metering
Pasadena Water & Power
Average PWP Generation Cost by Resource
39
Pasadena Water & Power
Expected PWP Gas-Fired Generation Cost
40
Pasadena Water & Power
Assumptions – Natural Gas Prices
41
Pasadena Water & Power
Assumptions – Electricity Prices
42
Pasadena Water & Power
Assumptions – Carbon Prices
43
Pasadena Water & Power
2030 Total Power Supply Content Comparison by Portfolio
44
Baseload Renewables
include Geothermal and Biogas/ Biomethane.
Pasadena Water & Power
Power Supply Changes Over Time – Stay the Course
45
Baseload Renewables
include Geothermal and Biogas/ Biomethane.
Pasadena Water & Power
Base Case Portfolio GHG Comparison
46
Carbon (GHG) Intensity = GHG Emissions / Sales
Average over 20 years
One-year (2030) GHG emissions compared to 2008
Pasadena Water & Power
How much does the 40% RPS portfolio (above and beyond the SBX1-2 33% mandate) cost rate payers?
47
Reduce Renewable Portfolio Standard from 40% to 33%
Fiscal Year 2015
Fiscal Year 2016
Fiscal Year 2017
Fiscal Year 2018
System Average Rate per kWh 16.150¢ 17.120¢ 18.030¢ 18.030¢
Change in ¢ per kWh n/a (0.035¢) (0.027¢) (0.053¢)
New System Average Rate per kWh 16.150¢ 17.085¢ 18.003¢ 17.977¢
Annual Savings for 500 kWh per month Customer n/a $2.10 $1.58 $3.18
Annual Savings for 1000 kWh per month Customer n/a $4.20 $3.24 $6.36
Annual Savings for 10,000 kWh per month Customer n/a $42.00 $32.40 $63.60
Annual Savings for 100,000 kWh per month Customer
n/a $420.00 $320.40 $636.00
During the last rate case, PWP explored the potential impact on rates of reducing the local RPS from 40% to the state mandated 33%. As the table below shows, the savings would be very small.
Pasadena Water & Power
Power Supply FTE: 52
48
Energy Charge (Adjusted by formula)
Pasadena Water & Power
Progress Toward 2012 IRP Recommendations
49
Recommendation Target Status
Renewable Energy: RPS 40% by 2020; Meet/exceed state mandated level of 33% by 2020
On Track; 28% for 2014; Well on our way to 40% by 2020
Renewable Energy: Local Solar
15 MW by 2020; 19 MW by 2024 Approximately 6.2 MW installed
Coal Power Displacement Reduce coal purchases by at least 35 MW by 2016 (via power sale to non-California public entity buyers)
No willing/qualified buyers; Sales blocked by CARB Resource Shuffling Rules. Able to achieve some reduced output w/economic dispatch + additional carbon premium.
New Local Gas-Fired Generation
Replace Broadway power plant with a comparably sized new combined cycle plant by 2014
GT-5 Under Construction; Commercial Operation expected June 2016
Energy Savings Incorporate adopted 2010 Energy Efficiency Goals Adopted 2013 Energy Efficiency Goals: 12,750 MWh, 2.3 MW = ~ 1% per year (energy), 0.7% (demand)
Additional Demand Response
Additional 5 MW by 2012 through incentives and programs
None identified to date. Under review pending development of smart grid strategy.
GHG Emissions Reductions
25% by 2015; 40% by 2020 (from 2008 levels) 19.1% as of 2014
Upgrades of Existing Generation
Continue to maintain and upgrade Glenarm Units 1 and 2 to extend their lives through 2030
Unit 1 complete. Unit 2 still being evaluated. Separate staff recommendation pending.
Pasadena Water & Power
Customer Survey
• 470 responses to 24 questions between August 2014 & May 2015
• Respondents self-selected & not restricted as to the number of times they could respond to the survey.
• 83.5% indicated that they live in Pasadena.• 48.1% indicated that they work or own a business
in Pasadena. • 82.8% indicated that they were answering from a
residential customer perspective.• Not necessarily statistically significant. • Summary data on the responses, charts, and lists of
additional comments received, if any available on PWP IRP website.
50
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