quarterly business review - bpa.gov · bp-18 rate case q2 forecast. b o n n e v i l l e p o w e r a...

QUARTERLY

BUSINESS REVIEW MAY 1, 2018

INTRODUCTION Scott Simms, DIRECTOR OF COMMUNICATIONS

S L I D E 2 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | S C O T T S I M M S

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

AGENDA

Time Presentation Speaker

9:00 – 9:02 Introductions Scott Simms Director of Communications

9:02 – 9:20 State of the business: • Grid modernization • Environment, Fish and Wildlife

updates

Elliot Mainzer Administrator

9:20 – 9:30 Finance update Mary Hawken Acting chief financial officer

9:30 – 9:40 Power Services update Joel Cook Senior VP of Power Services

9:40 – 9:50 Transmission Services update Richard Shaheen Senior VP of Transmission Services

9:50 – 9:51 Upcoming involvement opportunities Scott Simms

9:51 – 10:00 Question and answer session

S L I D E 3 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | S C O T T S I M M S

STATE OF THE BUSINESS Elliot Mainzer, ADMINISTRATOR AND CHIEF EXECUTIVE OFFICER

S L I D E 4 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | E L L I O T M A I N Z E R


SAFETY


0.4

0.9

1 1 1

1.1

1.2

0

0.5

1

1.5

Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Incident frequency rate Number of injuries and illnesses per 200,000 hours worked

2018 Ceiling


GRID MODERNIZATION


• Modernizing BPA’s assets and operations is a critical

element of our 2018-23 Strategic Plan and will help

increase competitiveness and customer

responsiveness.

– Increase power and transmission revenues.

– Reduce long-term transmission costs by potentially

decreasing or delaying the need for system expansion.

• We will enhance system operations in three major

ways: automation, accuracy and visibility.

• Sustained investment of $25 million per rate period

through 2021.


ENERGY IMBALANCE MARKET


• One outcome of grid modernization – the

potential to join the Western EIM.

• BPA is exploring how and under what conditions

it could participate in the EIM operated by the

CAISO.

• Initial cost-benefit analysis:

– Assumed start-up cost of $35 million.

– Annual benefit to Power Services of $14 million.

• BPA is committed to transparency and customer

engagement in working towards a decision on

whether to join the market.


OTHER GRID MOD ENGAGEMENTS


• BPA is engaging in related efforts to protect NW

interests and support developments that could

improve secondary revenues.

– Day-ahead capacity product: CAISO’s proposal for

day-ahead market enhancements includes an

imbalance reserve product.

– Intertie optimization: CAISO and others are studying

ways to increase dynamic transfer capability and

capacity of the AC and DC interties.


SPILL SURCHARGE


• On April 2, the 9th U.S. Circuit Court of Appeals

upheld the 2018 spill injunction. BPA will be

implementing a spill surcharge in FY 2018.

• The spill surcharge will adjust power rates to

recover the non-Slice portion of the cost

associated with increased spill and lost

generation relative to the spill assumptions used

when setting rates.


SPILL SURCHARGE

S L I D E 1 0 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | E L L I O T M A I N Z E R

• Next week BPA will share:

– Preliminary data and assumptions used to calculate

the surcharge.

– Information will include proposed program spending

reductions to help offset the spill surcharge.

• Rates staff will review these materials at a

workshop on May 16 at 1 p.m.


FISH ACCORDS


• Columbia Basin Fish Accords signed in 2008.

– Signed by action agencies, states and tribes.

– To date, partners have restored more than 8,000

acres of estuary floodplain and reopened nearly 4,000

miles of spawning grounds.

• Fish Accords are set to expire in September

2018.

• BPA actively exploring post-2018 path forward

on Fish Accords.


FISH ACCORDS


• Consideration for Fish Accords extension is the

2018-2023 Strategic Plan commitment:

– BPA intends to manage its fish and wildlife program

costs at or below the rate of inflation, inclusive of any

new obligations that may emerge from litigation or

subsequent commitments in current or future

biological opinions.

• As BPA further explores potential Fish Accords

extension, additional outreach will occur with

customers and regional stakeholders.

FINANCE Mary Hawken, ACTING CHIEF FINANCIAL OFFICER

S L I D E 1 3 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | M A R Y H A W K E N


$26

$361

0

100

200

300

400

FCRPS net revenues In millions of dollars

BP-18 Rate Case Q2 Forecast

AGENCY NET REVENUES



AGENCY FINANCIAL HEALTH


$3,627 $3,653

$3,300

$3,661

3100

3250

3400

3550

3700

Total expense Total revenue

Federal Columbia River Power System Total revenue and expense in millions of dollars

BP-18 Rate Case Q2 Forecast


Q2 BUDGET TRUE UP


1200

1300

1400

1500

1600

FY 2015 FY 2016 FY 2017 FY 2018

Historical agency underspend Total program expense in millions of dollars

Start-of-year budget Actuals FY 2018 budget true up


BUDGET ESCALATION


1450

1500

1550

1600

1650

FY 2017actuals

FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023

Cost-management objective escalation alternative Total program expense in millions of dollars

FY Target (BP-20 path) Rate period target


• Conducted depreciation study update using data

through FY 2016.

• The largest change is due to increased costs

associated with removing assets.

• New depreciation rates went into effect March

2018.

DEPRECIATION STUDY

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | M A R Y H A W K E N S L I D E 1 8


DAYS CASH ON HAND

S L I D E 1 9

BP-18 Rate Case FY 2018 EOY forecast

Power Trans. Agency Power Trans. Agency

EOY Reserves 170 468 638 214 566 780

Reserves not for risk 149 63 212 168 102 270

Reserves available for risk 21 405 426 46 464 510

Days cash on hand 4 237 64 9 275 76

*Reserves in millions of dollars

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | M A R Y H A W K E N

POWER SERVICES Joel Cook, SENIOR VICE PRESIDENT OF POWER SERVICES

S L I D E 2 0 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | J O E L C O O K


166

208 211 213

192 201

0

50

100

150

200

250


Power total expense Total expenses in millions of dollars

BP-18 Rate Case Actuals

POWER SERVICES EXPENSE

S L I D E 2 1

Total expense (in millions of dollars)

BP-18

Rate Case

Q2 EOY

forecast

BP-18

year-to-date

Expenses

year-to-date

2,629 2,488 1,281 1,190

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | J O E L C O O K


POWER SERVICES REVENUES


211 221

242

286 269

262

0

50

100

150

200

250

300


Power total revenues Total revenues in millions of dollars


Total revenues (in millions of dollars)

BP-18

Rate Case

Q2 EOY

forecast

BP-18

year-to-date

Revenues

year-to-date

2,827 2,841 1,449 1,491


PERCENTAGE OF ANNUAL RUNOFF


Where does the water come from? (as a percent of the annual runoff at The Dalles)

22% 15%

59%

14%

6%

4%

6%

8% 27%

10%


SNOWPACK CONDITIONS

S L I D E 2 4

National Weather Service official water

supply forecast as of April 9, 2018

Jan. – July

(million acre feet) Percent average

118.3 117

114% 113%

124%

145%

147%

162% 135%

112%

131% 89%

115%

117%

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | J O E L C O O K


HENRY HUB PRICES

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | J O E L C O O K S L I D E 2 5

2.87 2.97

2.75

3.69

2.66 2.65

2.0

2.5

3.0

3.5

4.0


Henry Hub prices In dollars per one million British thermal units

Actuals March 28 NYMEX Average BP-18 Rate Case

(0.40) (0.42)

(0.69)

0.23

(0.71)

(0.53)

(0.19) (0.13) (0.12) (0.10)

(0.05) (0.06)

(0.8)

(0.4)

-

0.4


Variance from BP-18 Rate Case In dollars per one million British thermal units

Actuals FY 2018 expected

BP-18 avg.: $3.12

3/28 avg.: $2.92


MID-C PRICES


26.53 26.06 27.44

22.51 21.42 20.53

10

15

20

25

30

35


Mid-C heavy load hour prices In dollars per megawatt hour

Actuals Forward market (ICE) BP-18 Rate Case

(1.02) (2.10) (3.32)

(7.29) (7.18)

(3.41) (3.41) (4.68) (3.93)

(3.02)

1.32

5.11

(0.21)

(8)

(4)

-

4

8


Variance from BP-18 Rate Case In dollars per megawatt hour

Actuals FY 2018 expected


POWER SERVICES CAPITAL


14 25

43

60

77 92

200

0

100

200

300


$ millions

Capital spend and TBD metric Tracks capital expenditure and work completed to date

Actual $ millions FYTD Remaining Forecast

Note: capital expenditure KPI includes only direct-funded federal hydropower capital.


FEDERAL HYDROPOWER RELIABILITY


Good

3.6

4.6

5.9

3

4

5

6

7

Q1 Q2 Q3 Q4

Federal hydropower forced outage factor Percentage of hours fed hydro projects are offline due to unplanned outages

FY 2018 Target


COLUMBIA GENERATING STATION RELIABILITY


93.5

95.6

94

92

93

94

95

96

Q1 Q2 Q3 Q4

Columbia Generating Station availability factor Percentage of time Columbia is available to serve demand

FY 2018 Target

Good

TRANSMISSION SERVICES Richard Shaheen, SENIOR VICE PRESIDENT OF TRANSMISSION SERVICES

S L I D E 3 0 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | R I C H A R D S H A H E E N


TRANSMISSION SERVICES EXPENSE


78 78 77

83 77

91

0

20

40

60

80

100


Transmission total expense Total expense in millions of dollars


Total expense (in millions of dollars)

BP-18

Rate Case

Q2 EOY

forecast

BP-18

year-to-date

Expenses

year-to-date

1,043 1,050 521 485


TRANSMISSION SERVICES REVENUES


85 88 89 91 92

99

0

20

40

60

80

100


Transmission total revenues Total revenues in millions of dollars


Total revenues (in millions of dollars)

BP-18

Rate Case

Q2 EOY

forecast

BP-18

year-to-date

Revenues

year-to-date

1,052 1,066 526 544


TRANSMISSION SERVICES CAPITAL


208

329

35

74 103

122 149

182

424

0

100

200

300

400

500

600

0

100

200

300

400

500

600


Units $ millions

Capital spend and units installed Tracks capital expenditure and work completed to date

Actual assets FYTD Remaining planned assets Actual $ millions FYTD Remaining Forecast


TRANSMISSION RELIABILITY - SAIFI


0.74

0.56

0.27

0.22

0.66

0.68

0

0.2

0.4

0.6

0.8

Q1 Q2 Q3 Q4

System average interruption frequency index Tracks frequency of unplanned outages

Low voltage (< 200kV) High voltage (>= 200kV) Low voltage warning level High voltage warning level

Good


TRANSMISSION RELIABILITY - SAIDI


150

99

129

76

430

260

50

150

250

350

450

Q1 Q2 Q3 Q4

System average interruption duration index Tracks duration of unplanned outages

Low voltage (< 200kV) High voltage (>= 200kV) Low voltage warning level High voltage warning level

Good


ENGAGE WITH TRANSMISSION

S L I D E 3 6

• Reliability coordination.

• Asset management.

• TC-20 (formerly Transmission tariff engagement

and Pro Forma Gap Assessment).

• Evolving transmission demand.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | R I C H A R D S H A H E E N

PUBLIC PROCESSES Scott Simms, DIRECTOR OF COMMUNICATIONS

S L I D E 3 7 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | S C O T T S I M M S


PUBLIC PROCESSES

S L I D E 3 8

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | S C O T T S I M M S

• May 9 – FY2020-21 Rate Period High Water Mark process workshop.

• May 10 – Resource Program workshop.

• May 15-16 – Efficiency Exchange Northwest 2018.

• May 16 – Spill surcharge workshop.

• May 22 – Strengthening financial health: capital financing workshop.

• May 30 – Columbia River System Operation EIS public update webinar.

• May 31 – TC-20 Tariff customer workshops.

– Additional meetings: June 26, July 23, Aug. 21.

• June 13 – South of Allston Bilateral Redispatch Pilot workshop.

• June 18–22 – Integrated Program Review.


COMMENT PERIODS

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 | S C O T T S I M M S S L I D E 3 9

• May 11 – Financial Reserves Policy and Leverage

Policy.

• May 24 – Bonneville Environmental Foundation

agreement extension.

QUESTION AND ANSWER

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R M A Y 2 0 1 8 S L I D E 4 0


The next QBR is scheduled for July 31, 2018.

Strategic plan is available at www.bpa.gov/StrategicPlan.

Didn’t get your question answered? Email [email protected]. Answers will be

posted to www.bpa.gov/goto/QBR.

THANK YOU


This information was publicly available on

April 30, 2018, and contains information not sourced

directly from BPA financial statements.

FINANCIAL DISCLOSURE


quarterly business review - bpa.gov · bp-18 rate case q2 forecast. b o n n e v i l l e p o w e r a...

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