STRATEGIC UPDATE & FLEXIBLE PATH Board Public Input Session J u n e 1 3 , 2 0 1 8 I n f o r m a t i o n a l U p d a t e 1
AGENDA • OVERVIEW • OPERATIONAL DYNAMICS • SAVE FOR TOMORROW ENERGY PLAN (STEP) • OUR FLEXIBLE PATH • FLEXIBLE PATH OUTREACH IN MOTION 2
OVERVIEW 3
WE SUPPORT OUR COMMUNITY THE WHY: San Antonio is a prime center for growth & economic development, • which will benefit everyone. Acknowledging what matters: • RELIABILITY • AFFORDABILITY & VALUE • GREAT SERVICE • OUR FORWARD LOOKING COMMITMENT: We want to share important information with you on the approach & • options we have to support our community, economic prosperity & business interests. STARTING WITH OUR FLEXIBLE PATH!! o 4
P O W E R T O D R E A M Our People First philosophy comes to life through our Power to Dream campaign. Because everyone has dreams, and those dreams deserve to see the light of day.
WHICH ALIGNS TO OUR FOCUS … COMMUNITY & CUSTOMERS 6
RELIABILITY MATTERS!!! 24 HOURS A DAY 7 DAYS A WEEK 365 EVERY DAY OF THE YEAR • Our Power / Energy is there • We minimize / for you when you need it!! prevent outages! 7
AFFORDABILITY & VALUE MATTER!!! We CONTROL COSTS to: SAVE YOU MONEY! 8
GREAT SERVICE MATTERS!!! TODAY & TOMORROW With a Clear Commitment to our ENVIRONMENT Supported by Creative & Helpful PROGRAMS Thru Well Maintained Community ASSETS From Highly Engaged & Safe EMPLOYEES 9
CPS ENERGY BY THE #’S 805K # 1 # 1 # 1 # 1 158 Top 10 344K Larg rgest est # of Years in Voted ted Most t Solar Power er Wind d Power wer Electr tric ic & Engaged gaged Municipa nicipally- Busin iness ess Trusted ed Bra rand nd Produ ductio ction n Produ ductio ction n Gas Reside identia ntial l Owne ned d Electr tric ic in the South uth in Texa xas; in Texa xas Custo tomer mers Custo tomer mer and d Gas Region on Seventh nth in Relationsh ionship ip Comp mpany in the by MSI the Natio tion n by MSI U.S. AA+ NEE (New Energy Economy) $11B Premier ier Credit it $2.5B Added ed $5B Rating ing >900 more than Cumulative $11B B in Assets ets, , Cumulative 900 new 900 Economic $2.5B 5B in Annual jobs new Jobs Impact Reve venue 10
BOARD OF TRUSTEES Note: Also a handout 11
Note: Also a handout 12
OPERATIONAL DYNAMICS 13
OPERATIONAL DYNAMICS WE ARE A FULLY INTEGRATED UTILITY GENERATION THE GRID CUSTOMERS We operate & manage in all aspects of the utility energy business & the ERCOT market 14
INVESTMENTS – LONG TERM TRADITIONAL GENERATION 40-60 YEAR 40-60 YR LIVES LIVES 30+ YR 30+ YEAR LIVES LIVES EARLY An historical value driver for our INVESTMENTS community has been our ability to invest in & maintain assets for a very long time. Disposals done too early or late can be very costly. 15
VISION 2020 2010 GENERATION 2020 PROJECTED GENERATION 1.6% 0.2% 0.0% 7.6% 6% 8.1% Coal Coal 5.5% 2.1% 1% Nuc lear Nuclear 0.2% 2% 12. 2.1% 1% 34. 4.4% 4% Natural Gas 0.5% 5% 6.9% Natural Gas 45.9% Purch Pwr Purch Pwr Landfill Gas Landfill Gas 19. 9.6% 6% S olar Solar 31.8% Wind Wind 23. 3.5% 5% S T EP STEP Low - No Carbon Generation Sources = 54% Low - No Carbon Generation Sources= 66% Renewable + Demand Reduction Sources = 15% Renewable + Demand Reduction Sources = 25% Vision 2020 transitions CPS Energy from traditional generation power sources to competitively priced power that is based on a diverse generation portfolio 16
SAVE FOR TOMORROW ENERGY PLAN (STEP) 17
SAVE FOR TOMORROW ENERGY PLAN (STEP) • GOAL : 771 MW of Demand Savings by 2020 (equivalent of the output of a power plant) • INVESTMENT : Up to $849 Million • DEMAND REDUCTION - Achieved as of FY 2018: 626 MW * Category Programs Abbreviation Examples of weatherization in a home Weatherization Weatherization Wx Residential Energy Res HVAC, Home Energy Assessments, New Res EE Efficiency Construction, Multi-Family, Cool Roof Commercial Energy C&I Solutions, Small Business Solutions, New Comm EE Efficiency Construction, Schools & Institutions, Multi- Family Demand Response Demand Response DR Solar Solar 18 * Pending final measurement & verification
OUR S.T.E.P. - PROGRAM 1 st Major FLEXIBILITY MOVE 900 $900 Helping To Proactively 771 748 800 $800 Change Behaviors! 681 700 $700 626 Dollars in Millions 600 $600 522 463 500 $500 MW 352 400 345 $400 318 273 300 $300 221 162 200 $200 100 $100 39 0 $- FYE2009 FYE2010 FYE2011 FYE2012 FYE2013 FYE2014 FYE2015 FYE2016 FYE2017 FYE2018 FYE2019 FYE2020 FYE2021 STEP Cumulative Expenditures STEP Cumulative MW $’s Building another $’s Supporting < Coal Plant + Operations Conservation: LOWER & Maintenance STEP 19
APPEALING PROGRAMS 300,000 265,620 250,000 200,000 157,181 Participants 141,559 150,000 127,346 114,563 94,041 84,239 100,000 69,799 33,339 50,000 - FYE2010 FYE2011 FYE2012 FYE2013 FYE2014 FYE2015 FYE2016 FYE2017 FYE2018 Fiscal Year Popularity is increasing: In FYE 2018, we had 265K interactions with customers 20
CONSERVATION: OUR LEADERSHIP IN TEXAS 2016 WEATHERIZATION FUNDING: CPS Energy – $20.1M Austin Energy – $2.7M Next Best: Oncor – $5.5M 2016 DEMAND RESPONSE 2016 ROOFTOP RESOURCES: SOLAR CPS Energy – 207 MW INSTALLED Next Best: Austin Energy – 131 MW CAPACITY: After that: CenterPoint – 120 MW* CPS Energy – 34 MW Austin Energy – 10 MW Next Best: Oncor – 12 MW We’re a leader in Demand Side Management (DSM) Programs because of our STEP investment in the community *Note: Demand Response resources are only available in ERCOT EEA2 emergency. 21
TEXAS BENCHMARKING Our broad range of DSM Programs compare favorably to other electric providers in Texas Commercial Residential Solar R&D Recommission MTP Residential HVAC Community Solar Retail Buy Down Commercial DR Weatherization Commercial EE Schools & Gov. Residential DR Residential EE Development Solar Rebate Research & In-School Education Roofless Lighting Homes EE Kits New Utility ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ AEP Central (Corpus Christi) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Austin Energy ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ CenterPoint (Houston) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ CPS Energy ✓ ✓ ✓ ✓ ✓ ✓ Oncor (Dallas) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ El Paso Electric 22
COST EFFECTIVE Cost effectiveness of rebates has improved 49% since FY15 through a combination of adjusting incentives & declining technology & implementation costs 3.5 3.0 2.5 2.0 PACT Score 1.5 1.0 0.5 0.0 FY15 FY16 FY17 FY18 Wx 0.86 Res EE 1.45 1.26 1.31 2.18 Comm EE 3.23 3.28 2.97 3.08 DR 0.89 1.58 2.20 3.08 Solar 1.41 2.27 Portfolio Total 1.51 1.72 1.86 2.25 Glossary: Wx = Weatherization | Res EE = Residential Energy Efficiency 23 Comm EE = Commercial Energy Efficiency |DR = Demand Response
OUR MANY RENEWABLE INSTALLATIONS Alamo 3 - 5.5 ACROSS TX & SA MW Alamo 2 - 4.4 MW Solara 110 MW Sweetwater 3 & 4 Blue 341 MW Wing Alam 14 Pearl 50 MW o 1 MW (Under Construction) 40 Desert Sky 1 & 2 MW 161 MW Sirius 110 MW Sinkin 1&2 20 (In Testing) MW Somerset 11 MW Eclipse 40 Helios 95 MW MW Papalote Creek 130 MW Penascal 77 Cedro Hill 150 MW MW 24 Los Vientos 200 MW
OUR FLEXIBLE PATH 25
GOALS & APPROACH 65% Low-carbon generation Renewable energy capacity in power generation mix 20% Purchase of cleaner Natural Gas “Rio Nogales” Units • Purchase of 450MW of utility scale solar • 75% NOx emissions reduction since 1997 75% Closure of J.T. Deely Coals Units 1 & 2 in 2018 • Using a more efficient product – lower sulfur fuel • Solar Leadership #6 High National Ranking by Environment Texas • New Environmental Tools Air Quality Sensors • Smart Sniffer “Gaston” • We continue our commitment to sustainability & being an engaged environmental steward 26
DEVELOPING A FLEXIBLE FUTURE AGAIN RELIABILITY MATTERS: Traditional generation is playing the role of “virtual storage” for renewable energy until energy storage technology scales up Now: Renewables and Future: Renewables and Traditional Generation Energy Storage Currently not economical 27
COMMUNITY DIALOGUE = MORE ENGAGEMENT Policies City of Priorities San Antonio ASPIRATIONAL GOALS Flexible Path Customers Partners Environmental Input Businesses Others PATH TO THE GOALS Traditional Generation CPS Energy Technology & Innovation Design Strategy Manage Plan & Strategy Our decisions reflect the values & priorities of our community! 28
WHY THE FLEXIBLE PATH, WHY NOW? Technology is evolving & changing now, & at a rapid pace. Flexibility is needed for us to meet your needs & desires in a responsible way. 29
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