AESO 2017 Business Plan and Budget Review Process Stakeholder Consultation Summary Presentation October 13, 2016
2017 Budget Review Process • Amended process for 2017 Own Costs and Capital budgets – Preparation and approval by December 2016 of 6-month budget for January to June 2017 – Allows for additional time for more details on the government’s policy initiatives to become available – Followed by efficient stakeholder consultation in near term incorporating any AESO impacts – Consultation will begin in March 2017 for a detailed 18-month budget for the period from July 2017 to December 2018 • AESO Board approval by June 2017 • Standard process for 2017 Transmission Operating Cost forecasts – Preparation and approval by December 2016 of a 12-month forecast for 2017 2
2017 and 2018 Budget Review Process Summary Q4 2016 Consultation Q1/Q2 2017 Consultation Stakeholder Written process given limited Consistent with prior years’ Consultation new information process for full stakeholder Process engagement and technical meetings Business Plan and Abbreviated document Comprehensive document Budget Proposal Business Initiatives Continuation of existing Detailed review and consultation initiatives with stakeholders Transmission Prepare and approval for 12- Prepare and approval for 12- Operating Costs month forecast for 2017 month forecast for 2018 Own Costs and Jan to Jun 2017 budget based Detailed review and consultation Capital on 2016 approved budget with stakeholders for the period from Jul 2017 to Dec 2018 3
Presentation of 2017 Information • Additional information to the following PowerPoint presentation is provided in the Word document titled ‘Supplementary 2017 Forecast and Budget Information’ • In the absence of in-person stakeholder meetings, this information provides the details that would have otherwise been disclosed through verbal discussion • The Word document has been cross-referenced to the slide numbers in this presentation for ease of reading 4
2017 Business Initiatives
Business Initiatives Summary • Presentation of the major strategies and initiatives (i.e. AESO’s business priorities) • For the period from January to June 2017, these are the carryforward initiatives presented to stakeholders in prior consultation processes • Additional information on 2016 achievements and 2017 plans is provided in the following slides 6
Business Initiatives Supporting Strategic Objective 1 – Framework Business Initiative Expected Achievement 2016 Plans 2017 Market Evolution – Ongoing assessment of market design, structural elements and implementation of related changes Design, Consult (rules development), Design, Consult, Implementation Implementation Renewable Electricity Program (REP) Implement first REP competition (Round 1) and Government of Alberta (GoA) endorsed; AESO identify winning bidders positioned to open first competition in Q4 or in Climate Change line with revised GoA timelines; Commencement Program (first stage) of first competition Framework monitoring, assessment of proposed Framework monitoring, assessment of proposed changes and related recommendations changes and related recommendations Consult, Design and Implement Implementation Determine the integration plan for new products Tariff provisions for storage to be filed as part of and/or technologies (e.g. operating reserve the next General Tariff Application (GTA) in 2017 Market Initiatives amendments, technical standards and tariff provisions); Implement plan - Storage, Other new products/technologies to continue Mothballing and Intertie Restoration inflight Market Systems Replacement - Replacement and/or reengineering of market systems determined to have reached end- of-life Implementation Implementation (future sustainment iterations) Market Systems Complete MSR System reliability components Continuation of future sustainment initiative Replacement and Reengineering (MSR) (short-term sustainment) 7
Business Initiatives Supporting Strategic Objective 1 – continued Business Initiative Expected Achievement 2016 Plans 2017 Tariff and Technical Standards Enhancements Consult and Design Implementation Major components include how energy storage File GTA with AUC 2017 General Tariff will be managed in the tariff, Section 8 Application (GTA) (customer contributions) changes and cost/causation study Consult, Design and Implement Consult, Design and Implement Prioritization and Advancement of Loss Factor Continue to advance Loss Factor rule, Alberta rule; Alberta Reliability Standards (80 new Reliability Standards and Technical Rules Technical Standards and standards and revisions required); and Rules Technical Rules (Customer Connection, Substation, Transmission Line and Metering Rules) Major Projects – Design, development and deployment activities for projects having notable industry impact Advancement of the Fort Design, Implementation Implementation McMurray West (FMW) Project AESO regulatory proceedings involvement Develop programs to manage the FMW Project where applicable; Continued Project post energization; Implementation of DFC (Formerly referred to as CP integration; Preparation for Debt Funding Integration) Competition (DFC) 8
Business Initiatives Supporting Strategic Objective 2 – Value Business Initiative Expected Achievement 2016 Plans 2017 Reliability Program – Facility, process and technology enhancements to improve grid reliability Implementation Implementation Energy Management System Replacement infrastructure procurement and Production implementation by July 2017 (EMS) Upgrade configuration; Factory Acceptance Testing complete Implementation Implementation System Control Centre Complete definition phase including all preliminary Continue implementation phase – RFP, permit (SCC) Facility Expansion approvals; Subject to Board approval, commence applications, other as required implementation phase and develop schedule Security – Critical Infrastructure Protection (CIP), Information Technology (IT) and cyber security enhancements Implementation Implementation Develop internal CIP process and procedure Complete internal compliance requirements Alberta Reliability Standards requirements; Establish compliance approach for and related audits; Set up market participant CIP Implementation monitoring market participants and guidance on compliance program preparing compliance evidence Implementation Implementation IT and Cyber Security IT and Cyber Security advanced in accordance Continue to advance IT and Cyber Security Advancements with AESO business plan program 9
Business Initiatives Supporting Strategic Objective 3 – People Business Initiative Expected Achievement 2016 Plans 2017 Advance maturity level of our Human Resources processes Design, Implementation Design, Implementation Increase workforce capabilities by broadening (2015-2018 HR strategy and roadmap roll knowledge (AESO and industry) across the out) – continued from 2016 organization; Program development of cross Workforce capabilities - functional practice and learning opportunities expanded realized; Enhance learning and development programs to meet future needs as identified in strategic plan; Establish broader exposure and a comprehensive understanding of corporate skills and competencies required in the future 10
2017 Transmission Operating Cost Forecast
AESO Disclaimer The information contained in this document is published in accordance with the AESO’s legislative obligations and is for information purposes only. As such, the AESO makes no warranties or representations as to the accuracy, completeness or fitness for any particular purpose with respect to the information contained herein, whether expressed or implied. While the AESO has made every attempt to ensure the information contained herein is timely and represents a reasonable forecast, the AESO is not responsible for any errors or omissions. Consequently, any reliance placed on the information contained herein is at the reader’s sole risk. 12
Operating Cost Forecast Summary 2017 2016 2016 2015 ($ millions) Forecast Projected Forecast Actual Wires Costs 1,864.8 1,802.5 1,684.8 1,596.0 Ancillary Services 118.9 93.1 182.6 171.3 Transmission Line 74.1 44.4 111.9 75.8 Losses Other Industry Costs* 23.2 22.4 22.8 22.6 TOTAL 2,080.9 1,962.5 2,002.1 1,865.7 Pool Price (per MWh) $32 $21 $41 $33 * Includes transmission and energy market costs Forecast – current estimate of future costs Projected – current estimate of current year costs based on actual costs as of August 2016 combined with a forecast for the remaining four months of the year 13
2017 Pool Price Forecast
Price Forecast for 2017 • Hourly pool price forecast is an integral input into calculating the forecast costs for ancillary services and transmission line losses • AESO in-house generated hourly pool price forecasts from 2013 to 2016 for BRP forecasting purposes • For 2017 BRP, the 2017 hourly pool price forecast is obtained from the EDC Associates’ Q3 2016 Update Report • Decision to use the EDC forecast was due to competing AESO priorities for staff resources • EDC hourly pool prices were used in 2012 and prior BRP forecasts; they are considered as a reliable industry information source 15
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