board of directors meeting · 2.02.2018  · • on july 19, 2017, at hour ending 1600, the...

Board of Directors MeetingFebruary 22, 2018

Annual Meeting2017 Year In Review

February 22, 2018

2017 Operations Year-In-Review

Category YTD Variance

Municipal Demand (1.5%)

Municipal Energy (1.7%)

Baseload Generation (1.4%)

Wind Generation (1.4%)

Solar Generation (9.2%)

Surplus Sales Volume 9.7%

Surplus Sales Price (7.2%)

Dispatch Cost (1.1%)

Year-End Operational Results

Variance Key: Favorable: >2% | Near budget: +/- 2% | Unfavorable: <-2%

Surplus Sales Market

• Changes in market drivers resulted in lower than anticipated surplus sales pricing

PR Average Power Price

CIG Average Gas Price

$/MWh$/MMBtu

Impact of Joint Dispatch

Total Net PRPA Benefits Resulting from JDA

Total Benefits for 2017: $655,981Sales: $507,091 Purchases: $148,890

$-

$20,000.00

$40,000.00

$60,000.00

$80,000.00

$100,000.00

$120,000.00

Sales - Margin Expenditures - Savings

2017 Events of Significance

• There were no lost time safety incidents in 2017• Completed the purchase and installation of Fiber Manager. Began digitizing the

fiber system into Fiber Manager.• Completed all city-related Fiber inventories• No controllable losses of load or customer communications connectivity• 94.14 percent Equivalent Availability Factor for Rawhide• Rawhide Unit 1 had a calculated heat rate of 10,005 for October and 10,002 for

November. These calculated values are some of the best heat rates on record for this unit

• A new BNSF transportation contract for Rawhide was executed in June and went into effect on July 1, 2017. The contract runs through 2022

• Completed railcar replacement project; sold the existing fleet of steel railcars, and put the newly acquired aluminum rail car fleet into service in March

• Sold Windy Gap units, resulting in $39 million in revenue (additional sales pending)• Increased participation level in the Windy Gap Project to meet minimum target

level of 14,000 acre-feet (additional storage pending) • 99.95 percent Transmission Service Availability Factor• The Richard Lake, Rawhide-Ault, Rawhide-Timberline and Richard Lake-Linden

Tech air flow spoilers were installed, increasing the reliability of the lines by reducing galloping

2017 Events of Significance

• The three-year boundary meter calibration testing was completed in September• Construction of the new Foothills substation in Loveland was completed and it was

placed in service on July 5• As of December 2017, construction of the Boyd substation was 70 percent

complete with an estimated completion date of May 2018• Due to the reduced sales market, we were able to purchase replacement power for

the Rawhide spring outage at an average cost of $3.50/MWh below budget• On June 1, Joint Dispatch between Platte River, Public Service Company of

Colorado and Black Hills Power went live• On July 19, 2017, at hour ending 1600, the municipal peak load was 660.5 MW

which was an all-time high for municipal load• Platte River and the City of Fort Collins kicked off the demand response (DR) pilot

during the month of July• FERC docket ER17-1951 was approved on August 22, 2017. This docket was to

meter Craig generation from WAPA’s Balancing Authority into PSCo’s • Platte River and the City of Longmont kicked off the Voltage Reduction pilot

program on November 1• Negotiations with Enyo were completed to purchase 150 MW of wind which will

become commercial in December 2020

• The energy model for the Zero Net Carbon (ZNC) study was finalized and several additional projects to support the ZNC study, including reports on battery energy storage and decommissioning costs, were completed

• The non-Regional Transmission Organization Zero Net Carbon model results were presented to stakeholders across the four owner communities

2017 Events of Significance

Questions?

2017 Financial Year-In-Review

Significant EventsVery good budget/financial results

• Below-budget operating revenues (0.9%) and operating expenses (2%)

• Surplus sales pricing below budget, energy above

• Interest income above budget – higher interest rates and additional cash

• $39M in proceeds from Windy Gap unit sales

• Trapper Mine royalty reduction

• Forced outage exchange agreement payout by Tri-State

• Capital Projects• 23 out-of-budget projects for $3.9M

• 16 over budget projects for $1.4M

• 35 projects carried over to 2018 for $12.8M

• 87 projects completed

2017 Financial Results

Category Variance from Budget(in millions) Indicator

Net Income $2.3

Revenues ($1.2)

Operating Expenses $3.5

Capital Expenditures $15.1

Debt Expense $0.3

> 2% Favorable | 2% to -2% At or Near Budget | < -2% Unfavorable

* Capital carryover of $12.8M from 2017 Budget into 2018 Budget.

*

Operating Expenses

Below Budget Variances• $2.1M – Personnel expenses (wages & benefits)

• $1.1M – Fuel • $2.5M – Rawhide (under budget due to

lower transportation costs, less generation)

• At budget – Craig (higher mining costs, above budget generation, offset by royalty reduction)

• $1.4M – CTs (above budget due to generation)

• $0.4M – Wheeling• $0.3M – Joint Facilities• $0.3M – DR Pilot (timing)

Out of Budget• $1.1M – Impoundments (environmental obligation)

$65.6

$48.8

$35.4

$22.0

$63.8

$47.7

$35.4

$21.4

010203040506070

Operations & Maintenance Fuel Purchased Power A&G

$/M

illion

s

2017 Budget 2017 Actual

Variance from 2017 Budget: $3.5M

2017 Financial Summary

StrategicFinancial Plan Target 3 Yr Avg 2017 2016 2015

Net Income(In Millions) > $6 Million $13.0 $14.1 $18.0 $6.8

Debt Service Coverage > 1.5X 1.68 1.75 1.78 1.51

Days Cash On Hand > 200 Days 241 298 221 205

Debt to Capitalization < 50% 31% 30% 33% 29%

• All Strategic Financial Plan targets were exceeded.

• AA credit rating.

Questions?

2017 Corporate Services Year-In-Review

Significant Events - Safety

• Revised the Rawhide Lockout/Tagout (Clearance) program• Electrical Safety Program completed• Successfully piloted Active Release

Techniques (ART) soft tissue injury prevention program

2015 2016 2017

Recordable Incident Rate 2.19 3.15 0.87

Lost Time Case Rate 0.44 0.90 0.00DART (Days away restricted) 0.87 0.90 0.00

No lost time injuries in 2017!

Significant Events – Physical Security• Established guidelines for emergency events requiring

employee action• Completed CIP low impact intrusion detection program at

all wholly owned substations• Protection of critical assets• NERC CIP compliance exceeding Low-Impact requirements• Ability to quickly investigate and resolve intrusion events• Real-time, remote visibility for first responders

Significant Events - HR • New Employee and Intern On-Boarding• Supervisory/Leadership Development• Benefits Benchmarking

2015 2016 2017 Recruitment Total # of positions filled 40 50 54 % of positions filled internally 30% 30% 28%

Turnover Voluntary 0.88% 2.94% 2.89% Involuntary 1.32% 2.52% 0.82% Retirements 3.53% 2.52% 4.95% Total Turnover 5.73% 7.98% 8.66%

Employee Demographics Average Age of employees 47.76 47.33 46.84 % of employees eligible for retirement 38.20% 36.10% 32.79% % of DB employees 66.52% 58.92% 51.42% % of DC employees 33.48% 41.08% 48.58%

Significant Events - Technology• Upgraded all employees to Windows 10 and Office 365

• Administered Cyber Security Training

• Presented first annual update to the Board on cyber security

• Implemented Intrusion Detection program

Significant Events – HQ Campus Project• January – December progress

• Schematic and Design Development phases completed• Contracted with Construction Managers – FCI Constructors• Contracted with Owner’s Rep – Wm. T. Welch Company, LLC• Final site plan, updated cost model and schedule completed

Significant Events - Facilities• Completed:

• An upgrade of the substation signs at all wholly owned substations

• Rawhide Grading & Drainage project

• Replacement of the RailcarBuilding at Rawhide

Questions?

2017 Communications & Marketing Year-In-Review

Zero Net Carbon• Public meetings• Microsite• Stakeholder engagement• Media relations activities that led to significant regional

and national coverage (more than $250,000 of AVE)

• Open houses• Microsite• Media relations (small amount of coverage) transparency• Business meetings• Employee emails and special meetings

Collaboration with municipalcommunicators• Quarterly meetings established• Outage communications procedure developed• Issue specific meetings / calls• Sharing of materials• Joint press releases

Social Media

• Public engagement and education• Dedicated staff• Process for postings• More strategic posts • Audience building

+ +

Questions?

2017 General CounselYear-In-Review

• Legal Support For:• Water Transactions• Mountain West Transmission Group (MWTG)• Wind PPA• 2018 Outage Agreements• HQ Construction Contracts

• Private Letter Ruling Request• Board Governance Procedures• Settlement of ACC Dispute

2017 Accomplishments

• MWTG Implementation• Windy Gap Firming Project Funding• Policy Repository/Resolutions Rescission• Reliability Compliance• Fiber/Backhaul Support Entity

Efforts in 2018

Questions?

2017 General Manager Year-In-Review

2017 Key Accomplishments• Board of Directors Work Session• HQ Campus• Windy Gap Storage Acquisition, Sales and Funding• Expanded Energy Efficiency/Efficiency Works

Program• Demand Response Pilot Implementation• Joint Dispatch • Fiber Inventory/Fiber Optic Network Accounting Policy• MWTG/SPP Negotiations • 150 MW Wind RFP Completion • Customized Resource Portfolio – 9 Options Delivered• Zero Net Carbon Study • Railroad/Coal Contract Extension

Moving Forward Together

• Grid Modernization • Community Solar -

Battery Storage• MWTG/SPP• Cyber Security• Physical Security

Technology Utilization

Moving Forward Together

• Fiber/Backhaul Services

• Community Solar Program

• CRP – ZNC – IRP • Crisis Communication• Windy Gap Firming

Project Financing• Compliance Services• Engineering &

Substation Services

Municipal Collaboration/

Communication

Moving Forward Together

• Grid Modernization• 150 MW of

Wind/Transmission• 20 MW + Solar• New Integrated Resource

Portfolio• Craig Unit 2 Future

Resource Diversification & Alignment

Moving Forward Together

• Rate Restructuring –Unbundled & Transparent

• Renewable Tariff Solution• Large Commercial Renewable

Requests• Website - Custom Microsites• Expanded Efficiency Works

Prog.

Enhanced Customer

Experience

Questions?

Board of Directors MeetingFebruary 22, 2018

43PLATTE RIVER POWER AUTHORITY | NEW HEADQUARTERS CAMPUS | Board of Directors MeetingFEBRUARY 22, 2018

44

AGENDA

Headquarters Campus Project Activity Update• Current Project Processes• Project Timeline• Cost Model• Microwave Building• Site Development & Landscaping• Next Steps

45

CURRENT PROJECT PROCESSES

Design Completion Schedule

Completion of Design Development Phase (November 30th, 2017) 75% Construction Documents issued on February 8th, 2018 100% Construction Documents due – end March 2018 Project Hearing with City of Fort Collins

PDP Complete - One Round Only! P&Z Public Hearing (January 18th, 2018) - Passed on consent, appeal period

complete Final Site Plan submittal - February 14th, 2018 Final Site Plan submittal comments – March 14th, 2018FCI Constructors Activities Currently out for bids in Sub-Contractor Market with 75% CD Documents GMP Pricing due March 13th, 2018 Site Construction Mobilization – April 2018

46

CURRENT PROJECT PROCESSES

Ongoing General Project Activities• Bi-weekly comprehensive design review discussions with Sr. Leadership on

necessary decisions and direction• Detailed Plan Check Review• FF&E Procurement Process• Microwave Building Upgrades & Enhancements• City of Fort Collins Development Agreement• Public Outreach – Open House (March 28th, 2018)• Site Phasing – Planning and City Discussions

47

PROJECT TIMELINE

UPCOMING 2018 MILESTONES

JAN FEB

MAR

APR

MAY

JUN

JUL

AUG

48

COST MODEL SUMMARY

49

CONSTRUCTION BUDGET BREAKDOWN

50

CONTINGENCY USAGE

Increase Substation Garage Area Main Entrance Protection and Entry Drive Extend HQ Footprint by 900sf Add 2nd Utility Feed for Full HQ Power Redundancy Enlarge Pool Car Garage to include Bike Storage Add Fire Sprinkler to Fleet Garage A&B☒ Modify height of Maintenance Shop by 4’☒ Brick veneer to Warehouse and Substation Garage

Legend Accepted – Contingency Funds Used☒ Rejected – Contingency Funds Not Used

51

COST MODEL SUMMARYMICROWAVE BUILDING

Project Scope• Site Development Upgrade• Exterior Enclosure Upgrade• Add Standby Generator

52

LANDSCAPING & MONUMENT SIGN

53

LANDSCAPING DEVELOPMENT

54

LANDSCAPING DEVELOPMENT

55

LANDSCAPING DEVELOPMENT

56

NEXT STEPS

Feb. BOD Meeting

• Construction Documents & Phasing

March BOD Meeting

• Site Mobilization Plans

April BOD Meeting

• Ground-Breaking and Construction Update

57

QUESTIONS?

Board of Directors MeetingFebruary 22, 2018

Wind UpdateRoundhouse Energy (Enyo) -Power Purchase Agreement

(PPA)

Preferred Proposal – Roundhouse Renewable Energy (Enyo)

• Purchase 150 MW from about Dec 1, 2020 through May 31, 2042

• No third party transmission service or congestion risk

• Requires about 19 miles of transmission line construction to the Rawhide Substation

• Review transmission easement options

RoundhouseLocated on Duck Creek Ranch in southern Wyoming / northern Colorado

Enyo Wind Project

• Annual output 575,000 MWh per year for 150 MW wind purchase

• Annual capacity factor of approximately 44 percent

• Platte River will serve 48 percent of member load with carbon-free resources in 2021, compared to 30 percent carbon free today

• Option to purchase an additional 75 MW if we notify Enyo prior to December 31, 2018, at a price that is $0.60/MWh lower than the initial 150 MW purchase

RoundhouseLocated on Duck Creek Ranch in southern Wyoming / northern Colorado

Preferred Proposal – Roundhouse Renewable Energy (Enyo)

March 31, 2018 Enyo will provide plan for permitting transmission project and securing transmission right-of-way

June 30, 2019 Enyo will execute necessary easements and leases

June 30, 2019 Enyo will execute generator interconnection agreement with PRPA Transmission

January 1, 2020 Enyo will obtain all permits to construct and operate wind turbines and transmission line

December 1, 2020 Guaranteed Commercial Operation Date

Key Milestone Dates in PPA

$(4)

$(2)

$-

$2

$4

$6

$8

$10

$12

$14

2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Mill

ions

Net Savings (Costs): RTO vs Non-RTO

RTO, Base Market Projections

RTO, Low Market Projections

Non-RTO, Low Market Projections

• Projected long-term financial benefit from increased sale, reduced operating expenses

• Financial benefit greater in an RTO (avoided integration costs)

• Projected Rate Savings*2021: (0.9%) to 1.4%2025: 0.5% to 3.4%2030: 2.4% to 4.8%

*2021 reflective of current market. Actual savings are dependent on the market

Financial Impact: 150 MW of Wind PPA

• Guaranteed Energy Amount is 575,000 MWh per year for 150 MW wind purchase

• Platte River has the option to purchase up to an addition 75 MW of wind

• Lower price than the initial 150 MW purchase• Must exercise option prior to December 31, 2018• Guaranteed Energy Amount increases to 837,500 MWh at the

maximum 225 MW purchase of wind• Construction and Operating Security Funds increase

proportionally to nameplate capacity amounts

Key Terms of the PPA

• Platte River will have two (2) opportunities to purchase the transmission line

Initial Option• If Platte River purchases the transmission line on commercial

operation date (12/1/2020), PPA price will decrease $1.70-2.00/MWh.

• Platte River must pay $900K/mile plus Rawhide Substation interconnection costs (Approx. $20M)

Second Option• If Platte River purchases the transmission line 5 years after

commercial operation date (12/1/2025), PPA price will decrease $0.85-1.00/MWh.

• Platte River must pay $750K/mile plus 83.3% Rawhide Substation interconnection costs (Approx. $16.7M)

Key Terms of the PPA (cont’d)

• Platte River will have the right to curtail wind output• 40 hour of curtailment rights without any cost or limitations• Unlimited curtailment rights if Platte River pays Enyo its lost

revenue

• Platte River will have the Right of First Offer to purchase the wind project if Enyo decides to sell

• Enyo will not have the right to deliver additional output into the Rawhide Substation without Platte River’s approval

Key Terms of the PPA (cont’d)

Questions?

Board of Directors MeetingFebruary 22, 2018

January Operational Results

Variance Key: Favorable: >2% | Near budget: +/- 2% | Unfavorable: <-2%

Category January Variance YTD Variance

Municipal Demand (1.7%) (1.7%)

Municipal Energy (0.5%) (0.5%)

Baseload Generation (5.0%) (5.0%)

Wind Generation (9.2%) (9.2%)

Solar Generation (12.7%) (12.7%)

Surplus Sales Volume (13.0%) (13.0%)

Surplus Sales Price (7.5%) (7.5%)

Dispatch Cost (4.3%) (4.3%)

Board of Directors MeetingFebruary 22, 2018

CategoryJanuary

Variance from Budget($ in millions)

Net Income $0.4

Debt Coverage .28x

Revenues ($0.7)

Operating Expenses $1.4

Capital Additions $1.3

Financial Summary

> 2% Favorable | 2% to -2% At or Near Budget | < -2% Unfavorable

Board of Directors MeetingFebruary 22, 2018