ELECTRICITY AND OUR FUTURE CWLP’S INTEGRATED RESOURCE PLAN Public Utilities Committee Meeting May 6, 2019 1
Agenda • Purpose of IRP • Public Process • TEA Present Results - Report & Presentation Online www.cwlp.com/IRP • Next Steps 2
IRP An Integrated Resource Plan (IRP) is the result of a comprehensive planning study, which provides a recommended mix of supply- and demand-side resources a utility may use to meet its customers’ future electricity needs. 3
IRP Public Process • Public Meetings & Presentations June 11, 2018, September 17, 2018, December 18, 2018, May 6, 2019 • 2018 Public Comments On IRP Inputs • 2019 Public Comments: May 7 th to June 3 rd IRP@cwlp.com; US Mail; Open House • Open House May 20 th Lincoln Library, 5:00-7:00 pm • Next Public Utilities Committee Meeting www.cwlp.com/IRP 4
CWLP Integrated Resource Plan Spring 2019
Overview • Introduction • Process Overview • Results Overview • Recommendations Explanation 2 CONFIDENTIAL & PROPRIETARY May 6, 2019
Process Overview 3 CONFIDENTIAL & PROPRIETARY May 6, 2019
IRP Process Flow Develop Process Results Create and Run Assumptions & and Develop Models Scenarios an Action Plan 4 CONFIDENTIAL & PROPRIETARY May 6, 2019
Planning Considerations Flexibility Cost Risk “What is cheapest isn’t always what is best.” 5 May 6, 2019 CONFIDENTIAL & PROPRIETARY
Cost Total Cost Per Unit Cost Net Present Value of Levelized Cost of Energy Revenue Requirements NPVRR ($) LCOE ($/MWh) 6 CONFIDENTIAL & PROPRIETARY May 6, 2019
Risk • Renewables • Market prices • Weather • Environmental regulations • Power plant retirements • Electricity usage • Electric vehicles 7 CONFIDENTIAL & PROPRIETARY May 6, 2019
Modeled Fuel Price Uncertainty 8 CONFIDENTIAL & PROPRIETARY May 6, 2019
Market Risk Cases 9 CONFIDENTIAL & PROPRIETARY May 6, 2019
Flexibility • Short term actionable items • Long term directional items – Greater potential to change with circumstances • Phased approach – Improves optionality – Reduces portfolio risk 10 CONFIDENTIAL & PROPRIETARY May 6, 2019
Results Overview 11 CONFIDENTIAL & PROPRIETARY May 6, 2019
Considered Resources • Natural Gas – Combustion Turbine – Combined Cycle Gas Turbine – Reciprocating Internal Combustion Engine • Renewables – Solar – Wind • Battery Storage • Market Purchases 12 CONFIDENTIAL & PROPRIETARY May 6, 2019
Energy Efficiency Programs • Existing Programs: • Potential Programs: – Heating and A/C – Insulation incentives – Lighting – Smart Thermostat Program – Home Energy Audit – A/C Rebate – Low Income – Social Behavior Change 13 CONFIDENTIAL & PROPRIETARY May 6, 2019
Short-Term Results 100% 100% 100% 100% 80% 50% 14 CONFIDENTIAL & PROPRIETARY May 6, 2019
Long-Term Results 100% 100% 100% 100% 90% 75% 15 CONFIDENTIAL & PROPRIETARY May 6, 2019
Recommendations Explanation* *Recommendations based on best information available during study process 16 CONFIDENTIAL & PROPRIETARY May 6, 2019
Recommendation Summary • Retire Units 1,2 & 3 in 2020 (or as practical) • Retain Unit 4 • Issue renewable RFP • Issue capacity & energy RFP • Expand energy efficiency efforts • Retain peaking units • Build FEJA solar (if feasible) 17 CONFIDENTIAL & PROPRIETARY May 6, 2019
Recommendation Timeline Energy Efficiency programs ‘20 ‘21 ‘22 ‘23 ‘24 ‘25 ‘26 ‘27 ‘28 ‘29 ‘30 ‘31 ‘32 ‘33 ‘34 ‘35 ‘36 ‘37 ‘38 ‘19 • NPV ($M): 1,042 • LCOE ($/MWh): 45.29 18 CONFIDENTIAL & PROPRIETARY May 6, 2019
Generation Mix 19 CONFIDENTIAL & PROPRIETARY May 6, 2019
Market Purchases and Sales 60% 47% Purchases Sales 39% 40% 20% 0% -9% -20% -40% -60% -57% -80% 2019 2021 2023 2031 20 CONFIDENTIAL & PROPRIETARY May 6, 2019
Environmental Impact 21 CONFIDENTIAL & PROPRIETARY May 6, 2019
Dallman 1 & 2 • Retire Dallman 1 & 2 – Every scenario retired these units – $22 million capital expense avoided 22 CONFIDENTIAL & PROPRIETARY May 6, 2019
Dallman 3 • Retire Dallman 3 – Every eligible scenario retired – $26 million capital expense avoided – $210 million NPV cost increase to retain Dallman 3 • Expected to increase cost $10 M / year over next few years – 2020 retirement may be unreasonable 23 CONFIDENTIAL & PROPRIETARY May 6, 2019
Dallman 3 Retention Cost 24 CONFIDENTIAL & PROPRIETARY May 6, 2019
Dallman 4 • Recommend retaining and reassessing in next IRP • Must be replaced due to transmission constraints – Gas unit replacement cost $120 million • Marginal on retirement – Replacing increases risk • High coal cost scenario makes Dallman 4 less economic 25 CONFIDENTIAL & PROPRIETARY May 6, 2019
Dallman 4 Coal Price 26 CONFIDENTIAL & PROPRIETARY May 6, 2019
Renewables RFP • Recommend issuing a renewables RFP ASAP – Tax Credits expiring – Can sign PPA beginning in future • Results add PPA in 2023 • Significant cost declines in last decade 27 CONFIDENTIAL & PROPRIETARY May 6, 2019
Market Purchases • Consider market purchases – Replace Dallman 1, 2, & 3 at a reduced cost – Energy & capacity • Long-term (5-10 years) 28 CONFIDENTIAL & PROPRIETARY May 6, 2019
Energy Efficiency • CWLP has successful energy efficiency programs • Expand programs on as-economic basis • Conduct more focused analysis – Demand-side management (DSM) – Energy Efficiency – Advanced Meter Infrastructure 29 CONFIDENTIAL & PROPRIETARY May 6, 2019
Retain Peaking Assets • Cheap capacity • Reliability benefits 30 CONFIDENTIAL & PROPRIETARY May 6, 2019
Illinois FEJA • Build 2 MW Illinois Future Energy Jobs Act (FEJA)-applicable solar • CWLP may not qualify 31 CONFIDENTIAL & PROPRIETARY May 6, 2019
Additional Risks • Electric Vehicles • New Technologies • Environmental Regulations • Changes near CWLP – Generation & Transmission • Market Prices • Fuel Prices 32 CONFIDENTIAL & PROPRIETARY May 6, 2019
Disclaimer This document was prepared by The Energy Authority, Inc. (“TEA”), solely for the benefit of City, Water, Light and Power (“CWLP”). TEA hereby disclaims (i) all warranties, express or implied, including implied warranties of merchantability or fitness for a particular purpose, and (ii) any liability with respect to the use of any information, recommendations, or methods disclosed in this document. Any unauthorized commercial use of this document by third parties is prohibited. The recommendations resulting from this study are based on the economics of each decision according to the inputs available to TEA. The recommendations are subject to change as the underlying facts and assumptions change. CWLP’s final action plan may reasonably differ from the TEA’s recommendations due to various local, organizational, or other considerations not factored into these recommendations. More next pgs. 33 CONFIDENTIAL & PROPRIETARY May 6, 2019
NEXT STEPS CWLP’S INTEGRATED RESOURCE PLAN 6
NEXT STEPS • Develop Action Plan – Review Public Comments – Begin planning steps with MISO • Initiate RFP for Purchase Power Agreements (PPAs) • Retain Dallman 3 longer than Dallman 1 and 2 • Develop a plan for employees 7
Public Discussion of IRP Results • May 20 th Open House -Lincoln Library 5:00-7:00 pm • Public Comment Period May 7 to June 3 - Name & Address requested (IRP@cwlp.com or U.S. Mail) • Next Public Utilities Committee Meeting -Updates & Summary of Public Comments • TEA’s full report and all presentation documents and videos to date www.cwlp.com/IRP
Public Communication Website www.cwlp.com/IRP Email IRP@CWLP.com CWLP General Office, 4 th floor, Attention IRP, US Mail 800 East Monroe Street, Springfield, IL 62757 Lincoln Library Open House May 20 th , 5-7pm 9
Questions 10
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