2018 Energy Update Bryan Municipal Utilities Kevin M. Maynard Director of Utilities November 9, 2017 Reliable. Local. Yours.
Bryan Municipal Utilities overview • Not-for-profit, community-owned utility services provider • Established in 1892 • Three primary services Water • Telecommunications • Electricity • • 44 full-time employees • More than $26 million annual revenue Reliable. Local. Yours. 2
Bryan Municipal Utilities overview Operations oversight provided by five-member Board of • Public Affairs Bryan residents elected by local citizens – Approve policies, staffing, budgets, rates – Authorize utility improvements – and extensions Bryan Board of Public Affairs Reliable. Local. Yours. 3
Water Utility Reliable. Local. Yours.
Municipal Water Utility • Water supply provided by seven deep wells (127 to 147 feet) in four locations • 8.0 MGD raw water production capacity • 5.0 MGD treatment capacity • 1.41 average daily output • 1.91 MGD peak daily output Bryan Water Treatment Plant Reliable. Local. Yours. 5
Municipal Water Utility Treatment process consists of: Aeration to oxidize iron and manganese, release undesirable gases • Chlorination for additional oxidation and disinfection • Filtration to remove oxidized iron and manganese • Bryan’s source water contains naturally occurring fluoride; no • additional fluoridation required Water considered very hard; total hardness of approximately 327 • mg/l (19 grains/gallon) Bryan’s treatment process does not include softening • Reliable. Local. Yours. 6
Municipal Water Utility • 1.4 million gallons of elevated storage (two water towers) • One average day of finished water storage • 1.0 million gallons of ground level raw water storage at Water Treatment Plant • No environmental compliance issues Reliable. Local. Yours. 7
Water Utility sales trend • Water sales have declined over the last 20 years • Decreasing sales and inflation create rate pressure Water Sales by Rate Class (Gallons) Bryan Municipal Utilities % Rate Class 1997 2016 Difference Change Residential 170,007,684 140,258,228 -29,749,456 -17.50 Commercial 307,241,748 184,980,400 -122,261,348 -39.79 Total 477,249,432 325,238,628 -152,010,804 -31.85 Reliable. Local. Yours. 8
Water Utility rate plan • In 2015, BPA adopted a five-year water rate plan • Third year of plan effective with bills rendered on or after December 20, 2017 • Water rates remain very competitive with others in area even after implementation of five-year rate plan Reliable. Local. Yours. 9
Water Utility rate plan Reliable. Local. Yours. 10
Water Utility primary issues • Ensuring adequate capital improvements funding – Additional $500,000-$600,000 annually needed for water supply, treatment and distribution system improvements – Will evaluate 2018 water main replacement financing options Reliable. Local. Yours. 11
Water Utility primary issues • Planning for future – If additional water supply and treatment capacity is needed in the future, what is the best location? – Current location or site west of town (solar field site) – Do new treatment technologies make softening or other water quality enhancements feasible? – Water supply and treatment alternatives study planned in 2018 Reliable. Local. Yours. 12
Telecommunications Utility Reliable. Local. Yours.
Municipal Telecommunications Utility • Developing plan to rebuild fiber optic network over next 5 to 10 years • Plan to increase speeds by year-end 2018 – Residential speeds of up to 30 Mbps – Business speeds of up to 100 Mbps • Future focus: – Reliability – Increased bandwidth/speed – Local customer service – Cost competitiveness Reliable. Local. Yours. 14
Electric Utility Reliable. Local. Yours.
Power Supply Reliable. Local. Yours.
Power Supply arrangements • In its early years, BMU generated all of the energy used locally at its power plant • In 1954, BMU established an interconnection with Toledo Edison • Purchasing power from TE was less expensive than installing another generator at the time • TE interconnection provided a backup source of power to improve reliability Reliable. Local. Yours. 17
Power Supply arrangements • Natural gas for generating electricity curtailed during early 1970s Energy Crisis and fuel oil prices increased • BMU began purchasing most of its electric energy from TE instead of generating it locally • BMU power plant used to reduce peak demands and for emergency backup • Due in part to its nuclear power plant construction program, TE’s power prices increased significantly during late 1970s Reliable. Local. Yours. 18
Power Supply arrangements • In response, BMU purchased 10.5 miles of abandoned railroad right-of-way and constructed a high voltage transmission line to connect to Ohio Power (now AEP) • In 1982, BMU switched to AEP and reduced electric rates by an average of 23% • BMU was able to purchase power from AEP at cost-based rates of approximately $0.03/kWh until 2006 Reliable. Local. Yours. 19
Power Supply arrangements • By the mid-2000s the electric industry had moved from cost-based to market-based power supply costs • When the AEP contract was renewed in 2006, power supply costs increased from 3.5 cents/kWh to 6.1 cents/kWh • BMU’s power supply costs have averaged 6.5 cents/kWh to 7.2 cents/kWh since 2007 Reliable. Local. Yours. 20
Power Supply arrangements • BMU is a member of American Municipal Power, Inc. (AMP), a not-for-profit wholesale power supply and services agency for 135 municipal electric systems in nine states • Joint action through AMP allows BMU to achieve economies of scale and manage risks Reliable. Local. Yours. 21
Power Supply arrangements • BMU began receiving an allocation of New York Power Authority (NYPA) hydropower through AMP in mid-1980s • BMU participated in construction of the Belleville Hydroelectric Plant through AMP in 1990s • In 2007, to reduce power cost volatility, BMU began purchasing blocks of power through AMP that had varying contract lengths Reliable. Local. Yours. 22
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Power Supply arrangements • As market prices continued to increase through 2008, BMU evaluated participation in a number of power supply projects through AMP • BMU agreed to participate in construction of the Prairie State Energy Campus and the Cannelton, Smithland and Willow Island hydroelectric projects in 2007 • BMU agreed to participate in the Meldahl and Greenup hydroelectric projects in 2010 Reliable. Local. Yours. 24
Power Supply arrangements • Emphasis on a diverse, more environmentally friendly power supply portfolio • Approximately 30% of power supply is generated by renewable resources including: • Landfill gas to energy • Hydroelectric • Solar • Wind • Approximately 25%-30% of power supply is market purchases Auglaize Hydroelectric Plant Reliable. Local. Yours. 25
Bryan 2011 Power Supply Resources Bryan Power Plant Auglaize Hydro 0.2% 4.9% NYPA Hydro 2.6% Belleville Hydro 3.6% American Municipal Power 88.7% Reliable. Local. Yours. 20
Bryan 2018 Power Supply Resources NYPA Hydro, 2.6% Belleville Hydro, 3.7% BP Purchase (2024), AMP Hydro, 4.2% 22.0% Meldahl Hydro, 3.4% Greenup Hydro, 1.7% AFEC (Natural Gas), 13.2% Morgan Stanley Purchase (2020), 9.2% Auglaize Hydro, 4.3% Bryan Solar, 1.2% Blue Creek Wind (2022), 2.4% Prairie State (Coal), EDI Landfill Gas 28.4% (2021), 4.0% Reliable. Local. Yours. 20
Power Supply arrangements • Diverse resources reduce power supply cost volatility • More environmentally friendly resources reduce risk of carbon tax, cap and trade or other environmental compliance costs • New assets help stabilize power costs for foreseeable future • Transition to more diverse, asset-based, environmentally- friendly power supply portfolio was accomplished without significant changes in power supply costs Reliable. Local. Yours. 28
Historic Power Supply costs Reliable. Local. Yours. 21
Electric Rate Plan Reliable. Local. Yours.
2017 Electric COS Study/Rate Plan drivers • Rates were last adjusted in 2006 • Power supply resources have changed since 2006 • Prairie State Energy Campus • AMP Fremont Energy Center (AFEC) • Cannelton/Smithland/Willow Island Hydroelectric Projects • Greenup/Meldahl Hydroelectric Projects • Bryan Solar Field • New resources have greater demand and lesser energy costs • Power Supply Cost Adjustment (PSCA) had grown to $0.0279/kWh • Provide adequate capital improvements funding • Determine funding level required to maintain reliable service and help keep rates lower and more stable over long term Reliable. Local. Yours.
Rate Plan goals • Maintain electric system financial integrity • Allocate costs of providing service in a fair and equitable manner using industry practices • Rates designed to be overall revenue neutral • Move rates toward cost of service • Include projected power supply costs in rates – Minimize Power Supply Cost Adjustment (PSCA) • Minimize customer financial impacts • Develop rates that send appropriate price signals Reliable. Local. Yours.
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