Strategy in Motion November 2018 B O N N E V I L L E P O - PowerPoint PPT Presentation

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N BPA Update: Strategy in Motion November 2018

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N POWER RATES Power rate drivers in $ millions Power rate drivers in $ millions Energy Efficiency expense Energy Efficiency expense Secondary Secondary DSI sales DSI sales Load loss Load loss FRP phase-in FRP phase-in Other Other Reductions Reductions 250 250 10 16 16 IPR 200 200 10 10 30 30 65 150 150 24 24 18 8 Projected inflation 7 11 100 100 75 75 22 Historical inflation 14 50 50 61 61 61 0 0 Upward rate Upward rate Remove spill Remove spill Debt Debt Corps, Corps, Energy Efficiency Energy Efficiency Generation Generation Internal Internal Fish and Wildlife Fish and Wildlife Residual rate Residual rate pressure pressure surcharge surcharge management management Reclamation and Reclamation and inputs inputs operations operations (net 4(h)10(c)) (net 4(h)10(c)) pressure pressure actions actions Columbia Columbia

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N BENDING THE COST CURVE Bending the cost curve Average annual program costs in billions of dollars and percentage of cost change by rate period Billions of dollars 2.0 + 3 - 4 + 3 percent percent + 4 percent + 13 percent percent + 26 1.5 percent 1.0 0.5 0.0 BP-08 BP-10 BP-12 BP-14 BP-16 BP-18 2018 IPR FY 2008-2009 FY 2010-2011 FY 2012-2013 FY 2014-2015 FY 2016-2017 FY 2018-2019 FY 2020-2021

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N TRANSMISSION RATES • 9.5 percent – average increase under initial proposal. • 4 percent – average increase under settlement.

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N FINANCIAL RESERVES POLICY Financial Reserves Policy framework in millions of dollars CRAC Surcharge No action RDC 800 600 400 200 0 -200 -400 Agency Power Transmission

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N UNDERSTANDING LEVERAGE Debt-to-asset ratio (64 percent) Car = Worth $20,000 Total debt ($141,000) Total assets ($220,000) Credit card $3.63 Billion Owe $6,000 Car Owe $15,000 Home Worth $200,000 Home Owe $120,000 Debt Asset

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N LEVERAGE POLICY BPA's current leverage ratio and targets Long-term target range Mid-term target range Current leverage ratio 100 80 60 96 88 40 78 20 0 Agency Power Transmission

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N GRID MODERNIZATION Maximize capacity and improve Improve Power and grid efficiency. Transmission revenues.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N PROJECTS UNDERWAY • Mission critical information technology – Modernize the systems necessary to do core power and transmission functions; the foundation to all other grid mod projects. • Outage management projects – Improves outage coordination across agencies and reduces risk of non-compliance.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N PROJECTS UNDERWAY • Marketing and Settlements Solution – Improves how BPA trades and settles power transactions with the California Independent System Operator. • Automatic generation control – Enables additional capacity marketing from hydro system • Reliability coordinator – Transition from Peak Reliability to CAISO

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N ENERGY IMBALANCE MARKET • Benefits include: – Optimize operation of the power and transmission system. – Congestion management.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N PROCESS TO JOIN THE EIM • Monthly EIM stakeholder meetings Now July 2019 • Issue proposal to sign and 30-day comment period Late 2019 • Record of decision 2020-22 • Develop necessary systems along with tariff and rate development • EIM go live if decision made to join Planned April 2022

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N MARKET OPPORTUNITIES • Clean capacity • New loads • Carbon policies

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N HISTORICAL FISH AND WILDLIFE SPENDING BPA fish and wildlife investments in $ millions Expense/direct Reimbursable Capital repayment Power purchases Lost opportunity costs 1000 800 600 400 200 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -200

FUTURE F&W SPENDING BP-18 Actuals Rate Case 2018 IPR FY Percentage of Spending FY 2016-2017 FY 2018-2019 2020-2021 Categories Allocated to F&W ($ in Millions) ($ in Millions ) ($ in Millions) 256 277 249 100% Integrated Program 5 6 6 50% NWPCC 27 34 31 US Fish & Wildlife Service 100% Lower Snake River Compensation Plan 50 48 49 ~19% Corps of Engineers O&M 7 7 7 ~4% Bureau of Reclamation O&M 195 TBD 58 (power purchases and UNSLICED hydro operations effects foregone revenues) 135 129 113 Depreciation & Interest on COE / Reclamation / USF&WS Capital F&W Investments (based on Plant in Service) 698 536 455 Total $ Depreciation & Interest on BPA Direct Program Capital F&W Investments This information has been made publicly available by BPA on July 17, 2018, and contains information not reported in agency financial statements.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N FISH ACCORDS EXTENDED • Columbia Basin Fish Accords extended for up to four more years. • $400 million for fish and wildlife mitigation and protection.

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N EXAMPLE: HABITAT IMPROVEMENT Klickitat Watershed Enhancement Project, before and after

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N COLUMBIA RIVER SYSTEM OPERATIONS • Developing alternatives for system operations to include in the draft environmental impact statement. • Oct. 19 presidential directive: Complete the EIS and associated biological opinions by 2020.

*Chart from NOAA fact sheet: Southern Resident Killer Whales and West Coast Chinook Salmon

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N ALIGNING EE TO MEET BUSINESS NEEDS • BPA’s 2018 Resource Program identified both energy efficiency and demand response as cost-effective solutions to meet long-term power needs. Winter energy need (in megawatts) under • Demand response critical conditions helps meet system Energy needs Energy efficiency capacity needs in the 1400 summer. 1200 • Energy efficiency 1000 helps meet system Market 800 energy needs in the purchases 600 winter. 400 Market 200 sales 0 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N COLUMBIA RIVER TREATY • In 2018, the U.S. and Canada began negotiations to modernize the Columbia River Treaty. • Activities to date: – Negotiation sessions – U.S. public town halls

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N TRANSMISSION CUSTOMER SERVICE

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N RESPONSIVENESS AND EFFICIENCIES • Conducting “Deep Dives” – Completed in: Umatilla, Hood River/The Dalles, Tri-Cities (focus on Pasco), Albany, Burley, La Grande, Eugene, Olympic Peninsula, Central Oregon and South Oregon Coast. • Evaluating new ways to meet transmission needs – Example: Hooper Springs

B B O O N N N N E E V V I I L L L L E E P P O O W W E E R R A A D D M M I I N N I I S S T T R R A A T T I I O O N N REGIONAL PLANNING ORGANIZATION

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N TARIFF • New tariff will allow BPA to adopt terms and conditions for transmission service in a timely, efficient and transparent manner. • BPA engaged in settlement discussions with transmission customers. • Working diligently to reach agreement on terms and conditions, as well as agreement to convert current contracts to the new tariff when it becomes effective.