The Grid At A Glance Past, Present & Future Arizona Power - PowerPoint PPT Presentation

The Grid At A Glance Past, Present & Future Arizona Power Authority September 7, 2018

Personal Background Electric Industry Dave Slick • Resource Planning • Transmission Planning Career • Supply & Trading SRP: 31 Years • Regulatory Affairs APS: 11 Years • Contract Management Bechtel: 2 Years • Industry Organization Groups • Nuclear Project Development 2 APA Transmission Presentation - 7 Sept 2018

Tony Seba Presentation • Stanford University Futurist • Clean Disruption of Energy & Transportation • April 9, 2018 presentation • Disruption Attributes: – Significant cost decrease – Low utilization factors – Multiple drivers or technologies – Adoption rate very high 3 APA Transmission Presentation - 7 Sept 2018

North American Electric Grid 4 APA Transmission Presentation - 7 Sept 2018

Arizona EHV Transmission “Then” San Juan Four Glen Canyon Navajo Corners McCullough Mead Voltage El Dorado Moenkopi 500 kV 345 kV Cholla Owners APS Westwing Pinnacle SRP Phoenix Peak Metro Area TEP System Liberty Kyrene USBR Saguaro SCE Tucson Jointly Owned Area South Vail “Then” = 1975 5 APA Transmission Presentation - 7 Sept 2018

Arizona EHV Transmission “Now” San Juan Four Glen Canyon Navajo Corners McCullough Mead Voltage El Dorado Moenkopi 500 kV 345 kV Cholla Coronado Owners Morgan Springerville APS Westwing Pinnacle SRP Phoenix Peak Metro Area Rudd TEP Palo Verde System Browning Liberty Hassayampa Kyrene WAPA Jojoba Duke North Gila Gila Pinal Saguaro Pinal SCE River Tortolita Central West Tucson Jointly Owned Area South Vail 6 APA Transmission Presentation - 7 Sept 2018

Perspectives in Viewing the Electric Utility Business • Customer • Economic • Employee • Environmental • Financial • Legal • Regulatory • Reliability • Shareholder • Stakeholder • Technological Innovation • Other 7 APA Transmission Presentation - 7 Sept 2018

Energy Business Framework Utility Owned Generation Vertically Other Utilities Integrated Utility Owned Utility Transmission Distribution Retail Customer 8 APA Transmission Presentation - 7 Sept 2018

Energy Business Transformation – 1 Utility Owned Merchant Generation Generation Other Utilities Utility Owned Merchant Transmission Transmission Distribution Retail Customer 9 APA Transmission Presentation - 7 Sept 2018

Energy Business Transformation – 2 Centralized Market Utility Owned Merchant Mechanisms Generation Generation (RTO, ISO, EIM) Other Utilities Utility Owned Merchant Transmission Transmission Distribution Customer Owned Generation Retail Customer 10 APA Transmission Presentation - 7 Sept 2018

Energy Business Transformation – 3 Centralized Market Utility Owned Merchant Mechanisms Generation Generation (RTO, ISO, EIM) Community Choice Other Generation Utilities Utility Owned Merchant Transmission Transmission Distribution Micro Grids Customer Owned Generation Generation Retail Customer Community Customer Owned Electric Choice Storage Consumption Aggregators 11 APA Transmission Presentation - 7 Sept 2018

Federal Regulation Federal Energy Regulatory Commission Imposes mandatory reliability standards on FERC the bulk transmission system North American Electric Reliability Corp NERC Ensures the reliability of the North American bulk power system Western Electricity Coordinating Council Monitors and enforces compliance with WECC mandatory reliability standards in the Western Interconnection Peak Reliability Peak Provides reliability coordination service, tools and analysis in the Western Interconnection 12 APA Transmission Presentation - 7 Sept 2018

Regulated by FERC? Profit Non Profit Federal Public Power Utilities Power Marketing Investor Owned Utilities Consumer Owned Entities Administrations Wind Developers Rural Cooperatives Solar Developers Municipal Utilities BPA Merchant Generators Irrigation Districts SEPA Merchant Transmission Electrical Districts SWPA Joint Action Agencies WAPA Indian Tribes Wholesale Shareholders Customers Customers Power Customers Mostly Yes Mostly No 13 APA Transmission Presentation - 7 Sept 2018

State Regulation • Arizona Corporation Commission (ACC) – Transmission line siting (115 kV and above) – Generation siting (100 MW and above) 14 APA Transmission Presentation - 7 Sept 2018

Transmission Concepts • Ownership • Capability • Reservations / Rights • Schedule • Flow • Congestion • Pancaking • Losses 15 APA Transmission Presentation - 7 Sept 2018

Ownership & Capability Ownership: Entity A: 500 MW Line Rating or Entity B: 500 MW Maximum Capability: Total 1,000 MW 1,000 MW A B Transmission Line Rating or Maximum Capability • May be referred to as Total Transfer Capability (TTC) • Established by transmission planning studies • May be subject to a WECC approval process • Continuous & emergency ratings are directional • Maximum capability rating may persist for years • Inside centralized markets: revisited more frequently / more seasonally 16 APA Transmission Presentation - 7 Sept 2018

Reservations / Rights Maximum Capability: 1,000 MW A B Transmission Reservations / Rights • The “contract path” world Reservations: • A result of FERC 888 Entity A: 400 MW • Implementation via OASIS Entity B: 300 MW • Path, quantity, direction, time and Entity C: 200 MW price specific • Long term reservations may be Total 900 MW renewable Not Reserved: 100 MW • Not reserved may be referred to as Available Transfer Capability (ATC) 17 APA Transmission Presentation - 7 Sept 2018

Schedule Schedule: Entity A: 200 MW Entity B: 200 MW Entity C: 100 MW Maximum Capability: Total 500 MW 1,000 MW A B Transmission Schedule Reservations: • Applies to a specific future Entity A: 400 MW period of time Entity B: 300 MW • Usually arranged one or Entity C: 200 MW more days in advance Total 900 MW Not Reserved: 100 MW 18 APA Transmission Presentation - 7 Sept 2018

Flow Schedule: Entity A: 200 MW Entity B: 200 MW Entity C: 100 MW Maximum Capability: Total 500 MW 1,000 MW A B Actual Flow: Reservations: 600 MW Entity A: 400 MW Entity B: 300 MW Actual Flow Entity C: 200 MW • Likely distinct for each point in time • Actual flow is a function of many Total 900 MW factors, including generation status Not Reserved: 100 MW and transmission system physics 19 APA Transmission Presentation - 7 Sept 2018

What Does A Transmission System Problem Look Like? 20 APA Transmission Presentation - 7 Sept 2018

Congestion Schedule: Entity A: 200 MW Entity B: 200 MW Entity C: 100 MW Maximum Capability: Total 500 MW 1,000 MW A B Actual Flow: Reservations: 600 MW Entity A: 400 MW Entity B: 300 MW Entity C: 200 MW “ Congestion ” May Refer Total 900 MW to Either of These Not Reserved: 100 MW 21 APA Transmission Presentation - 7 Sept 2018

One Way to Understand Transmission Congestion Transmission Restaurant • • Actual The maximum capability of Go to our favorite Flow a transmission line has restaurant on a Saturday been determined night • • Actual electricity flowing on People are standing around because there aren’t the line exceeds maximum capability enough tables for everyone • • Contract Attempt to reserve Attempt to make Path transmission rights on a reservation at a favorite particular path restaurant on the day before Mother’s Day • No transmission rights are • available for the time No tables are available at period of interest any time the next day 22 APA Transmission Presentation - 7 Sept 2018

Pancaking Pancaking is the payment of multiple transmission service rates and losses for the delivery of a resource. In this example, a resource owner or purchaser has a resource at Point A that needs to be delivered to Point C, and the only existing transmission is displayed below. A B C Transmission Owner: Line A-B Transmission Owner: Line B-C Transmission Service Rate: $A / kw-yr Transmission Service Rate: $B / kw-yr Transmission Loss Rate: C% Transmission Loss Rate: D% When sufficient ATC exists on path A-B and path B-C, then the resource owner / purchaser can achieve the desired delivery by paying $A+B / kw-yr for transmission service and C+D% for transmission losses. 23 APA Transmission Presentation - 7 Sept 2018

Losses A 100 MW resource A 5% loss rate exists 95 MW arrive at is located at Point A on Line A-B Point B A B Transmission Losses • Causes include conductor heating, radiation losses, dielectric heating and coupling losses • Past practice: often paid in quantities of energy • Future practice: often paid financially 24 APA Transmission Presentation - 7 Sept 2018

WECC Transmission Jan 1, 2017 25 APA Transmission Presentation - 7 Sept 2018