HomeMy WebLinkAbout#16 Purchase power plan FY23 AGENDA ITEM #16
Public Utility District m
MEETING DATE: April 3, 2024
TO: Board of Directors
FROM: Jared Carpenter, Electric Utility Director
SUBJECT: Considering Review of the District's Purchase Power Plan for FY23
APPROVED BY:
Brian C. Wright, General Manager
RECOMMENDATION:
Provide input to staff on the District's actual versus budgeted purchase power costs and
energy consumption for FY23.
BACKGROUND:
On October 6, 2021, a Workshop was presented to the Board to discuss the District's
proposed Purchase Power Plan as part of the proposed FY22-23 Budget. The
workshop covered forecast energy and costs for these fiscal years. The Board
approved the FY22-23 Purchase Power Plan on November 3, 2021, with the adoption
of the FY22-23 Budget. The FY23 Purchase Power Plan budgeted amounts, based on
a forecast energy purchase, and the actual amounts are included in Attachment A.
ANALYSIS AND BODY:
Like many electric utilities, CY 2022 was a landmark year because nationwide energy
volatility hit levels not seen since the California energy crisis of 2001-2002. The most
volatile months were November and December 2022, and continued into January 2023.
The District responded by looking for opportunities to reduce financial exposure, while
still meeting the goals of the Renewable Portfolio Standard. Each year, the Staff
presents to the Board its Power Purchase review, which details how energy is
consumed and costs compared with previous years, and the forecasts presented. While
CY 2023 started with high uncertainty, Staff was able to create solutions to help
mitigate the volatility in November and December 2023, and continued into January
2024. Attachment A provides details of the success of CY 2023.
GOALS AND OBJECTIVES:
District Code 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.
Page 1 of 2
Page 94 of 159
District Code 1.05.030 Goals:
1. Manage for Financial Stability and Resiliency
2. Environmental Stewardship: Create a sustainable resilient environment for all our
communities.
3. Engage with our customers and communities in a welcoming and transparent way to
identify opportunities.
4. Take the best of private sector thinking to modernize the utility and add value to our
communities.
FISCAL IMPACT:
None.
ATTACHMENTS:
1. Attachment A - Purchase Power Review FY23
Page 2 of 2
Page 95 of 159
Truckee Donner Public utility District
2023 Purchase Power Review
BACKGROUND:
The FY22-23 Purchase Power Plan was approved by the Board on November 3, 2021 with
the adoption of the FY22-23 Budget. The FY23 Purchase Power Plan budgeted amounts,
based on a forecasted energy purchase of 171,978 MWh, and a summary of budgeted
versus actual amounts for FY23 are shown in the following tables:
JMBudg�/MWh
Total Energy Supply -Various $12,899,463 $75.00
Transmission — NV Energy $1,082,537 $6.29
Total FY23 $13,982,000 $81.30
% DifF
Total Energy Consumption (MWh) 171,978 172,797 0.5%
Purchase Power Cost per($/MWh) $81.30 $84.17 3.5%
Total Energy Cost FY23 $13,982,000 $14,544,200 4.0%
Over(Under) Budget $562,200
The Actual for 2023 excludes the $475,763 CVPIA legal settlement proceeds which
credited purchased power costs. These proceeds were planned for in budget approval to
be transferred to rate reserve and are a component of the FY23 budget review agenda item
of this 4/3/3024 board meeting.
Energy production (MWh) by source in FY23, and the change compared to the previous
year, is detailed in the following table:
Note: Gree denotes carbon-free and brown denotes fossil fuel or an unspecified fuel
resource.
Page 1 of 6
Page 96 of 159
Source 2021 2022 2023 Change(2022 vs.2023) Type
Horse Butte Wind 46,067 42,795 37,990 (4,805)Intermittent
Pleasant Valley Wind 405 453 332 (121)Intermittent
Transjordan Landfill Gas 26,029 25,436 26,693 1,257 Base Load
Stampede Dam(WAPA) 5,597 8,474 7,148 (1,326)Intermittent
TCID Hydroelectric Dams 3,741 7,601 4,380 (3,221)Intermittent
Red Mesa Solar 13,270 13,270 Intermittent
Veyo Waste Heat Recovery 6,108 10,194 9,136 (1,058) Base Load
Nebo Natural Gas 16,203 15,567 20,884 5,317 Base Load
5-Year Market Purchase 33,114 18,923 17,511 (1,412) Base Load
Unspecified Market Purchases 32,7711 44,380 35,453 (8,927) Base Load
Total Energy Production r 170,035r 173,823 172,797 (1,026)
The District's total energy consumption was less than 1% more than budget, and total
purchase power costs were $562,200 or 4% more than budgeted. For reference, FY22 was
$3,314,869 or 25% more than budgeted. The below chart shows the monthly variances
between actual and budgeted.
Actual vs. Budget
$3,500,000
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
rl r-I r-I r-I rl rl N N N N N N [YS M m m M M
N N rh N N N N N N N N N N N N N N N
C L >_ -S a > c L >. - a a C -S a >
M - W o M ro m ? W o M rc - a) o
V1 z - 2 2 Ln z Ln z
-Actual -Budget
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 defined 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
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 or clean resources by 2045. In addition,
lawmakers passed SB 1020 in 2022, which requires 90% clean electricity by the end of
2035 and 95% by the end of 2040 as intermediate milestones to the target of 100% clean
energy by 2045. Compliance periods and RPS requirements are as follows:
Page 2 of 6
Page 97 of 159
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 District has a diverse portfolio of clean resources including hydroelectric, biogas, solar,
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. Since
these are RPS eligible and/or carbon free resources, the District purchased additional
RECs to cover the RECs that were lacking from these resources.
The District's final RPS value for FY23 will be known only after final energy and REC
information for District resources becomes available sometime in Q2, 2024, after final
numbers are compiled by the Western Area Power Administration (WAPA), UAMPS and
other sources that need to transfer the final values to the District. However, the below table
shows the District's power supply sources since 2020 including our current estimates for
2023, and includes the California numbers for general comparison.
Renewable Portfolio Standard Review 2020 2021 2022 2023
TDPUD CA TDPUD CA TDPUD CA TDPUD CA
Eligible Renewable 54% 33% 48% 33% 46% 36% 51%
Biomass&Biowaste 16% 3% 17% 2% 16% 2% 15%
Geothermal 0% 5% 0°% 5°% 0% 5°% 0%
Eligible Hydroelectric 6% 1% 1°% 1% 3°% 1°% 4%
Solar 0% 13% 0% 14% 0% 17% 8%
Wind 32% 11% 30% 11% 27% 11% 24%
Coal 0% 3% 0% 3% 0% 2% 0%
Large Hydroelectric 0% 12% 0% 9% 0% 9% 0%
Natural Gas 10% 37% 10% 38% 10% 36% 12%
Nuclear 0% 9% 0% 9% 0% 9% 0%
Other 11% 0% 6% 0% 11% 0% 5%
Unspecified Power 26% 5% 35% 7% 34% 7% 31%
Total 101% 100% 1 100% 100% 100% 100% 100% 0%
Percent of Retail Sales Covered by
Retired Unbundled RECs 14% 0% 14% 0% 14% 1 0% 13%
ANALYSIS:
Staff believes that, for the District, a future with higher load growth driven by community
growth and electrification is likely. Not only must the District continue to convert our current
electric resource portfolio to 100% clean or carbon-free, we must also plan for additional
resources with growth and financial instability in the energy markets. This necessitates
Page 3 of 6
Page 98 of 159
electric resource planning that considers and incorporates multiple factors including:
• Carbon Free vs. RPS vs. Fossil Fuel Resources - The District's FY23 RPS is
estimated to be 64%, which is ahead of State mandates, with efforts to achieve
100% carbon free by 2045 or sooner while considering rates and reliability;
• Intermittent vs. Base Load Resources - A significant portion of the District's
renewable resources are wind, solar, and hydroelectric and are intermittent in
nature, with no control over the timing and amount of generation. In order to meet
the District's 24-hour load needs, base-load, energy storage, or resources that can
be scheduled are required;
• Daytime vs. Nighttime Availability- The District has modeled our current portfolio,
with the addition of Red Mesa Solar Project, and demonstrated that we are
approaching 100% carbon free during the daytime hours. In orderto achieve 100%
carbon free, the District will be increasingly required to procure carbon free
resources during the evening and nighttime hours;
• Affordability and Equity - The District must continue to consider the impacts of
rising electric rates on our community and to California's climate goals and
strategies. Electric rates are bricks and mortar for economic development and
critical for electrification efforts;
• Portfolio Timing, Diversification, and Risk - The management of the District's
electric resource portfolio considers and balances - in addition to all of the above -
timing, diversification, and risk; and
• Conservation and Demand-Side Management Programs - Reducing energy
consumption, and most importantly the time of energy consumption, can reduce
resource procurement requirements and costs.
During FY2023, Staff created workshops, addressed future actions to address the District's
electric resource planning and how this fits with the District's budgets, strategic initiatives,
regulatory requirements, and mission. Staff hired a consultant to develop an Integrated
Resources Plan (IRP) that can be found on the website. The IRP is a long-term planning
tool used to evaluate and optimize the District's portfolio of energy supply resources,
including energy efficiency and demand response, in order to meet our customer's electric
needs well into the future. Highlights of the IRP include:
• Adding local generation and energy storage will be helpful;
• Incorporate geothermal or small hydroelectric resources into the power
supply mix;
• Change the Districts energy efficiency programs to be more focused on peak
demand savings.
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
Page 4 of 6
Page 99 of 159
resources, therefore meeting the goals of AB32. Auction results are shown below.
Cap and Trade Settlement Proceeds to
Price District
2021 Cap and Trade Auctions
Auction 26, February 2021 $ 17.80 $ 169,100
Auction 27, May 2021 $ 18.80 $ 178,600
Auction 28,August 2021 $ 23.30 $ 221,350
Auction 29, November 2021 $ 28.26 $ 278,135
Total Auction Proceeds FY21 applied
as revenue in FY22 $ 847,185
2022 Cap and Trade Auctions
Auction 30, February 2022 $ 29.15 $ 131,816
Auction 31, May 2022 $ 30.85 $ 139,504
Auction 32,August 2022 $ 27.00 $ 122,094
Auction 33, November 2022 $ 26.80 $ 121,189
Total Auction Proceeds FY21 applied
as revenue in FY23 $ 514,603
2023 Cap and Trade Auctions
Auction 34, February 2023 $ 27.85 $ 84,180
Auction 35, May 2023 $ 30.33 $ 92,264
Auction 36,August 2023 $ 35.20 $ 107,078
Auction 37, November 2023 $ 38.73 $ 117,817
Total Auction Proceeds FY21 applied
as revenue in FY24 $ 401,339
Staff estimates auction proceeds in the current financial master plan to be $350,000 for
FY24 and beyond, although this is directly impacted by trends in auction settlement prices
and any additional regulatory changes.
FISCAL IMPACT:
A summary of budgeted versus actual energy and cost amounts for FY22 and FY23 are
shown in the following table:
Page 5 of 6
Page 100 of 159
2022 2023
Budget Actual Budget Actual
Power Purchases, MWH 170,275 173,824 171,978 172,797
Total Energy Purchase, MWH 2.1% 0.5%
Power Purchae Costs Budget Actual Budget Actual
Total Energy Supply $ 12,463,084 $ 15,579,403 $ 12,899,463
Transmission - NV Energy $ 1,045,916 $ 1,216,762 $ 1,082,537 $ 1,082,537
Miscellaneous Costs $ 27,704
Total Power Purchase Cost $ 13,509,000 $ 16,823,869 $ 13,982,000 $ 14,544,200
$Over/(Under) Budget $ 3,314,869 $ 562,200
Difference, Actual vs. Budget 24.5% 4.0%
Purchase Power Cost ($/MWH) $ 79.34 $ 96.79 $ 81.30 $ 84.17
Percent Difference,Actual vs. Budget 22.0% 3.5%
11
Goals and Objectives:
This item is in support of the following goals and objectives:
District Code1 .05.030 Goals:
1. Manage for Financial Stability and Resiliency
2. Environmental Stewardship: Create a sustainable resilient environment for all of our
communities.
District Code1 .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.
Page 6 of 6
Page 101 of 159