NWE ISG’s Infrastructure Initiative€¦ · Reliable Service We value reliable electric and gas...
Transcript of NWE ISG’s Infrastructure Initiative€¦ · Reliable Service We value reliable electric and gas...
NWE ISG’s Infrastructure Initiative
Forward Looking Statements
• These materials may contain several forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performance, and often contain words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “seeks,” or “will.”
• The information in these materials is based upon our current methodology and estimates as of the date hereof. Our actual future business methodology and financial performance may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or these materials for any reason. Although our estimates, expectations and beliefs are based on reasonable assumptions, actual results may differ materially. The factors that may affect our results are provided in these materials and listed in certain of our press releases and disclosed in the Company’s public filings with the SEC.
Information Not Final
• This presentation is a work in progress and provides only estimates of data, costs and program development based upon information available to NorthWestern Energy at this time. It is not to be relied on as a decisional document.
• The final outcome or recommendation, if any, of this initiative is dependent upon input from all stakeholders, including members of our stakeholder groups, as well as financial considerations and regulatory treatment. Accordingly, the data, costs and program development contained herein are subject to change upon the further development of this initiative.
• INFRASTRUCTURE STRATEGIC DRIVERS
ISG’sGuiding
Principles
Customers Responsiveness
ReasonableCosts
ReliableService
Sustainable Future
ISG’s Guiding Principles-Reliable Service Reliable Service We value reliable electric and gas service for individual consumers and businesses.We recognize there may be differences between market sectors depending on the location of the domicile or nature of the business. Therefore, the following are clarifying value statements:
We value a utility company that maintains its infrastructure and incorporates new technology in order to provide reliable electric and gas service to individual consumers and businesses. We believe reliability should never interfere with one’s personal quality of life or impede economic growth/vitality.
We believe there is a balance between maintaining reliable utility service and the expense to maximize the reliability of that service. We believe in maintaining current reliability performance as judged relative to industry peers. We value a utility company that continually reviews and incorporates new technology that is proven to increase the reliability of its services.\
We value a utility company that retains the infrastructure and employee capability to respond to ever-increasing catastrophic weather events in a manner that minimizes the length of outages and avoids system-wide failures.
We believe that businesses engaged in risk-sensitive activities (such as medical facilities), industrial enterprises requiring a higher degree of reliability, as well as users who choose to locate their homes/businesses on the end of a service line, should be obliged to pay the expense associated with that elevated reliability requirement. (Relates to fourth bullet under the Reasonable Guiding Principle).
We recognize the key role of our electric and gas transmission infrastructure beyond NWE’s bundled retail customers, and, in particular, service to Electric Cooperatives and Local Distribution Companies. Generally, we believe that NorthWestern must have the resources to provide transmission service to these wholesale customers that meets industry reliability standards for transmission service, and should be reasonably the same as other NorthWestern major load centers. 9
ISG’s Guiding Principles-Customer Responsiveness • Customer Responsiveness
• We recognize that Montana is a great place to live and offers reasonable energy prices. We recognize that there is a tradeoff between maintaining low energy prices and meeting increasingly diversified customer needs and preferences.
•
• Customer Responsive
• We expect that gas and electric reliability should never be an impediment to economic vitality and quality of life.
• We expect that NWE will maintain current reliability performance judged relative to industry peers, considering that NWE is positioned with existing infrastructure and employee capability to respond to increasing numbers of catastrophic events and avoid system-wide failures.
• We recommend that risk sensitive and industrial customers, as well as those on the end of a line that require high degrees of reliability, pay for needed increased levels of reliability.
• Customer-End User Responsiveness
• We recommend that NWE maintain existing service levels (web, walk-in, software, etc.) as well as engaging and adapting to future services that can be cost-effectively provided.
• We expect that NWE will recognize the diversity of customer groups and needs
• We support incentives and regulatory solutions for customer responsiveness and services as markets and electricity solutions develop. This includes improving and expanding ways for customers to affect their energy usage and bills beyond traditional opportunities.
• We expect that NWE will respond to customer needs and goals in a collaborative, respectful, and ongoing manner.
• We expect that NWE will engage in the following to meet consumer needs:
• Provide more information
• Become more relationship focused
• Offer convenience
• Offer Value Options
• Continue to pursue cost controls
• Offer green and net metering options
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ISG’s Guiding Principles-Reasonable Costs
• Reasonable Cost • We value reliable and quality electric and gas service at the lowest cost.• We also recognize the potential conflict between “quality service” and “low cost”.• Therefore, here are additional clarifying value statements:•• We value a utility company that maintains its infrastructure and keeps in mind both current and future generations. We value a utility that fairly pays its employees, is
engaged both in presence and financially in our communities, minimizes environmental impacts of providing services, and appropriately invests in future technology. All in the context of ensuring that all reasonably accessible customers, both residential and commercial, have access to quality, affordable service.
•• We embrace the opportunity to maximize utility assets to incent economic growth through widely available and reasonably priced service.• We embrace the opportunity to maximize utility assets to develop new revenue generating business models; for example, exporting energy outside of Montana to create
jobs and lower Montana customer costs. • We believe that customers that use a particular service or have a more demanding level of reliability or quantity of energy usage should generally pay the associated costs
for that service. However, we also recognize the complexity of the system and that is impossible to avoid some cost-sharing between users. We understand that cost allocations are policy decisions made by the Montana Legislature and implemented by the Montana Public Service Commission. We also recognize the historic policy decision that urban customers partially subsidize the costs of rural customers. We ask that policy makers and NWE carefully limit the extent to which one customer class subsidizes another. We believe this is especially important as more private distributed energy generation is developed. We encourage NWE to work closely with policy makers to better understand changes in the market (such as distributed energy generation) and develop updated regulatory structures that incents development (and associated Montana businesses) while still creating a financial incentive to NWE and customers. [See related discussion under Sustainable Future Discussion]
• We understand that some forms of present and future generation may be more costly and encourage regulators and NorthWestern Energy to balance these factors to provide options for more clean energy.
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ISG’s Guiding Principles-Sustainable Future
• Sustainable Future • We value proactive planning for the future to protect the utility, customers, society and the environment.•• We recognize that it is hard to predict the future, especially with so many changing factors such as natural gas prices, climate change,
distributed generation, the internet of things, smart appliances, electrification of transportation, regulation, and customer demands, THEREFORE:
•• We recommend that NWE be proactive in planning not only for physical infrastructure needs but also for changing technologies and
business structures• We encourage NWE to focus on being solution-oriented even in the face of extreme changes and challenges and to act more as a
partner than a provider• We expect NWE to be adaptable to changes and foster a company-wide culture of adaptability• NWE should remain customer-focused to stay ahead of changing customer needs (e.g. cost, technology, reliability, power quality,
information, distributed and green power preference) • We expect NWE to manage all assets efficiently (e.g. develop additional transmission lines in existing corridors when appropriate)• We expect NWE to embrace opportunities to maximize assets, update business models and economically benefit the state from a
business development and energy export perspective and a customer perspective.• While keeping costs low and managing short term increases are important [See Reasonable Cost], we expect NWE to make decisions
based on lowest long term cost and impact (utility, environment and social)
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Infrastructure Scenarios
Scenario’s will be developed by focusing on guiding principles in different priorities
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Scenario One
• Reasonable Cost
• Reliable Service• Sustainable
Future• Customer
Responsiveness
Scenario Two
• Reliable Service• Reasonable
Cost• Sustainable
Future• Customer
Responsiveness
Scenario Three
• Sustainable Future
• Customer Responsiveness
• Reliable Service• Reasonable
Cost
Infrastructure Strategies
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Modify current five year plan and Infrastructure Categories to meet scenario strategies using technology
Capacity (CP)*
The necessary delivery capabilities of the system necessary to meet operations,
reliability, and growth parameters
Reliability (RE)
Define delivery systems
expectations verses actual performance
Asset Life (AL)
Life of an asset based on a set
level of performance of a delivery system
The adherence to established norms
Technology
Compliance
*Note: Capacity is broken down into Capacity Growth (CP_G) and Capacity Reliability (CP_RE)
(CO)
15 *Delivery systems are comprised of: Electric & Gas Transmission & Distribution and Substations & Gate/Compressor Stations
Defining a Common Language for managing our delivery systems*
Optimizing Investment
Portfolio
Project Strategic
Value Analysis
Meet Delivery System’s
Performance Targets
Align with Corporate
Drivers
Infrastructure Vision and Mission
Capital Budget Five Year Plan- Base Scenario
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$920M of Capital Investment over 5 years for MT T&D
2017 2018 2019 2020 2021 5-year Total
MT Total $191,034,953 $165,449,437 $169,025,877 $180,568,234 $213,902,499 $919,981,000
MT T Gas $19,396,584 $24,449,774 $26,785,230 $20,253,456 $18,638,666 $109,523,710
MT T Electric $50,366,659 $50,177,503 $50,177,503 $62,587,268 $81,830,956 $295,139,890
MT D Gas $9,809,573 $9,637,534 $9,397,510 $17,632,696 $20,844,253 $67,321,566
MT D Electric $72,962,138 $81,184,625 $82,665,634 $80,094,813 $92,588,624 $409,495,834
DSIP $38,500,000 $0 $0 $0 $0 $38,500,000
2017 MT Capital Budget by Infrastructure Categories
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38%
3%3%
49%
7%
Risk Driven
Performance Metric and/or Value
Additional Drivers
Blankets and Programs
Outside Infrastructure Parameters
$95.5M
• Risk Driven- all projects with a risk level 3 or less in one or more of the five categories• Performance Metric or Value- projects not identified by risk that add to performance goal (only identified in Electric Distribution)• Additional Drivers- projects not identified as risk or performance that have a high score or SY• Outside Parameters- projects that fall outside of this process that need further review or add value beyond identified targets (ie-
Big Sky projects)
$74.4M
$13.1M
$5.5M$6.2M Blankets/Programs and
Risk account for 87% of the capital budget
Infrastructure Scenario One Strategy
• Maintain capacity margins• Reduce current capital capacity growth budget. Explore other rate recovery methods for high growth
areas driving abnormal investments.• Replace capacity reliability projects with technology
• Maintain reliability by increased technology• Increase technology driven programs (coordination, automation, etc)
• Extend asset replacement cycles• Reduce asset management program funding accepting more risk but managing reliability through
technology
• Decrease risk budget by 50% increasing project schedules and accepting greater short term risk
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Reasonable Cost Reliable Service Sustainable
FutureCustomer
Responsiveness
*Note: 2017 funding levels do not change
Total Budget Decrease $157M over five years, $60M in technology• Maintain capacity levels
o Reducing capacity growth funding by $25.4M• Improve reliability through advanced technology
o Reduce cap reliability and reliability funding by $37.3M and move $53M to technology• Increase replacement cycle and accept additional risk
o Reduce asset management programs by $33.7M and move $7M to technology• Increase risk appetite (postpones some investment but does not eliminate
o Reduce risk driven projects by $68.4 by increasing project schedules
Scenario One Summary - Reasonable Cost
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• Technology Investment Opportunities
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Grid Modernization Initiative Scenario 1Technology Category System Focus Costs ( $ ISG principle Expected benefitsElectricSegmentation Transmission 15$ Reliability 5 SAIDI Minutes
Distribution 30$ Reliability 15 SAIDI MinutesCircuit Coordination Distribution 5.0$ Reliability 1.25 SAIDI Minutes Equipment Monitoring Substations 0.6$ Reliability Deferred assets replacementTotal 50.6$ GasUpdated Hydraulic Modeling Software Transmission 0.1$ Sustainability Capacity planning deferrmentsImproved SCADA System Transmission 2.0$ Reliability Reliability/OperationsSD/MT Gas Scheduling System Transmission 0.8$ Customer OptioImproved Scheduling ProcessSystem Pressure Monitoring Distribution 2$ Reliability Deferred capacity upgradesTotal 4.9$ CommunicationFiber Control network (urban) Distribution 4$ Sustainability DG integrationsTotal 4$ Customer Experience 0
Grand Total 59.45$
Infrastructure Scenario Two Strategy
• Improve reliability by increased technology • Increase technology driven programs (segmentation, coordination, automation, etc)• Replace capacity reliability projects with technology
• Maintain capacity margins• Reduce current capital capacity growth budget. Explore other rate recovery methods for high growth
areas driving abnormal investments.• Maintain capacity reliability budget
• Maintain asset replacement cycles• Fund established asset management programs at historical levels
• Decrease risk budget by 25% increasing project schedules and accepting greater short term risk
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Reliable Service Reasonable Cost
Sustainable Future
Customer Responsiveness
*Note: 2017 funding levels do not change
Total Budget Increase of $8.8M over five years, $107M in technology• Maintain capacity levels
o Reducing capacity growth funding by $25.4M• Improve reliability through advanced technology
o Move $37.8M reliability capacity to technology.o Add $68.3M to base budget for technology (offsets come from capacity budget reductions)
• Increase risk appetiteo Reduce risk driven projects by $34.2 by increasing project schedules
• Scenario Two Summary – Reliable Service
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$191,034,953
$165,449,437
$169,025,877
$180,568,234
$213,902,499
$191,034,953
$168,429,210
$169,918,547
$179,035,472
$220,394,125
$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000
2017
2018
2019
2020
2021
Scenario Two Base Scenario
Technology Investment Opportunities
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Grid Modernization Initiative Scenario 2Technology Category System Focus Costs ( $ ISG principle Expected benefitsElectricSegmentation Transmission 25$ Reliability 8 SAIDI Minutes
Distribution 30$ Reliability 15 SAIDI MinutesVolt/Var Distribution 5$ Customer Options 5 MW's energy savedCircuit Coordination Distribution 15$ Reliability 4 SAIDI Minutes Bank Metering/Database Substations 1$ Sustainability Capacity planning deferrmentsEquipment Monitoring Substations 5$ Reliability Deferred assets replacementBreaker Monitoring Substations 2$ Reliability 4 SAIDI minutesRegulator Monitoring Substations 3$ Micro Grid controls DG integrationsTotal 86$ GasCompressor Controls Transmission 1.0$ Reliability OperationsMobile Data Transmission 0.5$ Sustainability System AwarenesMore on-line chromatographs Transmission 1.0$ Customer Options Therm Zone Billing/CustomerUpdated Hydraulic Modeling Software Transmission 0.1$ Sustainability Capacity planning deferrmentsImproved SCADA System Transmission 2.0$ Reliability Reliability/OperationsSD/MT Gas Scheduling System Transmission 0.8$ Customer Options Improved Scheduling ProcessSystem Pressure Monitoring Distribution 4$ Reliability Deferred capacity upgradesCentral Equipment (Valve control) Distribution 4$ Sustainability Teir 2 peak shavingTotal 13$ CommunicationFiber Control network (urban) Distribution 6$ Sustainability DG integrationsTotal 6$ Customer ExperienceWeb Portals Distribution 1.0$ Customer Options Billing optionsTotal 1.0$
Grand Total 106.4$
Infrastructure Scenario Three Strategy
• Requires Regulatory Changes• Increase technology for grid
• Enhanced control systems for enabling customer choice (DMS, AMI) • Improved customer experience software • Renewable Energy pilots
• Improve reliability by increased technology • Increase technology driven programs (segmentation, coordination, automation, etc)
• Maintain base budget for capacity and asset life• Stable risk profile by executing current compliance budget
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Sustainable Future
Customer Responsiveness Reliable Service Reasonable
Cost
*Note: 2017 funding levels do not change
Total Budget Increase $278.6M over five years for Technology• Electric $161M
o Improved reliability and monitoring, AMI Metering
• Gas $44.6Mo Enhanced control, scheduling, and monitoring, AMI Metering
• Communication $30Mo Communication backbone for Electric and Gas Technology
• Customer Experience $43Mo Enriched billing options, Sustainability Focused
Scenario Three Summary – Sustainable Future/Customer Responsiveness
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$194,857,566.96
$177,894,606.26
$199,979,107.36
$184,147,658.88
$155,049,622.94
$194,857,566.96
$247,544,606.26
$269,629,107.36
$253,797,658.88
$224,699,622.94
$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000
2017
2018
2019
2020
2021
Scenario Three Base Scenario
Technology Investment Opportunities
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Grid Modernization Initiative Scenario 3Technology Category System Focus Costs ( $ ISG principle Expected benefitsElectricSegmentation Transmission 30$ Reliability 10SAIDI Minutes
Distribution 30$ Reliability 15 SAIDI MinutesVolt/Var Distribution 15$ Customer Options 15 MW's energy savedAMI Metering Distribution 50$ Customer Options Billing optionsCircuit Coordination Distribution 20$ Reliability 5 SAIDI Minutes Bank Metering/Database Substations 1$ Sustainability Capacity planning deferrmentsEquipment Monitoring Substations 10$ Reliability Deferred assets replacementBreaker Monitoring Substations 2$ Reliability 4 SAIDI minutesRegulator Monitoring Substations 3$ Micro Grid controls DG integrationsTotal 161$ GasCompressor Controls Transmission 1.0$ Reliability OperationsMobile Data Transmission 0.5$ Sustainability System AwarenesMore on-line chromatographs Transmission 1.0$ Customer Options Therm Zone Billing/CustomerBar Coding System for Materials Transmission 1.0$ Sustainability Material Tracking PHMSAUpdated Fuel system/Panels Transmission 1.2$ Sustainability Reliability/EmissionsUpdated Hydraulic Modeling Software Transmission 0.1$ Sustainability Capacity planning deferrmentsImproved SCADA System Transmission 2.0$ Reliability Reliability/OperationsSD/MT Gas Scheduling System Transmission 0.8$ Customer Options Improved Scheduling ProcessEnhanced Physical Security Remote Sites Transmission 2.0$ Sustainability SecuritySystem Pressure Monitoring Distribution 4$ Reliability Deferred capacity upgradesCentral Equipment (Valve control) Distribution 6$ Sustainability Teir 2 peak shavingAMI Metering Distribution 25$ Customer Options Billing optionsTotal 45$ CommunicationFiber Control network (urban) Distribution 30$ Sustainability DG integrationsTotal 30$ Customer ExperienceWeb Portals Distribution 1.0$ Customer Options Billing optionsCustomer Experience Software Distribution 6$ Customer Options Billing optionsDemand Repsonse Distribution 20$ Sustainability 20 MW's savedLED Street lights Conversion Distribution 16$ Sustainability 2.64 MW's/ 10,312 MWhrs/yrsTotal 43.0$
Grand Total 278.6$
Major technology investments AMI metering- Gas and Electric ($75 Mil.)Improve communication network ($30 Mil.)Demand Response ($20 Mil.)LED Lighting initiative ($16 Mil.)Customer Experience ($ 7 Mil.)
• Electric $161Mo Improved reliability and monitoring, AMI Metering
• Gas $44.6Mo Enhanced control, scheduling, and monitoring, AMI Metering
• Communication $30Mo Communication backbone for Electric and Gas Technology
• Customer Experience $43Mo Enriched billing options, Sustainability Focused
Scenario Three Summary
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$194,857,566.96
$177,894,606.26
$199,979,107.36
$184,147,658.88
$155,049,622.94
$194,857,566.96
$247,544,606.26
$269,629,107.36
$253,797,658.88
$224,699,622.94
$0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000
2017
2018
2019
2020
2021
Scenario Three Base Scenario
Infrastructure Scenario Strategy Three
Major technology investments
• AMI metering- Gas and Electric ($75 Mil.)- Asset life issues begin in 2025-2030- Improved outage response and system monitoring- Allows new billing options and energy usage information- Improve allocation of service modeling
• Communication network ($30 Mil.)Required- Future system grid modernization
AMI backhaulDistributive Generation Demand Response integrationIntegration of the Internet of things
Infrastructure Scenario Three StrategyMajor technology investments
• LED Lighting initiative ($16 Mil.)-Energy savings and improve lighting performance-Improve asset life performance
• Demand Response ($20 Mil.)Defer peak capacity requirementsImproved existing generation utilization
• Customer Experience ($ 7 Mil.)-Improve customer information and energy usage information-Improve customer experience with more integrated web portal
Deeper Dive into Technology Within Five-Year Plan
What is an ADMS?
ADMS= Software + Model + SCADA + HMI(Enabling Future Applications)
Montana Benefits at Go Live (2019)
Grid Modernization Initiative Scenario Summation
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Scenario One Scenario Two Scenario ThreeTechnology Category Cost ($ M) Benefits Cost ( $M) Benefits Cost ($ M) Benefits
Elec
tric
Sys
tem
s
Transmission Segmentation $ 15 5 SAIDI Minutes $ 25 8 SAIDI Minutes $ 30 10 SAIDI MinutesDistribution Segmentation $ 30 15 SAIDI Minutes $ 30 15 SAIDI Minutes $ 30 15 SAIDI MinutesVolt/Var $ - $ 5 5 MW's energy saved $ 15 15 MW's savedAMI Metering $ - $ - $ 50 Billing optionsCircuit Coordination $ 5 1.25 SAIDI Minutes $ 15 4 SAIDI Minutes $ 20 5 SAIDI Minutes Bank Metering/Database $ - $ 1 Capacity Deferment $ 1 Capacity Deferment Equipment Monitoring $ 0.6 Deferred replacement $ 5 Deferred replacement $ 10 Deferred replacementBreaker Monitoring $ - $ 2 4 SAIDI minutes $ 2 4 SAIDI minutesRegulator Monitoring $ - $ 3 DG integrations $ 3 DG integrationsTotal $ 50.6 $ 86 $ 161
Gas
Sys
tem
s
Compressor Controls $ - $ 1 Operations $ 1 OperationsMobile Data $ - $ 0.5 System Awareness $ 0.5 System AwarenessMore on-line chromatographs $ - $ 1 Therm Zone Billing $ 1 Therm Zone BillingBar Coding System for Materials $ - $ - $ 1 Material TrackingUpdated Fuel system/Panels $ - $ - $ 1.2 Reliability/EmissionsUpdated Modeling Software $ 0.1 Capacity $ 0.1 Capacity $ 0.1 Capacity Deferment Improved SCADA System $ 2 Rel/Operations $ 2 Rel/Operations $ 2 Rel/OperationsSD/MT Gas Scheduling System $ 0.8 Improved Scheduling $ 0.8 Improved Scheduling $ 0.8 Improved SchedulingEnhanced Physical Security $ - $ - $ 2 SecuritySystem Pressure Monitoring $ 2 Capacity Deferment $ 4 Capacity Deferment $ 4 Capacity Deferment Central Equipment (Valve Con) $ - $ 4 Teir 2 peak shaving $ 6 Teir 2 peak shavingAMI Metering $ - $ - $ 25 Billing optionsTotal $ 4.9 $ 13 $ 45
Comm Fiber Control network (Urban) $ 4 Segmentation $ 6 Segmentation $ 30 Segmentation DGTotal $ 4 $ 6 $ 30
Cus
tom
er
Opt
ions
Web Portals $ - $ 1 Billing options $ 1 Billing optionsCustomer Experience Software $ - $ - $ 6 Billing optionsDemand Repsonse $ - $ - $ 20 20 MW's saved
LED Street lights Conversion $ - $ - $ 16 2.64 MW's/10k MWhrs/yrs
Total $ - $ 1.0 $ 43.0 Grand Total $ 59.45 $ 106.4 $ 278.6
Scenario Comparison
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CostRate
Impact Reliability ImpactCapacity Impact
Asset LifeImpact
Compliance Impact Technology
Base
$932M
Elec- $0.71 to $8.07Gas- $1.18 to $11.75
Electric: stable, 120 SAIDI• Little automation and
segmentationGas: moderate risk for outages
Increase Electric and Gas reserve Capacity• Add 100 MW a year
(25-30% increase)• Increase historical
funding on gas (30-50%)
• Maintain current replacement schedules
• Fund Substation Infrastructure plan at 100%
Maintain Current Compliance Schedules
• SDNE AMI • DMS
Scen
ario
O
ne
$762M
Elec- $0.71 to $7.04Gas- $1.18 to $8.47
Electric: slight improvement,decrease 3 SAIDI minute/year • Transmission Segmentation• Distribution Automation and
Coordination on 20% of circuits, focus on urban
Gas: slight risk for outages
Maintain Electric and Gas Reserve Capacity• Add 72 MW a year to
electric• Maintain historical
gas budget
• Increase replacement schedules by 33%
• Reduce Substation Infrastructure plan by 50%
Increase compliance schedules by 2x, moderate short term risk
$60M• SDNE AMI, DMS• Reliability improvements
through technology on transmission segments and some urban circuits
• Improved monitoring on assets• Technology for gas peak
shaving
Scen
ario
Tw
o
$928M
Elec- $0.71 to $8.30Gas- $1.18 to $12.17
Electric: great improvement,decrease 14 SAIDI minute/year • Transmission Segmentation• Distribution Automation and
Coordination on all of circuits, urban and rural
Gas: improve current reliability with monitoring
Maintain Electric and Gas Reserve Capacity• Add 72 MW a year to
electric• Maintain historical
gas budget
• Maintain current replacement schedules
• Fund Substation Infrastructure plan at 100%
Increase compliance schedules by 1.5x, slight short term risk
$107M• SDNE AMI, DMS • Enhanced Communication • Reliability improvements
through technology on transmission segments and all distribution circuits
• Improved asset monitoring Tech for gas peak shaving
Scen
ario
Thr
ee
$1.2B
Elec- $0.71 to $10.61Gas- $1.18 to $17.75
Electric: great improvement,decrease 14 SAIDI minute/year Transmission Segmentation• Distribution Automation and
Coordination on all of circuits, urban and rural
Gas: improve current reliability with monitoring
Increase Electric and Gas reserve Capacity• Add 100 MW a year
(25-30% increase)• Increase historical
funding on gas (30-50%)
• Improved data to defer investments
• Maintain current replacement schedules
• Fund Substation Infrastructure plan at 100%
• Improved monitoring
Maintain Current Compliance Schedules
$278M• SDNE and MT AMI, DMS • Enhanced CIS• Enhanced Communication • Renewable Energy Pilots• Reliability improvements on
transmission segments and all distribution circuits
• Improved asset monitoring Tech for gas peak shaving, monitoring and controls
Performance LevelReduced Improved
• The MT rate impacts from the alternative T&D capital spend scenarios was developed based on models determining revenue requirements for each scenario.
• The “revenue required” annually from the capital dollars invested is based on the following:
Revenue Requirement = Return on Capital (10.35% * equity portion of capital spend)+ Return of Capital (depreciation amount of capital spend)+ Property Taxes (3% of the capital spend)+ Interest Expense (4.25% * debt portion of capital spend)+ Income tax adjustment
• The following provides estimated impacts and could differ based on actual capital spend, allowed returns on equity and debt, and other factors
SUMMARY- Rate Impacts
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• The Base Capital Spend scenario is the current MT T&D electric and gas total capital spend plan. The three other electric and gas scenarios were provided by Asset Mgmt.
•The following assumptions drove the revenue requirement development and rate impacts for the various scenarios:• Cost of Equity = 10.35%• Cost of Debt = 4.25%• Equity % of Capital Structure = 48.0%• Debt % of Capital Structure = 52.0%• Property tax = 3% of capital spend• Depreciable life of T&D Capital = 30 Years• Depreciable life of Technology Capital = 10 Years
Current Typical Monthly Bill:oElectric = $88.61oGas = $71.51
ASSUMPTIONS
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CAPITAL SPEND SCENARIOS
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Revenue requirement scenarios
38
• TYPICAL BILL IMPACTS
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• TYPICAL BILL IMPACTS
40
• TYPICAL BILL IMPACTS
41
• ESTIMATED TYPICAL MONTHLY BILL
42
• ESTIMATED RATE BASE FROM CAPITAL SPEND
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• Rate Base levels based on the capital spends included in the base and various scenarios.
• Ending Rate Base calculated as the Capital Spend less depreciation less deferred income taxes.
• Average Rate Base levels used to calculate the return on equity, debt, and return on rate base, and drive the revenue required.
Asset Management Strategies and Infrastructure
QUESTIONS?
Five Year Plan by Primary Project Driver
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$0.00
$20,000,000.00
$40,000,000.00
$60,000,000.00
$80,000,000.00
$100,000,000.00
$120,000,000.00
$140,000,000.00
MT Total
MT Total
MT Total
MT Total
MT Total
RE CP-RE CP-G CO AL
ADMS Benefits
•Automated switching orders from real time loading information•A cost effective platform for Fault Location Isolation & Service Restoration (FLISR)•Near real time awareness of interruptions•Identify momentary interruptions perform early diagnoses
Increase Reliability
•Optimum system configuration based on real time information•Encourage reliable distributed energy resource (DER) integration
Optimize Capacity
•A cost effective platform for conditioned based monitoring (transformers/LTCs)•Awareness of compromised assets before failure
Asset Life
•Safety/Centralized Control
Reduced Risk
•Volt VAR Optimization (VVO)•Distributed Energy Resources (DER) Integration
Additional Business Opportunities
•Response to breaker and recloser outages before a customer calls.•Improve estimated time of restoration through increased situational awareness.
Increase Customer Satisfaction
•Modeling improvements•Automated switching plans•Situational awareness
Operational Benefits
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Asset Life
• Distribution, Substations, Transmission
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Infrastructure CAPEX Plan Blueprint
Capacity• Distribution, Substations, Transmission
Capacity• Distribution• Transmission
Electric
Overall Infrastructure
Gas
Reliability• Distribution, Substations, Transmission
Reliability• Distribution• Transmission
Distribution Base – includes Reactive and Normal Maintenance
Transmission Base – includes Reactive and Normal Maintenance
Compliance• Distribution, Substations, Transmission
Asset Life• Distribution, • Transmission
Safety/Compliance• Distribution• Transmission
Automation & Technology
Infrastructure CAPEX Plan Blueprint
• INFRASTRUCTURE CATEGORIES
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Define delivery systems expectations verses actual performance
Reliability
The necessary delivery capabilities of the system necessary to meet operations, reliability, and growth parameters
Capacity
Life of an asset based on a set level of performance of a delivery system
Asset Life
The adherence to Corporate risk tolerance considering compliance, operational, financial, reputational and strategic risk
Compliance
Fault Location Isolation and Service Restoration
(FLISR)
4246
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1
Golf Course Sub
Eastside Sub
Southside Sub
Customer Count400
300350
250
300
450300
400
700
300
20
400
900
FLISR Example
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1
Golf Course Sub
Eastside Sub
Southside Sub
1100 Customers Out of Power
FLISR Example – Auto Accident
4246
51
1
Golf Course Sub
Eastside Sub
Southside Sub
800 Customers Restored300 Customers Still Out
FLISR– Intelligent Auto Restoration
• FLISR• Helena pilot project resulted in 53% reduction in customer
minutes interrupted (CMI) on feeder/recloser outages.
- Billings Estimated Savings:
• The Value of FLISR as Demonstrated in the PNSWG Pilot
Year Outage Counts CMI Saved MT SAIDI Saved2014 23 1,325,940 3.79 2013 24 2,218,719 6.34 2012 18 1,054,303 3.01 2011 14 538,404 1.54
Average 19.75 1,284,341 3.67
Billings Estimated FLISR Savings
Conservation Voltage Reduction /
Volt Var Optimization (CVR/VVO)
• Volt VAR Optimization Overview
Historical Range (118V-124V) –Maintains highest reliability by ensuring adequate voltage under most loading conditions.
Intelligent Volt/VAR Control Range (114.5V – 120V)Increased device sophistication and controls to operate within lower portion of nominal range while continuing to deliver safe, reliable power.
ANSI – C84.1
VVO – Where do the savings come from?
Volt VAR Optimization Operation
126
114
120
Volta
ge
Distance from Substation
• CVR/VVO• 1% reduction in voltage resulted in approximately 0.8%
energy savings.
The Value of CVR/VVO as Demonstrated in the PNSWG Pilot
y = 0.8086x - 0.0004R² = 0.9815
-0.50%
0.50%
1.50%
-0.5000% 0.0000% 0.5000% 1.0000% 1.5000% 2.0000% 2.5000%
% k
Wh
Save
d
% Voltage Reduction
Helena ES kWh Savings Potential Based on % Voltage Reduction
• Sourdough Feeder #1• Customers: 4,730• Modeled avg. customer savings: 1.12%• Avg. customer kWh/yr (before): 16,213• Avg. customer kWh/yr (after): 16,032• Total kWh Savings per Customer 181 kWh/yr
Requires investment into DMS control system and infrastructure upgrades.
It is balance between the cost to the consumer and its potential savings. The goal is to reduce the customers utility bill as a whole.
Bozeman Case Study
Utility Supported Microgrid Overview
• Purpose:• Review the conceptual design of a Microgrid
• Takeaways:• High level understanding of a Microgrid• Talking points for the proposed Microgrid
• Next Steps:• Review operating procedures and commissioning steps with Butte Division Operations
Agenda
What is a Utility Supported Microgrid?
NWE Definitions:• “Microgrid” - Powers a medium voltage line without a utility source.• “Utility Supported Microgrid” - Benefits the utility system when the utility source is available and has the ability to
intentionally island to form a microgrid.
• NorthWestern is investigating:• How to safely integrate Microgrids
• A market based deployment of Microgridso Increased reliabilityo Better load managemento Asset deferral opportunitieso Greater system efficiency
• For Our Customers:• Increased reliability
o 2-4 hours of additional power during outages.
Why a Microgrid?
Location, if approved
Microgrid Site Beck’s Hill Road
• Location, if approved
Utility Source
Microgrid Site
Beck’s Hill Road
Customers within Microgrid Area
• Location, if approved
How Does it Work?
Microgrid:Battery Storage& Solar PV
17 Residential Customers
Recloser
Utility Source
Fused Disconnect
Closed
• How Does it Work – Grid Connected
17 Residential Customers
Utility Source
PV charges batteries and excess energy supports the grid.
Batteries can be discharged to support grid, as needed.
Recloser
Microgrid:Battery Storage& Solar PV
Closed
Fused Disconnect
• How Does it Work – Microgrid
Utility Source
1. Loss of Source Power
3. Safety Checks:- Microgrid Recloser did not lock out- Microgrid Recloser is not in hot line hold- Microgrid is not disabled
4. Microgrid Recloser Opens5. Microgrid is energized
Recloser
Microgrid:Battery Storage& Solar PV
ClosedOpen
17 Residential Customers
Fused Disconnect 2. IEEE 1547 trips A/C coupled inverters
• How Does it Work – Reconnect to Utility
Utility Source
1. Source power is available2. Safety Checks:
- Microgrid Recloser is not in hot line hold- Microgrid is not disabled- Microgrid is energized
3. Microgrid is then de-energized4. Microgrid Recloser is closed in to restore utility power
Recloser
Microgrid:Battery Storage& Solar PV
ClosedOpen
17 Residential Customers
Fused Disconnect
QUESTIONS?