EEI Spring Budgeting & Forecasting Meeting Utility Growth: Opportunities & Challenges
May 17, 2016
2
Agenda
PGE Overview
Generation Portfolio
Demand
Regional Environment
National Overview
Demand Growth
Electric Vehicles
Renewable Portfolio Standards
Oregon SB 1547
U.S. Tax Extender
Energy Storage
Distributed Energy Resources / Disintermediation
Potential Solutions
Q&A
PGE Overview
PGE at a Glance
Vertically integrated generation, transmission and distribution
852,164 customers(1)
46% of Oregonians
Majority of Oregon’s commercial and industrial activity
4(1) As of 12/31/2015
Quick Facts:
Financial Snapshot(1):
Revenue: $1.9 billion
Earnings per share: $2.04
Net Utility Plant Assets: $6.0 billion
GasHydro Coal
WindService territory
BeaverPort Westward 1 & 2
WASHINGTONOREGON
Portland
Faraday
Oak Grove
I-5
26
84Columbia River
SandyRiver
Salem
North Fork
River MillT.W. Sullivan
Colstrip 3 & 4Montana
Eastern Oregon
Madras, Oregon
WashingtonTucannon RiverWind Farm
Coyote Springs
Biglow Canyon
Boardman
Carty
PeltonRound Butte
5
Changes driven by: New generation: Port Westward Unit 2 (natural gas, Q4 2014), Tucannon River (wind, Q4
2014), and Carty Generating Station (natural gas, July 2016)
(1) Based on an estimated forecast which includes new generation from Carty Generating StationNote: For both charts, hydro and wind/solar include PGE owned and contracted resources
Hydro21%
Coal19%
Natural Gas47% Wind & Solar
13%
PurchasedPower35%
Hydro17%
Wind & Solar 8%
Natural Gas18%
2013 Power Sources as aPercent of Retail Load
(2013 Actuals)
Coal22%
2017 Power Sources as aPercent of Retail Load
(2017 Estimate)(1)
4 years later
Changing Generation Portfolio
6
Load Growth
2,000
2,500
3,000
3,500
4,000
4,500
5,000Annual MWa - Avg Annual Growth of 1.2%Summer MWa - Avg Annual Growth of 1.2%Winter MWa - Avg Annual Growth of 1.1%Summer Peak - Avg Annual Growth of 1.1%Winter Peak - Avg Annual Growth of 0.9%
7
Regional Environment
Energy Imbalance Market (California ISO – market operator): Current:
PacifiCorp NV Energy
Announced (entry): Puget Sound Energy (2016) Arizona Public Service (2016) Portland General Electric (2017) Idaho Power (2018)
Drivers: Increased renewable resources to meet RPS
Impact of California mandates and rooftop solarpenetration
Bonneville Power Administration controlled grid
8
SWOT Analysis: PGE’s Position in the Marketplace
Strengths Demand / appealing service
territory Relative low cost provider Diverse generation portfolio Plentiful renewables Single state jurisdiction
Opportunities Leverage positive customer
relationships New technologies Data-driven decision making New legislation
Weaknesses Conservative corporate culture Siloed company structure Loss of expertise (turnover due to
retirements) Difficulties attracting and retaining
talented workforce
Threats New markets entrants / non-
conventional business models Competitive offerings Disruptive technology Disintermediation
National Overview
Demand Growth
Actual (1990-2014):1.4% CAGR
Projected (2015-2040):0.7% CAGR
10 Source: U.S. Energy Information Administration (April 2016)
Residential
Commercial / Other
Industrial
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2012 2019 2026 2033 2040
(bill
ion
kilo
wat
thou
rs)
Electricity Sales
Electric Vehicle Demand
11 Sources: IEE Whitepaper “Forecast of On-Road Electric Transportation in the U.S. (2010 – 2035)” (April 2013)
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2010 2015 2020 2025 2030 2035
(tho
usan
ds o
f ele
ctrif
ied
light
y du
ty v
ehic
les)
Electric Vehicles
Low Medium High
147 TWh
112 TWh
33 TWh
Cumulative Electricity Use
WA: 15% x 2020*
OR: 25%x 2025* (large utilities)
CA: 50% x 2030
MT: 15% x 2015
NV: 25% x2025* UT: 20% x
2025*†
AZ: 15% x 2025*
ND: 10% x 2015
NM: 20%x 2020 (IOUs)
HI: 100% x 2045
CO: 30% by 2020 (IOUs) *†
OK: 15% x 2015
MN:26.5% x 2025 (IOUs)
31.5% x 2020 (Xcel)
MI: 10% x 2015*†WI: 10%
2015
MO:15% x 2021
IA: 105 MW IN:10% x 2025†
IL: 25% x 2026
OH: 12.5% x 2026
NC: 12.5% x 2021 (IOUs)
VA: 15% x 2025†
KS: 20% x 2020
ME: 40% x 2017
29 States + Washington DC + 3 territories have a Renewable Portfolio Standard (8 states and 1 territories have renewable portfolio goals)
Renewable portfolio standard
Renewable portfolio goal Includes non-renewable alternative resources* Extra credit for solar or customer-sited renewables†
U.S. Territories
DC
TX: 5,880 MW x 2015*
SD: 10% x 2015
SC: 2% 2021
NMI: 20% x 2016
PR: 20% x 2035
Guam: 25% x 2035
USVI: 30% x 2025
NH: 24.8 x 2025VT: 75% x 2032
MA: 15% x 2020(new resources) 6.03% x 2016 (existing resources)
RI: 14.5% x 2019CT: 27% x 2020
NY: 29% x 2015
PA: 18% x 2021†
NJ: 20.38% RE x 2020 + 4.1% solar by 2027
DE: 25% x 2026*
MD: 20% x 2022DC: 20% x 2020
Renewable Portfolio Standards
Source: dsireusa.org / October 201512
Oregon Senate Bill 1547
13
Increased the Renewable Portfolio Standard requirements
Prior:15% by 201520% by 202025% by 2025
Current:27% by 202535% by 203045% by 203550% by 2040
Requires Energy Service Suppliers to comply with standard
Allows energy storage to be included in the Renewables Adjustment Clause
Creates opportunity to update projection of Production Tax Credits included in rates annually
U.S. Tax Extender
14
Signed into law December 2015
5-year extension of the Production Tax Credit with a phase out
ITC extension for solar projects through 2022 (normalization remains an impediment). Start of construction:
Before 1/1/2020 – 30% Before 1/1/2021 – 26% Before 1/1/2022 – 22%* After 1/1/2022 – 10%
Begin before 1/1/2017
100%
Begin before 1/1/2018
80%Begin before 1/1/2019
60%Begin before
1/1/202040%
Begin after 1/1/2020
0%
*10% if beginning construction before 1/1/2022, but placed in service after 12/31/2023
PTCs
Energy Storage
15
AB2514 / California Procurements 1.325 GW of energy storage by 2020 Utilities may own no more than half of the
storage procured
SCE 235MW Lithium-ion 25.6MW ice storage
PG&E 42MW Lithium-ion 20MW flywheels 13MW zinc-based
PJM 246MW of battery storage 20MW flywheels Evaluating thermal storage and EVs
Distributed Energy Resources / Disintermediation
16
Distributed Generation Rooftop PV Community Solar Dispatchable Standby Generation Combined Heat and Power Fuel Cells Micro turbines
Distributed Storage
Electric Vehicles
Demand Response
Energy Efficiency
Disruptive Technologies / Business Models
Potential Solutions
17
Regulatory Changes to pricing structure to align fixed costs with fixed charges Incentive mechanisms for utilities to support Transition Adjustments for DERs
Partnerships with emerging technology firms
Anticipate structural / disruptive changes; develop / revise business model