2015 integrated resource plan stakeholder workshop #1 · the integrated resource plan provides a...

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2015 Integrated Resource PlanStakeholder Workshop #1

March 25, 2015Indianapolis, IN

GOALS FOR THE MEETING

Goals• To obtain diverse insights and perspectives on how I&M will

meet its customers resource needs in the future• Everyone will be heard and have the opportunity to contribute • Please be respectful of opinions or proposals you may

disagree with• Stick to the time allotted

Housekeeping• Safety – emergency exits• Restroom locations• Lunch logistics• Please silence phones and if you must take a call, please step

outside the room to do so

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Stakeholder Comments

I&M has added a comment form on its webpage

Please submit all comments, suggested inputs, portfolio scenarios,

critique, etc., through the website by April 30, 2015

Specifically, I&M would like comments on: Fundamental Pricing Assumptions Load Forecast Cost of technology options DSM/Energy Efficiency assumptions Sensitivity cases Portfolio selection Other

I&M will consider all comments

It may be necessary to contact some stakeholders to clarify comments or

meaning

MEETING AGENDA

Introduction by I&M Q&A on Resource Planning 101 (Pre-Read) Discussion of Key Inputs & Resource

Assumptions Stakeholder InputDiscuss Portfolio CharacteristicsDiscussion of Sensitivities & Other Resources

Next Steps

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Introduction to I&M Discussion of key inputs and resource

assumptions Stakeholder InputDevelopment of Non-optimized Resource PortfoliosDiscussion of Sensitivities and Other Resources

Next Steps

6

Introduction to I&M

Indiana Michigan Power (I&M), headquartered in Fort Wayne, IN

More than 585,000 customers in Michigan & Indiana.

Our Indiana service area spans portions of 24 counties & includes cities such as Elkhart, Fort Wayne, Marion, Muncie & South Bend.

I&M’s existing generation portfolio consists of: 2,223 megawatts (MW) of coal in Indiana (post Jun 2015) 2,160 megawatts of nuclear in Michigan, and 22.4 MW of hydroelectric power in both states. I&M purchases 450 MW of wind power in Indiana under PPA;

150 MW from the Fowler Ridge Wind Farm in Benton County Ind., 100 MW from the Wildcat Wind Farm in just north of Indianapolis, 200 MW from Headwaters Wind Farm in Randolph County, Ind.

I&M has achieved: 680GWh and 370 MW (42 MW EE & 328 MW Inter/DR) of energy and

demand reductions since 2008.

Almost all of the energy produced by I&M is from base load generation.

I&M is a unit of American Electric Power (NYSE: AEP), which is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states.

Cook Nuclear Plant

Fowler Ridge Wind Farm

Wildcat Wind Farm

Rockport Plant

Headwaters Wind Farm

Potential Solar Sites (4) for I&M demonstration


Introduction by Paul Chodak, President I&M Resource Planning 101 (Pre-Read – Q&A

only) Discussion of key inputs and resource

assumptions Stakeholder InputDevelopment of Non-optimized Resource PortfoliosDiscussion of Sensitivities and Other Resources

Next Steps

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The Integrated Resource Planning Process

There are many priorities that compete for resources as I&Mworks toward its objective is to provide safe, reliable, clean powerat rates that are reasonable.

Resource planning is a complex effort that must balance the needs of a variety of stakeholders: Customers Regulators Shareholders

While ensuring that electricity is provided in a safe, reliable & efficient manner at just & reasonable rates.

The process involves looking at “big-picture” trends that affect energy markets, developing & using forecasting & analysis models, & selecting approaches that will meet customer needs in the safest, most reliable & economical way given the uncertainties about the future.

PRE READ

Indiana Michigan Resource Options

The Integrated Resource Planning (IRP) Process requires the selection of a mix of resources to meet the future energy & capacity needs. The Resources are generally categorized into traditional supply side, demand side and variable or “non-dispatchable” energy resources.

Supply Side Resources Nuclear, Coal, Biomass Natural Gas Combined Cycle Natural Gas Combustion Turbine & Reciprocating Engines

Demand Side Resources Energy Efficiency Demand Response Distributed Generation Grid Improvements

“Non-Dispatchable” Energy Sources Solar Wind Hydro 9

PRE READ

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Resource Planning Specific to I&M

. I&M includes both Indiana & Michigan jurisdictions I&M is a member of the PJM Regional Transmission

Organization (RTO) & is able to transact capacity & energy within PJM

The discount rate used in all calculations is I&M’s weighted average cost of capital (WACC)

The analysis period covers 30 years Sunk Costs are not included in the analysis Example: unamortized costs of past investments Assumes all sunk costs continue to be recovered

regardless of resource disposition

PRE READ

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I&M Integrated Resource Planning Process (Pre-Read)

The Integrated Resource Plan provides a blueprint for future resource procurement decisions It is a snapshot in time & subject to revision All resource procurement decisions have separate

regulatory proceedings by IURC & MPSC Enables stakeholders to view various possible or plausible

resource solutions under a diverse set of possible future states

Each portfolio will have unique revenue requirements & revenue requirements “at risk”

PRE READ

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The Integrated Resource Plan DevelopmentCreating an Integrated Resource Plan (IRP) involves four basic & interconnected steps: Step 1: Gathering data, developing input assumptions & creating scenarios

Step 2: Portfolio Development

Step 3: Analyzing portfolios

Step 4: IRP Report Development

Produce the integrated resource plan

Develop a forecast of customer demand

Evaluate on-going capabilities of existing resources to meet that demand

Determine the need that needs to be filled – amount, timing and type

Identify (supply and demand side) resourcesthat may be available to meet the need

Use sophisticated modeling techniques & stakeholder inputto provide insight to the best solution

PRE READ

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Step 1: Gathering data, developing input assumptions and creating scenariosThis phase of the IRP development involves: I&M works with its internal experts to develop forecasts for commodities & fuel prices. These

are the core drivers in the integrated resource plan

Load forecasts are developed for the next twenty years & beyond. These forecasts take into consideration elements such as projected economic growth & energy efficiency effectiveness. They help the resource planners to anticipate the level of energy & capacity needed during the 20-year timeframe of the IRP.

Cost projections are developed for new construction, environmental compliance & other key input assumptions. Stakeholder input is solicited to confirm reasonableness of assumptions.

Potential resource options are screened to eliminate those that have technical & commercial availability limitations or are not feasible in Indiana Michigan Power’s service territory.

Assumptions on operational characteristics of existing resources are revisited, including their anticipated remaining useful life.

Scenarios are developed to reflect possible future states. These scenarios will be used to guide analysis of different resource portfolios. Stakeholder feedback will be solicited during the development of the scenarios.

PRE READ

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Step 2: Portfolio Development

In this phase of the IRP development process:

Screening models are used that incorporate the capital & operating cost of each resource option to identify cost-effective portfolios that will be evaluated in more detail over the range of scenarios & sensitivities

Portfolios are constructed to fill the “Gap” between requirements & current resources

Sensitivities are performed to determine how the cost-effectiveness of the portfolios change if certain key assumptions are varied. Such sensitivities include: fuel prices, load forecast, construction/capital costs, and carbon and environmental policies.

Stakeholders will be asked for feedback on portfolios and sensitivities that could be performed.

PRE READ

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Output

. The optimized portfolio will be a resource portfolio that

has the lowest present value of revenue requirements (PVRR), given the set of forecasts & assumptions.

The model can calculate the PVRR for portfolios that are developed by I&M or stakeholders (non-optimized portfolios).

When performing a risk analysis on a portfolio, the output is a distribution of PVRRs.

PRE READ

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Risk Modeling

. “Risk” is the likelihood and magnitude of a bad outcome. The present value of revenue requirements measured

over 100+ simulations that vary key inputsPower, natural gas, coal

“Revenue Requirements at Risk” is defined as the difference in the 95% of results from the 50% (median) results.

PRE READ

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Risk Variables

. Determining Correlations between power, natural gas and

coal is done with historical data Other variables can be modeled as well, but if there is no

historical data then correlations must be hypothesized.

PRE READ

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Plexos

. Plexos is a model that incorporates all of the

fundamental inputs and supply and demand options. Plexos can:Given a set of fundamentals, “build” a portfolio that has the

lowest (PV) revenue requirementsGiven a supply and demand side portfolio, determine its (PV)

revenue requirementsGiven both, run multiple (Monte Carlo) iterations

Resource Planning is currently using the Plexos Long-term Planning Module

known as Plexos LTPlan ®

PRE READ

The PLEXOS LTPlan model selects the optimal (lowest total cost) plan based on resource characteristics (e.g. installed cost, heat rate, fuel costs, min run times, load shapes)

Objective: Minimize net present value of forward-looking costs (i.e. capital and

production costs)

Production Cost P(x)

Capital Cost C(x)

Total Cost C(x) + P(x)Cost ($)

Investment xOptimal Investment x*19

IRP Development – Modeling Tool

PRE READ


Resource Planning 101 Discussion of Key Inputs & Resource

Assumptions Stakeholder InputDevelopment of Non-optimized Resource PortfoliosDiscussion of Sensitivities and Other Resources

Next Steps

IRP Content – Speakers Fundamentals: Karl Bletzacker – Director Fundamental

Analysis

Load Forecast: Chad Burnett – Director Economic Forecasting

Conventional Assets: John Torpey – Director Integrated Resource Planning

Renewables: Joe Karrasch – Manager Asset InvestmentsDemand Side Management: Scott Fisher – Manager

Integrated Resource Planning21

Featured Speakers

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Building Blocks of the Resource Plan

Current Supply and Demand Resources and their Performance and Variable Cost Characteristics

Cost, Performance, Limiting Parameters of possible incremental and/or Replacement Assets

Fundamental Forecasts

Demand/LoadForecasts

RESOURCE PLAN

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Fundamentals

.Forecast Process:

Forecast requires iterative solution to satisfy all constraints

LT Capacity Expansion Fuel Forecast

Load Forecast

Emissions Forecast and Retrofits

Capital Costs

Input Aurora Run

Existing Unit Retrofit

Yearly Runs (8760 hrs dispatch)

Generate ReportEmission

ConstraintsFuel Burn

Market Price

Output

Recycle

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Analysis and Insight

. The Long-Term Forecast The centerpiece is the Reference Case, referred to internally as the “Consensus

Case”. It contains:o well-scripted input assumptions and output analysiso fuel sensitivities used to portray cause-and-effect and provide regulatory

bounding of power prices.o results and written report completely designed to withstand regulatory

scrutiny.o comparisons with the EIA and other retained consultancies (names

redacted) featured along with a cursory gap analysis.

“Scenarios” Collaborative scenarios.

o distributed as a supplement to the Reference Case.o highlights internal concerns and observations that deviate from “sensitivities”

in that contributing/concurring factors must harmonize.

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Economic Scenario Development Process

.

SAModeling &

Analysis

RUN

REVIEW

Plan

ADJUST

INPUTS• Coal Price• Gas Price

• Emissions/Policy

• Renewables

• Macroeconomics

• Capital Costs

OUTPUTS• Power Prices

• Fuel Consumption

• Retirements

• New Builds

• Regions at Risk

SAModeling &

Analysis

RUN

REVIEW

Plan

ADJUST

SAModeling &

Analysis

RUN

REVIEW

Plan

ADJUST

INPUTS• Coal Price• Gas Price

• Emissions/Policy

• Renewables

• Macroeconomics

• Capital Costs

OUTPUTS• Power Prices

• Fuel Consumption

• Retirements

• New Builds

• Regions at Risk

“REF”case

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Scenarios & Sensitivities

Scenarios encapsulate future states in a way that all input variables are simultaneously plausible.Examples include

o “low growth” or o “boom economy”

Sensitivities change a single variable so that its impact within a scenario can be understood. Examples include:

o carbon tax, o high gas prices, o low gas prices

Sensitivities are not the basis for portfolio construction.

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Supply Stack

. Supply = Demand Market Price

Amos:1, $20.07

$-

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

- 20,000 40,000 60,000 80,000 100,000 120,000 140,000

Cumulative Capacity (MW)

Dis

patc

h C

ost (

$/M

Wh)

Water Wind/Solar FO Nuclear Coal NG Other Amos:1

Hydro, Nuclear

Coal

Combined Cycle

Oil/Gas Steam Units

High Efficiency Combustion Turbines

Older, Low Efficiency Combustion Turbines

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Demand/Load Forecasts

Load Forecast Process

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Demand/Load ForecastsKey Drivers of Load

Economic data is provided by Moody’s Analytics

Commercial Regional Economic Variables

(Employment, Income) Commercial Gross Regional Product Electricity Price State Natural Gas Price Heating & Cooling Degree Days Prior period kWh and Customer count Appliance saturation Appliance efficiency standards & trends Building standards & trends

Industrial FRB Industrial Production Indices

(Selected) Regional Economic Variables

(Employment) Regional Coal Production Manufacturing Gross Regional Product Electricity & Petroleum Prices State Natural Gas Prices Prior period kWh

Residential Regional Economic Variables

(Employment, Income) Demographics (Population, Households) Gross Regional Product Electricity Price State Natural Gas Price Mortgage Interest Rate Heating & Cooling Degree Days Prior period kWh and Customer count Appliance saturation

(surveyed every 3-4 years) Appliance efficiency standards & trends Building standards & trends

Other UltimateRegional Economic Variables (Employment)Heating & Cooling Degree DaysPrior Period kWh

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. Population within IM-IN service territory expected to grow at nearly half the pace of the state and about a third of the population growth of the US over the next decade.

Indiana population data by age cohort indicates an aging population.

Slow population growth has a dampening effect on residential and commercial growth.

An aging population will also affect energy sales growth, as they downsize homes and have altered buying patterns.

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. Customer growth in IM-

Indiana service territory has slowed dramatically over the past decade.

Over the past 10 years, Residential customer growth has been essentially flat and are projected to remain flat over the next decade.

The weak population forecast over the next decade is producing a very weak outlook for customer growth in IM-Indiana service territory. I&M‐ Indiana

Average Customer Growth by DecadeResidential Commercial

1995‐2004 0.7% 1.6%2005‐2014 0.0% 0.5%2015‐2024 0.0% 0.1%

Income influences decisions on investments in energy efficiency I&M Indiana average income lags Indiana (by 10%) and the U.S (by 17%).


.

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.

Prior to the last decade, IMI experienced steady growth in Residential customers and usage.

Over the past decade, weak demographics combined with an emphasis on energy efficiency (federal & state standards plus company sponsored programs) have significantly impacted the growth in Residential usage.

Residential usage is expected to continue to decline throughout the next decade.

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I&M’s Indiana service area expected load growth is impacted by federal, state and company energy efficiency.

10-year Compound Growth Rates:

Residential 0.0% -0.4%Commercial -0.2% 0.1%Industrial -0.3% 0.2%

Historical 10-Yr

(2004-14)

Forecast 10-Yr

(2015-25)

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I&M’s expected peak load growth is 0.1% per year for the forecast period.

Historical normalized peak demand growth has been 0.7% over the last 5 years and 0.8% over the last 10 years.

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Current Conventional Assets - Status

Capacity* In‐Service Retirement 2015 IRPPlant Unit (MW) Fuel Year Year for Planning Milestones

Fossil Fuel Resources

Rockport*** 1 1,118 Coal 1984 2044 SCR by end of 2017, FGD by 2025

Rockport*** 2 1,105 Coal 1989 2049 SCR by end of 2019, FGD by 2028**Unit is leased through 2022, assume lease continues

Nuclear ResourcesCook 1 1,006 Uranium 1974 2034

Cook 2 1,053 Uranium 1977 2037

Conventional Hydro

Hydros 12 Water Various N/A

Total (MW) 4,294 * I&M Share** I&M has discretion to select which Rockport unit it retrofits first.*** Represent I&Ms total entitlement associated with Rockport Plant, including share it purchases from AEG

Installed Full Load Fuel Variable Fixed Capacity OverallCapability (MW) (g) Cost (d) Heat Rate Cost (f) O&M O&M Factor Availability

Type Std. ISO ($/kW) (HHV,Btu/kWh) ($/MBtu) ($/MWh) ($/kW-yr) (%) (%)

Base LoadNuclear 1,610 6,600 10,500 1.1 5.5 94.9 90 95

Base Load (90% CO2 Capture New Unit)Pulv. Coal (Ultra-Supercritical) (PRB) 540 8,100 12,500 3.2 9.5 71.1 85 88IGCC "F" Class (PRB) 490 7,600 10,300 3.2 9.1 73.3 85 88

Base / IntermediateCombined Cycle (2X1 "F" Class) 624 1,300 6,900 7.8 2.9 11.6 60 89Combined Cycle (2X1 "G" Class, w/duct firing & inlet cooling) 780 1,200 6,700 7.8 2.8 10.3 60 89

PeakingCombustion Turbine (2 - "E" Class) 164 800 12,200 7.8 8.9 12.2 3 93Combustion Turbine (2 - "F" Class, w/inlet cooling) 420 800 10,300 7.8 4.3 9.2 3 93Aero-Derivative (2-Small Machines) 90 1,000 9,600 7.8 3.3 10.4 3 96Aero-Derivative (2 - Large Machines) 200 1,200 9,000 7.8 4.3 16.5 25 95Recip Engine Farm (22 Engines) 200 1,100 8,900 7.8 6.4 9.5 3 94

Notes: (a) Installed cost, capability and heat rate numbers have been rounded. (b) All costs in 2014 dollars. Assume 1.9% escalation rate for 2014 and beyond. (c) $/kW costs are based on nominal capability. (d) Total Plant & Interconnection Cost w/AFUDC (AEP-West rate of 7.83%,site rating $/kW). (e) Transmission Cost ($/kW,w/AFUDC). (f) Levelized Fuel Cost (40-Yr. Period 2015-2054) (g) All Capabilities are at 1,000 feet above sea level

New Generation TechnologiesKey Supply-Side Resource Option Assumptions (a)(b)(c)

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New Conventional Asset Options

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Renewables

.

Renewables in I&M Portfolio

• 450 MW of wind via PPAs

• 22 MW of owned Hydro

•Note PTC for wind ends 2015; ITC for Solar transitions from 30% to 10% at end of 2016

Installed Wind Costs

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PJM Wind Assumption

Wind PPA costs are expected to be in the range of $45 - $65/MWh

Wind capacity factors are expected to be in the range of 35% to 45%

Wind PPAs may be priced with or without escalation

For modeling wind PPAs, three tranches will be considered each year:• A low cost, high capacity factor project• A mid cost, mid capacity factor project• A high cost, low capacity factor project

PJM rules may limit capacity value (UCAP) wind projects may provide• Current projects receive about 13% of nameplate value

Installed Solar Costs Continue to Decline

40Costs exclude Federal ITC and utility rebates

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Installed Co

sts o

f PV Solar $

/Wac

Capital Cost Comparisons ‐ Solar PV

BNEF I&M States Avg. Utility 2015

BNEF I&M States Avg. Commercial 2015

BNEF I&M States Avg. Resdential 2015

Source: Bloomberg New Energy Finance H12015 AEP States Average Forecast

Program highlights: • A significant amount of new Solar Generation has been added to

various AEP operating company IRPs beginning the next decade, including I&M

• I&M began planning and regulatory activities associated with the ~ 16 MW Clean Energy Solar Pilot Project in 2014 to gain experience ahead of next decade’s ramp‐up in solar activity

• Regulatory case filed with Indiana Commission• Initial filing on 7/7/2014• Order from IURC authorizing costs approved on 2/4/2015• Cost recovery via a “Solar Power Rider”• Voluntary “Green Power Rider” wherein customers could seek more renewables

• Pilot Project consists of four (4) facilities (2.5 – 5.0 MW ea.) on I&M owned sites adjacent to I&M substations Additional ~ 1 MW distribution level solar facility may be added

• Interconnection applications for 4 sites filed with PJM on 4/29/2014• Total cost is expected to be ~ $38 M • Expected On‐Line Dates

• 2 Projects (Q4‐2015)• 2 Projects (Q4‐2016)

Benefits• Experience to be gained in critical areas

• Day‐ahead forecasting• Operations• Development and Construction • Technology

• Social / Economic Benefits

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I&M Solar Pilot Project

To Develop Incremental Energy Efficiency Assumptions 2017+ Utilized EPRI’s report, on EE Potential National scope with regional specificity

by U.S. Census Division Outlook through 2035 Residential, Commercial & Industrial

sectors Equipment stock turnover model Leverages EPRI R&D on end-use

measures & technologies Excludes impact of other mechanisms

such as new codes & standards not currently mandated

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Energy Efficiency

U.S. Energy Efficiency Potential Through 2035, EPRI, Palo Alto, CA: 2014. 1025477

Technical Potential: Every customer adopts the most efficient available measures, regardless of cost

Economic Potential: Every customer adopts the most efficient available measures that pass a basic economic screen

High Achievable Potential: Economic Potential discounted for market barriers such as customer preferences and supply chain maturity, indicative of exemplary EE programs

Achievable Potential: High Achievable discounted for programmatic barriers such as program budgets and execution proficiency; indicative of typical EE programs

Defining Energy Efficiency Potentials

Energy Efficiency

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Addressing Market & Program Barriers

Market Acceptance Ratios (MAR) – quantification of “Barriers” impact on savings– Informational – ill-informed, lack of knowledge, not aware of EE options– Financial – high initial costs, access to capital, misplace/split incentives (i.e., rental

property)– Transactional – installation hassle, supply-chain limitations– Behavioral – customer references, efficiency attitudes, technology riskiness

Program Implementation Factors (PIF) – limitations on the administrator of EE impacting the effectiveness of the program ( e.g. budget, incentives, split incentives)

Application Factors – For Secondary Measures only (e.g. insulation, windows, doors, roofing, low-flow showerheads)

Energy Efficiency

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Residential Measure Categories: Commercial Measure Categories:

Energy Efficiency

45The EPRI report identifies over 60 measures identifying the initial costs, expected energy savings & measure life.

Working with Load Research identified Applicable Load Shapes:– Commercial Cooling, Commercial Heating, Other Commercial– Residential Cooling, Residential Lighting, Other Residential

Energy Efficiency

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Energy Efficiency Resources will be estimated as ‘Achievable’ & ‘High Achievable’ Residential & Commercial Bundles/Programs.

Example of Residential EE Bundles that could be Modeled:

Energy Efficiency

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Installed 2014 cost $/kWh

Energy Savings Limit per year 2020‐2030 (GWh) Measure Life

Achievable 1 Shell ‐ Thermal 0.69$ 2.1 112 Water Heating 0.72$ 5.3 143 Appliances 1.35$ 5.1 144 Cooling 1.06$ 2.8 185 Lighting 0.19$ ‐ 30

High Achievable6 Shell ‐ Thermal 1.10$ 8.6 117 Water Heating 1.04$ 17.2 138 Appliances 2.23$ 4.7 149 Cooling 2.83$ ‐ 1810 Lighting 0.37$ 2.4 30

Residential Bundle Summary

The EPRI report provides the necessary data to develop a high level “bottom-up” Incremental EE Bundles to be modeled as a Resource within the IRP.

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Energy Efficiency

. Volt VAR Optimization (VVO) Allows for better (tighter) voltage regulation Supplies customers with “optimal” voltage. Costs for VVO range from $50-$55/MWh and must be rolled

out in phases on selected circuits. I&M has 68 MW of demand reduction potential from VVO Status - 12 circuits installed, 25 circuits in process


Resource Planning 101 Discussion of key inputs and resource

assumptions Stakeholder InputDiscuss Portfolio CharacteristicsDiscussion of Sensitivities and Other Resources

Next Steps

49

50

Portfolio Development Discussion

I&M’s Existing Portfolio expressed as “Unforced Capacity” (UCAP), which is a measure used by PJM to account for the probability of forced outages during peak periods.

Owned Resources Type 2015 2016 2017 2018 2019DC Cook Unit 1 Nuclear 1,001 932 932 932 932DC Cook Unit 2 Nuclear 1,053 1,033 1,082 1,082 1,082Rockport Unit 1 Coal 1,057 1,069 1,069 1,098 1,098Rockport Unit 2 Coal 1,082 1,018 1,018 1,018 1,018Berrien Springs 1 ‐ 12 Hydro 5.8 5.5 5.5 5.5 5.5Buchanan 1 ‐ 10 Hydro 3.2 2.9 2.9 2.9 2.9Constantine 1 ‐ 4 Hydro 0.9 0.9 0.9 0.9 0.9Elkhart 1 ‐ 3 Hydro 1.3 1.4 1.4 1.4 1.4Mottville 1 ‐ 4 Hydro 1.0 1.3 1.3 1.3 1.3Twin Branch 1 ‐ 8 Hydro 4.8 4.6 4.6 4.6 4.6New Solar (Michigan) Solar 1.8 1.8 1.8New Solar (Indiana) Solar 4.2 4.2 4.2

Michigan (Nuclear) 2,054 1,965 2,014 2,014 2,014Indiana (Coal) 2,139 2,086 2,086 2,116 2,116

Michigan (Renewable) 11 11 12 12 12Indiana (Renewable) 6 6 10 10 10

Total 4,210 4,068 4,123 4,152 4,152

Purchases/Contracted Type 2015 2016 2017 2018 2019Fowler Ridge 1 Wind 14.2 14.2 14.2 14.2 14.2 Fowler Ridge 2 Wind 4.8 4.8 4.8 4.8 4.8 Headwaters Wind 26.0 26.0 26.0 26.0 26.0 Wildcat Wind 12.8 12.8 12.8 12.8 12.8 Total 57.8 57.8 57.8 57.8 57.8

Customer Self Supply (Net) N/A (8.5) (5.7) (6.4) (3.9) OVEC Entitlement Coal 143.0 151.1 151.1 151.1 151.1 Total 134.5 145.4 144.7 147.2 151.1

Total I&M Resources 4,402 4,271 4,325 4,357 4,361

UCAP (MW)

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.Identify I&M’s Obligations - Preliminary

2015 /16 4,357 (73) 0 4,357 307 0.951 1.091 4,4362016 /17 4,270 (97) 0 4,270 307 0.953 1.092 4,3422017 /18 4,305 (117) 0 4,305 307 0.953 1.092 4,3802018 /19 4,231 (132) 0 4,231 307 0.953 1.092 4,2992019 /20 4,452 (143) (73) 4,379 296 0.953 1.092 4,4722020 /21 4,456 (150) (97) 4,358 296 0.953 1.092 4,4502021 /22 4,487 (156) (117) 4,370 296 0.953 1.092 4,4632022 /23 4,508 (158) (132) 4,377 296 0.953 1.092 4,4702023 /24 4,530 (159) (143) 4,387 296 0.953 1.092 4,4812024 /25 4,535 (159) (150) 4,385 296 0.953 1.092 4,4792025 /26 4,566 (159) (156) 4,410 296 0.953 1.092 4,5062026 /27 4,584 (159) (158) 4,425 296 0.953 1.092 4,5232027 /28 4,601 (159) (159) 4,443 296 0.953 1.092 4,5422028 /29 4,611 (159) (159) 4,452 296 0.953 1.092 4,5522029 /30 4,640 (159) (159) 4,481 296 0.953 1.092 4,5842030 /31 4,658 (159) (159) 4,499 296 0.953 1.092 4,604

Obligation to PJMForecast

Pool Req't (e)

Planning Year

Net Internal Demand

Internal Demand

(a)

DSM (b) UCAP Obligation

Projected DSM

Impact (c)

Interruptible Demand

Response (d)

Demand Response

Factor

At this time the Load Forecast is not final. The final forecast is expected in June.

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.Identify I&M’s current plans and capacity needs

Planned Capacity AdditionsUnits MW (i)

2015 /16 4,436 4,498 9.00 200 MW Wind 26 0 4,515 2.52% 4,401 (60) (35)2016 /17 4,342 4,498 6 4,518 5.47% 4,271 (96) (71)2017 /18 4,380 4,548 7 16 MW Solar 6 0 4,573 5.42% 4,325 (85) (55)2018 /19 4,299 4,579 4 4,607 5.42% 4,357 28 582019 /20 4,472 4,579 (67) 4,678 5.42% 4,424 (78) (48)2020 /21 4,450 4,609 (66) 4,707 5.43% 4,451 (29) 12021 /22 4,463 4,609 (66) 4,707 5.43% 4,451 (42) (12)2022 /23 4,470 4,609 (66) 4,707 5.43% 4,451 (49) (19)2023 /24 4,481 4,609 (66) 4,707 5.43% 4,451 (60) (30)2024 /25 4,479 4,609 (66) 4,707 5.43% 4,451 (58) (28)2025 /26 4,506 4,594 (66) 4,692 5.43% 4,437 (99) (69)2026 /27 4,523 4,594 (66) 4,692 5.43% 4,437 (116) (86)2027 /28 4,542 4,594 (66) 4,692 5.43% 4,437 (135) (105)2028 /29 4,552 4,579 (66) 4,677 5.43% 4,423 (159) (129)2029 /30 4,584 4,579 (67) 4,678 5.43% 4,424 (190) (160)2030 /31 4,604 4,579 0 4,611 5.43% 4,361 (274) (243)

Net Position w/ New

Capacity

Available UCAP

Net Position w/o New Capacity

ResourcesAnnual

PurchasesNet ICAPExisting

Capacity & Planned Changes

(g)

AEP EFORd (j)

Net Capacity Sales (h)

I&M Position (MW)Planning

YearTotal UCAP

Obligation

Near term capacity deficit is manageable with short term market purchases

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.Various portfolio options may be analyzed, for example:

1. Business as UsualA. Maintain Rockport and Cook plants through study period by investing in

environmental control system upgrades as required.B. Meet increasing energy demand through economically selected resources

including utility owned solar, wind PPAs, and energy efficiency programs.C. Add natural gas facilities as required to meet capacity obligations.

2. Fleet Diversification A. Retire one Rockport unit in 2022 when an assumed carbon tax beginsB. Replace capacity with NGCC facility (build new or purchase existing asset)C. Meet increasing energy demand through economically selected resources

including utility owned solar, wind PPAs, and energy efficiency programs.3. Carbon Free (Almost)

A. Retire one Rockport unit in 2022, retire second Rockport unit prior to adding FGD

B. Add significant quantities of renewable gen and EEC. Add Natural Gas CT’s for peaking capacity to meet PJM obligations

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Stakeholder Input

Stakeholders are asked to provide comments on:

The portfolio components (resources) that should be considered by I&M.

The attributes of resources (cost and performance) to be considered by I&M

Considerations for economic scenarios.

Considerations for evaluating risk.


Resource Planning 101 Discussion of key inputs and resource assumptionsStakeholder InputDevelopment of Non-optimized Resource PortfoliosDiscussion of Sensitivities and Other Resources

Next Steps

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Analyzing Portfolios

Step 3 in the IRP Development

Optimized portfolios are created using Plexos.

The preferred resource portfolio is selected by determining which portfolio best meets a number of quantitative and qualitative criteria

Portfolio costs under each scenario, results of sensitivities, and other key considerations including system diversity and environmental footprint are used in this selection process.

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IRP Report Development

Step 4 in the IRP Development

Optimized portfolios are modified based on stakeholder/I&M input and stochastic(risk) analysis .

Results of the preferred resource options and other key components of the draft IRP will be shared with Stakeholder prior to finalizing the IRP.

The final document is reviewed to assure all regulatory requirements are met and is presented to senior management prior to final submittal to the IURC by the deadline of November 1, 2015.

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Follow-up Steps in the Stakeholder Process

Additional meetings will be held at key points throughout the planning process. The tentative timeline is below.

Workshop #1Today (March 25, 2015)

Workshop #3September 2015

File IRPNovember 1, 2015

Workshop #2June 2015

Stakeholder CommentsBy April 30, 2015

Stakeholder CommentsBy July 30, 2015

2015 integrated resource plan stakeholder workshop #1 · the integrated resource plan provides a...

Documents