Board of Directors Meeting · • IT investments (engineering & help desk) • Centralized fleet...

Board of Directors MeetingSeptember 27, 2018

2019 proposed budgetwork session

September 27, 2018

Agenda

• Budget • Schedule• Trends• Process• Budget document• 2019 overview

• Capital 5-year forecast

September

• Board work session

October

• Updates and budget discussion•Model prices and resource updates (JDA, Silver Sage wind sale)

•Load forecast

•Wheeling and ancillary services rate adjustments

•Capital investments & depreciation (Windy Gap firming project, HQ campus)

•Financing update & removal of interest during construction

•Other changes (medical, Craig, etc.)

• Public hearing

December

• Board adoption• File with the state of

Colorado

Budget schedule

2019 Proposed Budget

Trends

• Low municipal load growth – revenue impact• Lower surplus sales market – lower revenue supplement• Infrastructure advancements – increased capital requirements• Resource diversification – renewable additions• Increased customer solutions and products – energy efficiency,

demand response, electric vehicles, smart thermostats• Expanded communications and community outreach – trusted

energy partner• Focus on managing controllable expenses

Budget process

2019 BudgetProduction cost

model

O&M expenses

Project planning Review and refinement

Strategic initiatives and core operations

activities

Reporting improvements

2019 budget process included enhancements to:

1. budget document 2. overall internal process2019 Proposed Budget

Budget document


2019 budget summary

• Three pillars• Strategic initiatives• Core operations• List of activities for each area

Financial review and budget schedules

• Summary of financial results• Consolidated budget schedules• Brief descriptions of revenues, operating

expenses, capital additions and debt expenditures

• Comparison schedules• Capital project descriptions and project

amounts

Budget process

• Budget development• Budget contingency• Management review• Budget document• Board review and adoption• Budget schedule

Financial governance

• Framework for financial activities and budget development

Strategic initiatives

27%

Core operations

73%


2019 budget focus

4 initiatives1) Baseload and

peaking generation, transmission

2) PPAs for existing renewable resources & hydropower

Core operations: The primary area or activity that a company was founded on or focuses on in its business operations. Many market leaders aim to maintain a strong position in their core business areas, but they usually remain open to developing new areas of activity as perceived business opportunities arise.

Core pillars

1. System reliability 2. Environmental responsibility

3. Financial sustainability

Operating expenses & capital additions: $232.1 million

Strategic initiatives activities 27% of operating and capital: $232.1M


Enhanced customer experience, $11.1 million, 5%• Energy efficiency business & consumer product expansion• Distributed energy resources – electric vehicles & smart thermostats• Demand response continuation• Wholesale rate redesign – implementation 2020

Communications and community outreach, $1.6 million, 1%• Public engagement• Effective communications – electronic tools, public & stakeholder materials, outreach, internal

communications, and employee activities & recognition

Resource diversification and alignment, $2.5 million, 1%• Resource planning – IRP• Renewable generation – development of 150 MW wind and 20 MW solar projects• Energy market – continue to pursue broader market

Infrastructure advancement and technology development, $46.6 million, 20%• Windy Gap firming project – increase water resource reliability• Headquarters campus – meet growing and changing needs of workforce, technologies and facilities• Physical security, cyber security, fiber and transmission projects

1

2

3

4

Rawhide Energy Station• Bottom ash conveying system and containment project final costs (proactive environmental

compliance)• Monofill upgrades (proactive environmental compliance)• Protective relays• Grading and drainage projects• Rotary car dumper variable frequency drives• Operational flexibility testing

Craig Station• Craig Units 1 and 2 scheduled maintenance outages

Transmission• SONET equipment upgrade• Oil breaker replacements• Generator step up transformer project planning• CIP requirements

Other expenses• Medical expenses• 6 new positions• IT investments (engineering & help desk)• Centralized fleet management program• Organic contract and power supply agreements renewals

Core operations activities73% of operating and capital: $232.1M


Drivers of change 2018 budget to 2019 budget

2019 budgetDSM expansion

Craig Units 1 & 2 outages

Medical increase, new positions

Ongoing operations & maintenance

(IRP & IT)Capital

investments

Debt financing, higher cash

balances & interest rates

Surplus sales energy increase

2% Tariff 1 rate increase, muni load

reduction


2018 2019Budget results budget budget

Total revenues ($ millions) 223.5$ 226.2$ 1.2%

Total expenditures ($ millions) 266.3$ 250.7$ (5.9%)

Board contingency ($ millions) 23.0$ 23.0$ 0.0%

Increase (decrease)

Financial results

* Contingency transfer required for 2018 capital additions. Amount to be determined later in the year.

*


Target 2018 2019minimums budget budget

Net income ($ millions) 3% of projected operating expenses 22.6$ 21.6$ (4.4%)

Fixed obligation charge coverage ratio 1.50x 2.48x 2.60x 4.8%

Debt ratio < 50% 38% 34% (10.5%)

Unrestricted days cash on hand 200 268 375 39.9%

Increase (decrease)Strategic financial plan indicators

$23 million contingency

Allowable under state budget law

and reduces need for amendments

Unforeseen expenses

(forced outages, gas usage, changes in capital

additions, business opportunities, etc.)

Requires board approval prior

to use

No impact on rates in budget

Based on approximately

10% of operating expenses and

capital additions

Budget contingency (reserved to the board)


Revenues and expenditures

Expenditures in excess of revenues: $24.5M2019 Proposed Budget

$207 $216 $224 $227 $226

-

50

100

150

200

250

300

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budget

Operating expenses Debt expenses Capital additions Revenues

$ millions

Owner communities

sales87%

Sales for resale and wheeling

11%

Interest and other income

2%

Variance

Owner communities ($0.9M)

Sales for resale $2.2M

Interest & other $1.3M

2019 revenues

$226.2 million | Variance from 2018 budget: $2.6M

• Loads developed on 10-year load forecast and energy changes from EE

• 2% Tariff 1 rate increase• Energy deliveries decrease 2.3%• Billing demand decrease 2%• Tariff 7 no rate change

Owner communities

sales

• Energy and prices – hourly model

• 2019 variance due to reduced owner communities’ loads

Sales for resale

• Interest income and other miscellaneous revenue

• 2019 variance due to higher projected interest rates and cash balances, no fiber revenues

Interest & other income


Operating expenses

71%

Capital additions

22%

Debt expense

7%

2019 expendituresVariance

Operating $5.8M

Capital ($19.2M)

Debt ($2.2M)

$250.7 million | Variance from 2018 budget: ($15.6M)

Operating expenses• Long-term contracts• Other purchases (price/qty) – hourly model

Purchased power

• Generation – hourly model• Prices based on long-term contractsFuel

• O&M – Rawhide, Craig, CTs, power ops• Planned maintenance outagesProduction

• O&M – lines, substations, SCADA, fiber, telecomTransmission

• Support groups• O&M – HQ facilities

Administrative & general

• Energy efficiency• Distributed energy resources• Demand response

Demand side management


Salaries and benefits

Salaries

• Regular wages increase $1.1M• Six new positions $0.7M

• 3.1% salary adjustment $0.9M

• Step increases/other $0.3M

• Other adjustments ($0.8M)

• Overtime decrease $0.7M• Outage in 2018

Benefits

• Increase of $2.5M from:• Medical/dental $2.2M

• Defined benefit $0.1M

• Defined contribution $0.1M

New positions

• Staff attorney *

• Accounting supervisor

• IT desktop support supervisor

• IT systems engineer

• System planning engineer

• Facilities electrician


* Accelerated to 2018 by board concurrence.

$232.1 million | Variance from 2018 budget: ($13.4M) 2019 Proposed Budget

Operating expenses & capital additions

Generation28%

Fuel21%Facilities

15%

Contract renewables and

hydropower13%

Transmission9%

General business9%

DSM4%

Market purchases

1%

-10

0

10

20

30

40

50

Fuel Purchasedpower

Salaries andbenefits

O&M Outages -Rawhide

Outageaccrual

Craig Units 1& 2

DSM Wheeling

2018 budget 2019 budget

$ millions

Operating expenses

$177.7 million | Variance from 2018 budget: $5.8M

Prices (RH & natural gas) No

replacement power for outages (2018 RH outage)

Medical, six positions, salary adj. 3.1%, partially offset by 2018 outage OT

EE program expansion, electric vehicles, smart thermostats2018 outage, 2019

screen outage

IRP, IT investments, cyber security insurance

CU 1 & 2 2019 outages


Core generation and transmission expenses have been controlled through continued preventative and predictive maintenance strategies and proactive capital investments.

Strategic initiatives,

84%

Core operations,

16%


2019 capital additions$54.3 million

Strategic projects:• Windy Gap firming project• HQ campus• CT controls• LED lighting• Circuit switchers• Revenue meters• Airflow spoilers• Solar interconnection• Hydrogen gas detectors• Trans line vault upgrades• Real time tools• Integrated tools for ops• Security – Loveland subs

Headquarters campus

54%

Windy Gap firming project

19%

Rawhide 13%

Transmission & substations

5%

General 4%

Craig Units 1 & 2 2%

Purchases 2%

Rawhide outage (final costs)

1%

2019 capital additions

$54.3 million | Variance from 2018 budget: $19.2 Excludes estimated 2018 capital carryovers of $2.6 million

Oil breakers, circuit switchers, relay upgrades, vault upgrades, revenue meters, airflow spoilers, solar interconnection

CTs controls upgrades, CTs protective relays, LED lighting, monofill upgrades, grading & drainage

Railcar moving equip, fire engine 12, vehicles

SONET equip, real time tools, IT


Windy Gap firming project

$99.4

Rawhide $40.1

Headquarters campus

$34.4

Transmission and substations

$25.4

Craig Units 1 & 2 $16.1

Rawhide outages $8.6

General $5.1

Communications $1.2

Capital 5-year forecastYears 2019-2023$230.3 million

2019 Proposed BudgetIncludes estimated 2018 capital carryovers of $2.6 million

0

5

10

15

20

25

30

35

40

45

2019 2020 2021 2022 2023

$ millions

Capital 5-year forecastProduction additions = $164.2 million

Rotary car dumper to VFD, $2.5M

Controls conversion – CTs, $4.8M

Soldier Canyon 10” ductile replacement, $13.6M

Monofill upgrade, $6.6M

Rawhide outage, $6.9M

Chilled water system, $0.4M

CAT equipment replacements, $1.6M

Windy Gap firming project, 2001-2023, $109M

Craig Units 1 and 2 projects, $16.1M

Protective relays –CTs (outage), $1.5M

Grading & drainage, $2.1M


Fire protection system upgrades – CTs, $1.2M

Dust collection system replacement – crusher building, $1.4M

Amounts represent total project cost. May have had costs prior to 2019 or extend past 2023.

0

5

10

15

20

25

30

35

40

45

2019 2020 2021 2022 2023

$ millions

Capital 5-year forecastTransmission additions = $25.4 million

Airflow spoilers, $1.8M

GSU transformer replacements, $8.5M

Aux and station service transformers, breaker, metering unit –Rawhide, 2021-2024 $7.2M

Fort Collins NE Substation, 2022-2024, $3.0M net of reimbursement

Substation & Transmission – Loveland Southeast, 2020-2026, $18.4M

Walls – Loveland Substations, $3.2M

Transmission line vault upgrades, $0.9M

Circuit switchers, breakers, relays, $2.8M

Oil breaker replacements, $1.1M

Transformer T3 replacement – Timberline Sub, $3.1M

Transformer T1 & switchgear – Horseshoe Sub, $1.3M

Wind Bay Rawhide Sub, $1.7M

2019 Proposed BudgetAmounts represent total project cost. May have had costs prior to 2019 or extend past 2023.

Transformer replacement – Valley Sub, $0.7M, net of reimbursement

Switchgear & transformer replacement –Loveland East, $1.2M

Transformer T1 & switchgear replacement – Airport Sub, $1.1M

100% reimbursable projects

Revenue meter replacements, $0.6M

Solar interconnection – RH Sub, $0.3M

0

5

10

15

20

25

30

35

40

45

2019 2020 2021 2022 2023

$ millions

Capital 5-year forecastGeneral additions = $40.7 million General additions include:

• Facilities upgrades• Computer upgrades• Communication equipment• Vehicles


Headquarters campus, 2016-2020, $51.6M

Financial info & payroll system

replacement, $0.6M

IT software and equipment, $1.6M

Vehicle replacements, $1.5M

SONET communication system replacement, $1.2M

SCADA equipment, $0.4M

Security – Loveland substations walls, $0.3M, net of 50% reimbursement

Amounts represent total project cost. May have had costs prior to 2019 or extend past 2023.

Real time tools, $0.6M

2019 budget focusOperating and capital: $232.1M


Strategic initiatives, 27%Enhanced customer experience $11.1 million, 5%• Energy efficiency business & consumer product expansion• Distributed energy resources – electric vehicles & smart

thermostats• Demand response continuation• Wholesale rate redesign – implementation 2020

Communications and community outreach$1.6 million, 1%• Public engagement• Effective communications – electronic tools, public & stakeholder

materials, outreach, internal communications & employee activities & recognition

Resource diversification and alignment$2.5 million, 1%• Resource planning – IRP • Renewable generation – development of 150 MW wind and 20

MW solar projects• Energy market – continue to pursue broader market

Infrastructure advancement and technology development$46.6 million, 20%• Windy Gap firming project – increase water resource reliability• Headquarters campus – meet growing and changing needs of

workforce, technologies and facilities• Physical security, cyber security, fiber and transmission projects

Core operations, 73%Rawhide Energy Station• Bottom ash conveying system and containment

project final costs (proactive environmental compliance)

• Monofill upgrades (proactive environmental compliance)

• Protective relays• Grading and drainage projects• Rotary car dumper variable frequency drives• Operational flexibility testing

Craig Station• Craig Units 1 and 2 scheduled maintenance outages

Transmission• SONET equipment upgrade• Oil breaker replacements• Generator step up transformer project planning• CIP requirements

Other expenses• Medical expenses• 6 new positions• IT investments (engineering & help desk)• Centralized fleet management program• Organic contract and power supply agreements

renewals

Key variances2018 budget to 2019 budget

2019 Proposed BudgetPositioned to meet Platte River’s strategic direction.

2019 budget $273.7M

Craig outage•$2.1M•Maintenance & capital

Medical expenses increase•$2.2M

DSM expansion•$1.3M increase•$10M total

6 new positions•$0.7M

Ongoing operations & maintenance•$0.7M increase•IRP & IT

Capital investments•$19.2M overall decrease•$53.8M w/o Craig outage

Debt financing$100M financed

Interest income$1.5M increase

Surplus sales energy & wheeling•$2.2M increase

2% Tariff 1 rate increase$3.9M increase

Owner communities load reduction•$4.8M decrease

•

•

•

Questions

Budget details for your information (not presented)

Small differences may exist in the following tables compared to the budget document due to rounding.

Owner communities sales

646Budget659

Budget

659 Actual


2018 2019budget budget

Owner communities revenues Tariff 1 average rate increase 2%, load reduction estimate 2.3%Demand 58.5$ 58.2$ (0.3)$

Energy 135.9 135.3 (0.6)

Renewable energy premium 2.6 2.6 - Tariff 7 $26/MWh, no rate change

Total 197.0$ 196.1$ (0.9)$

($ millions) Increase (decrease) Explanation

659 661 658690

665

300

400

500

600

700


MW Peak Load

$20.1 $23.7 $23.5

$26.2 $25.7

0

5

10

15

20

25

30

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetShort-term sales Wheeling revenues

$ millions





Short-term 18.9$ 20.3$ 1.4$ Energy increase 8% due to lower generation (owner communities load decrease), price decrease 0.5% due to market data

Wheeling 4.6 5.4 0.8 Increase in third party customer loads and Tariff 4 rate increase

Total 23.5$ 25.7$ 2.2$


$21.35 $21.66$23.12 $23.38 $23.00

0

5

10

15

20

25

30


$/MWh Average short-term wholesale price

Sales for resale prices

$26.10 budget

$23.38 budget

$24.05YTD

2018 *


Excludes sales from the combustion turbines and JDA transactions.

* Pricing was strong during the summer of 2018 due to higher temperatures and high natural gas prices in California leading to higher than anticipated prices in the region.

Other revenues


$1.9 $2.4

$3.1 $2.8

$4.4

0

1

2

3

4

5


Interest income Other income

$ millions


Other revenues

Interest income 2.8$ 4.3$ 1.5$ Projected increase in interest rates and cash balances

Other income 0.3 0.1 (0.2) Includes miscellaneous leases and Trapper Mine refund; no fiber revenue due to transfer of fiber assets

Total 3.1$ 4.4$ 1.3$


$(2.1) $(2.1)

$33.3 $35.4 $34.5 $36.6 $34.2

-5

5

15

25

35

45

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetWestern Other purchases Wind & REC Solar Solar - owner communities Outage accrual

$ millions

net net

Purchased power



Purchased powerWestern Area Power Admin 16.9$ 16.9$ -$

Other purchases 5.4 2.3 (3.1) Market: 2018 included replacement power for Rawhide Unit 1 maintenance outage. 2019 also lower reserves.

Wind and RECs 10.5 10.7 0.2 Contract rate escalations

Solar 3.6 3.5 (0.1) Contract, slight decrease in generationSolar - owner communities programs 0.2 0.3 0.1 Contract

Outage accrual (2.1) 0.5 2.6 2018 Rawhide Unit 1 outage accrual reversal 100% of estimated expenses. 2019 accrual for 2021 outage.

Total 34.5$ 34.2$ (0.3)$


$46.4 $47.7 $49.7 $47.5 $49.1

0

10

20

30

40

50

60

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetRawhide Unit 1 Craig Units 1&2 Combustion turbines

$ millions

Fuel expense



Fuel expense

Rawhide Unit 1 29.3$ 31.9$ 2.6$ Capacity factor of 95.5% due to generation increase of 13% (no outage), average delivered coal cost decrease of 3% (price based on market)

Craig Units 1 and 2 20.1 16.4 (3.7) Capacity factor of 57.6% due to generation decrease of 20% (2019 both units have outages) partially offset by an average delivered coal cost increase of 2%

Combustion turbines 0.3 0.8 0.5 Generation increase 297% (model projections & more in line with actual) partially offset by a natural gas price decrease of 23%

Total 49.7$ 49.1$ (0.6)$

Increase (decrease) Explanation($ millions)

0

1

2

3

4

5


Rawhide Unit 1 Craig Units 1&2 Combustion turbines

$ per MBtu

Fuel expense

2019 $/MBtuRawhide $1.33Craig $2.00CTs $2.48

$3.31/MBtuYTD 2018


Fuel unit cost per million Btu

$(7.0) $(7.0)

$44.6 $49.6 $45.2 $44.9 $47.4

-10

0

10

20

30

40

50

60

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetRawhide Unit 1 Rawhide Unit 1 outage Outage accrualCraig Units 1&2 Combustion turbines Power operations

$ millions

net net

Production expenses



Production expenses

Rawhide 31.8$ 32.1$ 0.3$ Increases in personnel expenses (medical), chemicals (off outage), screen outage, offset by decreases in routine expenses and closure of ash ponds

Craig Units 1 and 2 9.6 11.2 1.6 Both unit maintenance outages in 2019 vs. no maintenance outages in 2018

Combustion turbines 1.3 1.6 0.3 Personnel expenses (medical) and tuning and machine testing after controls system upgrade

Power operations 2.5 2.5 -

Total 45.2$ 47.4$ 2.2$

($ millions) Increase (decrease)

Explanation

$12.8 $14.2

$17.2 $16.2 $17.0

02468

101214161820

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetTransmission O&M Wheeling expense

$ millions

Transmission expenses New position:Engineering



Transmission expenses

Transmission 12.8$ 12.6$ (0.2)$ Decrease in Craig transmission line maintenance and the NW water line repair project, increases in personnel expenses (medical). Personnel expenses fluctuate with capital projects.

Wheeling 4.4 4.4 -

Total 17.2$ 17.0$ (0.2)$


$13.4$15.4 $16.7 $16.8

$20.0

0

5

10

15

20

25


A&G Operations A&G Maintenance

$ millions

A&G expensesNew positions in areas of:• Information technology (2)• General counsel• Accounting• Facilities



Administrative and general

Operations 14.8$ 17.4$ 2.6$ Personnel expenses for new positions and increased medical expenses. IRP contracted services.

Maintenance 1.9 2.6 0.7 IT investments and cyber security insurance

Total 16.7$ 20.0$ 3.3$


Demand side management



Demand side managementPersonnel expenses 0.8$ 0.9$ 0.1$ Salary adjustments and increase in medical expenses

Energy efficiency 7.3 8.8 1.5 Expansion of business and consumer product offerings

Distributed energy resources 0.6 0.3 (0.3) Decrease in demand response, increases in electric vehicles and smart thermostat programs

Total 8.7$ 10.0$ 1.3$


$4.0

$6.1

$8.7 $8.6 $10.0

0

2

4

6

8

10

12

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetEnergy efficiency Personnel expenses Distributed energy resources

$ millions

$38.4 $38.3

$73.5 $72.1

$54.3

0

15

30

45

60

75

90

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetProduction Transmission General

$ millions

Capital additions



Capital additions

Production 45.2$ 19.9$ (25.3)$ Windy Gap firming project, Rawhide CT controls upgrades, monofill updgrades, protective relays, grading & drainage, chilled water system upgrade, finalize outage projects, Craig Unit 1 and 2 projects (outage)

Transmission 5.8 2.5 (3.3) Circuit switchers, revenue meter replacements, airflow spoilers, solar interconnection, oil breaker replacements

General 22.5 31.9 9.4 Headquarters campus, SONET equipment replacement, IT projects, real time tools, vehicle and equipment replacements

Total 73.5$ 54.3$ (19.2)$

($ millions) Increase (decrease) Projects

$29.6 $27.9 $23.1

$20.8 $20.8

0

5

10

15

20

25

30

35

2016 actual 2017 actual 2018 budget 2018 estimate 2019 budgetPrincipal Interest

$ millions

Debt service expenditures



Debt service expenditures Series KK debt issuance planned for $100 million to fund the Windy Gap firming and the headquarters campus projects

Principal 12.2$ 10.4$ (1.8)$

Interest 10.9 10.4 (0.5)

Allowance for funds used during construction (2.3) (2.2) 0.1 Interest on bond funds allocated to capital assets

Total 20.8$ 18.6$ (2.2)$ Based on scheduled debt service payments, Series HH paid off, and Series KK (new) included for $2.4M


Update on the 75 MW wind option

September 27, 2018

• Platte River – Roundhouse Wind Power Purchase Agreement (PPA) includes an option to purchase up to an additional 75 MW

• Option must be exercised prior to December 31, 2018• Resource Planning has been evaluating the risks

associated with adding additional wind• Operations has been analyzing various options to

accommodate additional intermittent resources on the Platte River system

Background

Base assumptions:• Carbon costs start at about $4/ton in 2025, escalating to about

$16/ton in 2035• Rawhide operates with a 140 MW minimum capacity• Craig 2 retires in 12/29

Many different price / volatility cases were evaluated to develop range for option value:• Various market depth amounts• SPP-based market price shapes / volatility • SPP-based market price shapes / volatility (with curtailments)• 2018 market prices escalating at two percent • Carbon / no carbon (Craig 2 retires earlier or later)

Resource planning analysis

Key assumptions• Coal plants at minimum output levels• Craig 2 retires in 12/29• No long-term forward energy sales

Key risk considerations• Forward sales amounts and prices less predictable as surplus

energy is driven by high wind output• Cycling is expected to add another $1-2/MWh in maintenance

costs (Burns McDonnell study underway)• Incremental wind increases required sales

Resource planning - risk analysis

Resource planning - risk analysis

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

15 20 25 30 35 40 45 50 55 60 65 70 75

New MW of wind

Amount of wind that must be sold to market

2022

2026Value of wind being sold is dependent on actual market prices

Potential operational improvements

POTENTIAL IMPROVEMENT STATUSSell 12 MW of Silver Sage wind to Black Hills Power and replace with a purchase of a similar amount of additional Roundhouse wind

Complete

Sell up to 50 MW of Craig Output for five years, starting in 2019

Evaluating responses to our Reverse Request for Proposals

Review options to the reduce Rawhide operating minimum from 140 MW to 90 MW

Planning to perform testing at lower minimums in April 2019

Develop options for future renewable resources

Submitted interconnection requests for 150 MW of injection of solar at Rawhide and Ault substations

Discuss sales with potential buyers of Platte River’s surplus energy

Meetings 9/18 and 9/25

• All reasonable possibilities are being considered in an attempt to accommodate more wind

• Unless forward sales can be accomplished, a significant share of the incremental wind will need to be sold into market

• During times of high wind output, market prices could be extremely low or potentially no opportunity to sell output

• Must ensure additional wind meets Platte River’s three pillars i. system reliabilityii. environmental responsibility iii. financial sustainability

Key takeaways

Schedule

SCHEDULESeptember 2018 Complete the financial analysisNovember 2018 Evaluate and complete, if appropriate, the

sales of surplus energy for the years 2020 through 2025

December 2018 Develop a recommendation for Platte River’s Board of Directors meeting

December 2018 Send Enyo / NextEra a notice specifying the additional amount of wind that Platte River will purchase

Questions

2018 Rawhide outageSeptember 27, 2018

Thank you

Everything starts with safety

Our goal is for no one to get hurt during the outage. This is for all Platte River employees and contractors.

• There were no injuries during the 2015 outage.• There was one first aid and one near miss incident.• This is an achievable goal but it takes a lot of planning.

Thank you

Schedule and budget

Outage schedule • Off-line date: 9/24/18• On-line date: 11/12/18• Seven weeks: critical path - generator and bottom ash

26%

66%

8%

Outage budget allocation

Regulatory compliance Reliability Efficiency

Thank you

Major projects

• Generator • Bottom ash system• Air preheater baskets• Feedwater heater• Large number of Operations and Maintenance (O&M) work orders

Thank you

Generator

• The generator has two internal shorted turns that were initially discovered in 2000. Shorted turns occur when there is a breakdown in the insulation between the turns on the rotor.

• Pole imbalance testing of the shorted turns has shown that this issue has worsened each time that they have been inspected and tested. Tests were conducted in 2005, 2008 and 2015.

• The turbine manufacturer recommends addressing this issue, as the tested value increases towards ten percent. A third party consulted states that, from their experience, when the shorted turns increase to over five percent, the rotor can begin to experience problems.

Thank you

Generator

0%

2%

4%

6%

8%

10%

12%

14%

2005 2008 2012 2015 2018 2021

Pole imbalance trends

2005-2008; .87%/yr increase

2008-2015; .24%/yr increase

2005-2015 Avg; .20%/yr increase

Thank you

Generator

• The original generator rotor will be removed and replaced with the new rotor.

• All stator windings will be removed an replaced with new components.

• The recent iso-phase repairs will also be inspected.• Relay testing, as required for NERC compliance, will be performed.

Thank you

Bottom ash system

• The original bottom ash system will be removed and replaced with the new conveyor system.

• This project is being done to comply with Coal Combustion Residuals (CCR) regulation.

• The bottom ash will be conveyed out of the boiler building and trucked to the monofill.

Thank you

Bottom ash system

Thank you

Air preheater

• The APH baskets and seals will be replaced during the outage.• This will improve the thermal performance, returning it back to

its original specifications

Thank you

Feedwater heater

• The LP Feedwater heater 102 will be replaced during the outage.

Questions

August operational results

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

Category August variance YTD variance

Municipal demand (6.8%) 2.0%

Municipal energy (3.7%) (0.9%)

Baseload generation (13.5%) (10.4%)

Wind generation (7.5%) (4.3%)

Solar generation 7.8% (0.7%)

Surplus sales volume 33.0% 1.2%

Surplus Sales Price 69.0% 14.7%

Dispatch cost (1.7%) (1.1%)

CategoryAugust

Variance from Budget($ in millions)

Year to DateVariance from Budget

($ in millions)

Net Income $1.5 $9.0

Debt Coverage 1.0x .58x

Revenues $1.3 $3.1

Operating Expenses ($0.4) $4.4

Capital Additions $1.5 $16.7

Financial summary

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

Board of Directors Meeting · • IT investments (engineering & help desk) • Centralized fleet...

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Transcript of Board of Directors Meeting · • IT investments (engineering & help desk) • Centralized fleet...