commission workshop...aug 20, 2019 · add a footer 3 key revenue assumptions •retail sales are...
TRANSCRIPT
COMMISSION WORKSHOPD a t e : 8 / 2 0 / 2 0 1 9
T i m e : 9 : 0 0 A M
L o c a t i o n : C h e h a l i s
WORKSHOP AGENDA• K e y R e v e n u e D r i v e r s
• H y d r o F o r e c a s t i n g
• P o w e r P o r t f o l i o
• P o r t f o l i o M o d e l i n g
• R e t a i l R e v e n u e F o r e c a s t i n g
• K e y Ta k e A w a y s
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Key Revenue Assumptions
• Retail sales are planned to be 5% below the system planning assumptions
• Wholesale sales are based on P25 water and flat future wholesale prices
• Transmission wheeling revenues are expected to remain constant
• Customer paid construction is expected to increase by 3% per year
• Pole attachment revenue is expected to increase as the rates are updated
• Interest income is expected to increase through active management
• Fiber sales are flatBudgeted Amount
2020 2021 2022
Sales - Retail Electricity (69,457,500)$ (68,702,100)$ (68,943,800)$
Sales - Wholesale (4,382,600)$ (5,040,700)$ (5,286,300)$
Sales - Transmission (1,255,500)$ (1,255,500)$ (1,255,500)$
Sales - Fiber (399,300)$ (399,300)$ (399,300)$
Sales - Other Revenue (4,117,600)$ (4,343,100)$ (4,292,100)$
Grand Total (79,612,500)$ (79,740,700)$ (80,177,000)$
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Hydro Forecasting• Staff will be using a “P25”
water supply assumption when creating the budget.
• P25 planning assumes that we will receive a larger water supply than expected 3 out of 4 years.
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Hydro Forecasting• 1 acre foot = an acre of
water that is 1 foot deep
• 1 maf = 1 million acre feet of water
• The average runoff for the Columbia River Basin is 132 maf per year.
• Roughly 43 trillion gallons of water come through the basin every year.
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Portfolio Modeling
2
126 8
2735
27
10 7
-5 -71 3
9 13 10
23
33 35
1814
-2 -34
815 18 18
41
52
42
24 20
3 210
10
915 14
19
18
14
1414
11 12 12 10
1010 12
12
12 10
1010
10 1010 5
55 5
5
5
5
55
5 5
5
-40 aMW
-20 aMW
aMW
20 aMW
40 aMW
60 aMW
80 aMW
ATC Net Position ATC Net Sales Limit Long Limit Short
Balanced Load & Generation
Total Position Un-Hedged Position
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$-
$5.00
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$25.00
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Jan
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No
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Portfolio Modeling
The expected forward price curve escalates in the future
Staff is using a flattened forward price curve to remove the time premium
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Portfolio Modeling - Pricing and Hedging
57%
45%
19%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2020 2021 2022
Percentage of Portfolio Hedged• Selling high confidence surplus
power locks in price and certainty for the budget.
Retail Revenue Forecasting
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60 aMW
70 aMW
80 aMW
90 aMW
100 aMW
110 aMW
120 aMW
130 aMW
Actual Forecast Conservative Adjustment Linear (Actual)
Budgeting Forecast
System Planning Forecast
Loads have been on the decline since 2008
Retail Revenue Forecasting
10
Sales - Retail Electricity
86%
Sales -Wholesale
7%
Sales -Transmission
2%
Sales - Fiber>1% Sales - Other
Residential56%
Commercial 16%
Industrial17%
Industrial Transmission
5%
Irrigation>1%
Lighting>1%
Public Entities6%
Electric System Revenue Retail Revenue + Taxes
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Key Take-Aways• Retail sales make up 86% of our PUD’s revenue budget.
• Temperature and hydro conditions impact retail and wholesale revenue significantly.
• Staff has been tasked with increasing revenue from areas other than retail sales.
• Actively managing our asset portfolio including our fiber infrastructure will benefit customer rates.
• Preliminary estimates show revenue below expenditures each of the years modeled
• To balance the budget staff will evaluate a mix of:• reducing expenditures,
• increasing customer rates,
• increasing outside revenue,
• debt issuance for large capital items
