HomeMy WebLinkAbout18 Purchase Power Review FY20AGENDA ITEM #18
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MEETING DATE:April 7, 2021
TO:Board of Directors
FROM:Joe Horvath P.E., Electric Utility Director/Assistant GM
SUBJECT:Purchase Power Review FY20
APPROVED BY______________________________
Brian C.Wright, Interim General Manager
RECOMMENDATION:
Provide input to staff on the District’s actual versus budgeted purchase power costs and
energy consumption for FY20.
BACKGROUND:
On September 4, 2019, a W orkshop was presented to the Board to discuss the District’s
proposed Purchase Power and Resource Plan as part of the proposed FY20 and FY21
budget. This workshop covered the following topics: renewable portfolio standard targets;
conservation as first resource; diversified power supply plan; future renewable resources;
California Air Resources Board (CARB) Cap and Trade program; and proposed resources
and forecast costs for these fiscal years.The FY20 and FY21 Purchase Power and
Resource Plan was approved by the Board on November 6, 2019. The Purchase Power
Plan budgeted amounts, based on a forecasted energy purchase of 167,750 MWh,and a
summary of budgeted versus actual amounts for FY20 are shown in the following tables:
Cost Item Budget $/MWh
Total Energy Supply -Various $11,797,467 $70.33
Transmission –NV Energy $990,057 $5.90
Total FY20 $12,787,524 $76.23
Item Budget Actual % Change
Total Energy Consumption (MWh)167,750 169,091 0.8%
Purchase Power Cost per ($/MWh)$76.23 $66.74 -12.5%
Total Energy Cost FY20 $12,787,524 $11,285,537 -11.7%
The District’s total energy consumption was about 1%more than budget, and purchase
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power costs were almost 12% less than budgeted during FY20. The two major factors that
affect the total purchase power cost are energy consumption by our customers and
resource costs. A 1%increase in energy usage, by itself, should equate to a corresponding
but approximate 1%increase in purchase power costs.The purchase power cost also
absorbed $150,000 in Stampede hydro power costs that were re-allocated in April,2020 to
provide funding for customer relief funds as a result of the COVID pandemic.Despite these
increases, there were several factors that contributed to a reduction in total purchase
power costs. The District is a winter peaking utility, but almost all other UAMPS members
are summer peaking.This year,UAMPS resources and the member Pool performed better
than budgeted. In addition, UAMPS performed better than budgeted across all projects due
to timely market transactions and conservative financial practices on behalf of all members.
The District’s portion was credited against our purchase power costs.The District has also
been very conservative in budgeting purchase power costs due to market volatility and the
variability of renewable generation.All these factors helped reduce the District's actual
purchase power cost compared to budget.
Energy costs and consumption by month for FY20 are graphically depicted in the graphs
included in Attachment 1:
Budgeted vs. Actual Power Purchase Cost, 2020;
Budgeted vs. Actual MWh Consumption by Month, 2020;
Peak Load in MW by Month, 2015-2020;
Budgeted vs. Actual Power Sales, 2006-2020;
Resource Mix by Percentages, 2020; and
Resource Mix in MWh Purchases, 2014-2030.
Historical energy usage data for the years 2005 through 2020 are depicted in the following
tables included in Attachment 2:
Energy Purchases with Transmission System Losses;
Actual vs. Budgeted Energy Purchases;
Energy Sales to Customers; and
Distribution System Losses.
The District’s average energy growth over the last 15 years is about 1% per year.This has
been historically off-set by strong performance of the District’s energy conservation
programs.In FY20 the District consumed 169,091 MWh compared to 163,467 MWh in
F19, an increase of about 3.5% in just one year. It is likely that this increase is due to
effects of the COVID pandemic which resulted in more energy usage as customers stayed
at home.It is unclear whether this is a one-time increase, or a trend that will continue in the
future due to electrification initiatives at the State and Federal level.
Renewable Portfolio Standard (RPS)
On October 2, 2013 the Board approved the Renewable Energy Resources Procurement
Plan per the requirements of Senate Bill (SB)X1-2 (2011). This plan defines the minimum
required percentage (RPS) of renewable energy resources compared to retail sales per
three-year compliance period to the end of 2020. Other legislation has increased the RPS
requirements and extended the compliance periods to the end of 2030. In 2015, SB 350
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was signed into law, which mandated a 50% RPS by December 31, 2030. In 2018, SB 100
was signed into law, which again increases the RPS to 60% by 2030 and requires all
state's electricity to come from carbon-free resources by 2045. Compliance periods and
RPS requirements are as follows:
Period 1 -January 1, 2011 through December 31, 2013 -20% RPS;
Period 2 -January 1, 2014 through December 31, 2016 -25% RPS;
Period 3 -January 1, 2017 through December 31, 2020 -33% RPS;
Period 4 -January 1, 2021 through December 31, 2024 -44% RPS;
Period 5 -January 1, 2025 through December 31, 2027 -50% RPS; and
Period 6 -January 1, 2028 through December 31, 2030 -60% RPS.
The District’s final RPS amount is the ratio of all qualifying renewable energy received
divided by the District’s total retail energy sales, as defined by the California Energy
Commission (CEC). Section 3201(bb) of CEC regulations define retail energy sales as:
"Sale of electricity by a POU to end-use-customers and their tenants, measured in MWh.
This does not include energy consumption by a POU, electricity used by a POU for water
pumping, or electricity produced for onsite consumption (self-generation)." The retail
energy sales calculation for the District according to the CEC definition is shown in the
following table:
Retail Sales per CEC MWh
Retail Sales to Customers 159,134
Water Pumping -7,252
Other District Usage -517
2020 Retail Sales for RPS 151,365
The District has a diverse portfolio of renewable resources including hydroelectric, landfill
gas, wind, and heat recovery generation. Most of these resources include renewable
energy credits (RECs) that are transferred to the District in accordance with the energy
generated. However, several resources including Stampede hydroelectric, TCID
hydroelectric, and Veyo heat recovery projects come with a partial amount of RECs, or no
RECs at all.These resources actually generated about 24,435 MWh in 2020.Since these
are RPS eligible and/or carbon free resources, the District purchased additional RECs to
supply the RECs that were lacking from these resources.The District's estimated
renewable energy portfolio performance, or RPS, for 2020 is shown in the table below.
Eligible Renewables and Carbon-Free MWh RECs % Retail Sales
Hydroelectric (Stampede)7,624 5.0%
Landfill Gas (Transjordan)24,597 16.3%
Wind (Horse Butte, Pleasant Valley)47,833 31.6%
Heat Recovery (Veyo, carbon-free, w/o RECs)0 0.0%
Unbundled RECs (Small Hydro & Heat Recovery)14,000 9.2%
2020 Estimated RPS 62.1%
RPS Requirement 33.0%
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The District's final RPS value for FY20 will be known only after final energy and REC
information for District resources becomes available sometime in Q2, 2021. The final RPS
value is typically somewhat greater than the estimated value above.However, the final
RPS is also dependent upon the total amount of RECs that the Western Area Power
Administration (WAPA) transfers to the District for Stampede generation. This amount
varies from year to year, and is typically much less than half of the actual energy delivered
to the District from Stampede.In addition,changes to the overall RPS value are also due
to the variability of renewable resource generation from year to year.
California Air Resources Board (CARB) Cap and Trade Program
The Cap-and-Trade Program is a key element of California’s strategy to reduce
greenhouse gas (GHG) emissions,with annual auctions that began in 2013. Section
95892(d)(3) of the regulation states the following: "Auction proceeds and allowance value
obtained by the electric distribution utility shall be used exclusively for the benefit of the
retail ratepayers of each distribution utility, consistent with the goals of AB32, and may not
be used for the benefit of entities or persons other than such ratepayers." The Board
approved the use of auction proceeds to offset the cost of the District's renewable energy
resources, therefore meeting the goals of AB32.Four auctions were held in 2020, with
results as shown below.
Settlement Revenue to
2020 Cap and Trade Auctions Price District
Auction 22, February 2020 $17.87 $375,270
Auction 23, May 2020 $16.68 $289,164
Auction 24, August 2020 $16.68 $411,396
Auction 25, November 2020 $16.93 $368,668
Total Auction Proceeds 2020 $1,444,498
The revenues collected from the auctions in one fiscal year is spent in the following fiscal
year, consistent with standard accounting practice.Staff estimated auction proceeds to be
$1,400,000 in FY20.This amount was conservatively budgeted as revenue in FY21 to help
pay for renewable resources.The actual auction proceeds were slightly higher than
budgeted for FY20.The number of auction allowances were greatly reduced by CARB for
all POU’s, including the District, starting in FY21. Staff estimates auction proceeds to be
about $600,000 for FY21 and beyond.
This item is in support of the following objectives and goals identified by the District.
1.05.020 Objectives:
1.Responsibly serve the public.
5. Manage the District in an environmentally sound manner.
6. Manage the District in an effective, efficient and fiscally responsible manner.
1.05.030 Goals:
1.1.Conduct the District’s business in a legal, ethical, open, and transparent
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manner.
5.1 Seek power supply from a resource mix that satisfies its RPS program.
6.6.Develop appropriate financial procedures to assure responsible financial
management.
FISCAL IMPACT:
A summary of budgeted versus actual amounts for FY20 are shown in the following table:
Summary FY20 Budget vs Actual
Power Purchases, MWh Budget Actual
Total Energy Purchase, MWh 167,750 169,091
Percent Difference, Actual vs. Budget 0.8%
Power Purchase Costs Budget Actual
Total Energy Supply $11,797,467 $10,468,125
Transmission -NV Energy $990,057 $983,732
Miscellaneous Costs $0 $17,993
UAMPS Operating Margin $0 ($184,313)
Total Power Purchase Cost $12,787,524 $11,285,537
$ Over/(Under) Budget ($1,501,987)
Difference, Actual vs. Budget -11.7%
Purchase Power Cost ($/MWh)$76.23 $66.74
Percent Difference, Actual vs. Budget -12.4%
Peak Load Information Budget Actual
District Peak Load, MW 39.0 34.7
Difference, Actual vs. Budget -11.0%
ATTACHMENTS:
1.Energy Costs and Consumption by Month -FY20
2.Historical Energy Usage Data -FY06 to FY20