Board of Directors Meeting July 27, 2017 Windy Gap Unit Sales and - - PowerPoint PPT Presentation

Board of Directors Meeting

July 27, 2017

Windy Gap Unit Sales and Storage Acquisition

Board of Directors Meeting July 27, 2017

Agenda

1. Review:

a) Timeline of Activities b) Platte River’s Current and Anticipated Water Needs c) Firming Project Modeling: Relationship between Firming Level Participation, Units Owned, and Firm Annual Yield d) Board Direction

2. Windy Gap Unit Sales and Storage Acquisition: Request for Proposal Process 3. Water Transaction Goals/Outcomes/Status Update

Apr 2016 Jul 2016 Jul - Oct 2016 Oct - Dec 2016 Jan - May 2017 June – Sept 2017 Finalized Water Resources Reference Document RFP Process Windy Gap Unit valuation process with consultant Discussions and negotiations with select bidders

Platte River Water Policy Development

Board direction to increase firming project participation, possibly sell units Water Policy and Resolution adopted December 2016 Transactions Finalized

Platte River’s Water Needs for Generation

Platte River’s Water Needs for Current Generation

4,200 AF/year – Obligations under Reuse Agreement 600 AF/year – Process Water 4,800 AF/year

Platte River’s Water Needs for Future Generation (2050)

Estimated: 6,200 AF/year

Platte River’s Windy Gap Allocation

160 Windy Gap Units Yield: 0 – 16,000 AF/year

Windy Gap Firming Project Modeling

• Modeling Assumption Scenarios:
• Based on historical hydrology and 5% shrink factor
• 2 years of no Windy Gap pumping because of drought
• 3 years of no Windy Gap pumping because of drought
• Evaluated various combinations of Firming Level and

Units Owned to estimate Firm Yield

• Same firm yield with 100 – 160 units

4,265 4,625 4,980 5,340 5,695

1,000 2,000 3,000 4,000 5,000 6,000 7,000 12,000 13,000 14,000 15,000 16,000

100 Units, 2 yrs w/no pumping 160 Units, 2 yrs w/no pumping

Current Future

Firming Level

Annual Firm Yield Under Various Unit and Firming Level Scenarios

Annual Firm Yield Firm yield: 3 yrs w/no pumping

Key Points

• Firming Level of 12,000 AF = insufficient annual firm

yield to meet current generation needs

• Firming Level of 14,000 AF = meets current needs
• Same annual firm yield, with retaining a minimum of 100 units
• Should increase to 16,000 AF if possible to meet future

generation needs, and/or longer drought period

• Opportunities:
• Unsubscribed storage in Chimney Hollow
• Partnerships with other Firming Project participants

Platte River Water Policy

Board Direction

• Maintain adequate water supplies for existing and future
• perations.
• Increase Firming Project Participation level from 12,000 AF up

to 16,000 AF (minimum target level of 14,000 AF)

• Manage Water as an Asset
• Lease unpumped reusable effluent as appropriate
• Sell and/or lease up to 60 Windy Gap units

‒ Maintain control of a minimum of 100 Windy Gap units

• Sell and/or lease Carter Lake Outlet Capacity

‒ Maintain control of 5 cfs for future operational needs

Windy Gap Unit Sales and Storage Acquisition

Process

• Request for Proposal published (current WGFP participants)
• Proposal evaluations, selection of finalists
• Negotiations/finalization of terms
• Right of First Refusal to the assigning municipalities
• Approval of Northern Water Municipal Subdistrict Board
• Agreement approvals/signatures (both parties)
• Agreement finalization/execution
• Payment
• Transfer of units
• Transfer of storage
• C-BT Lease agreements

Platte River’s Request for Proposal – Windy Gap

Results of Request for Proposal (RFP)

• Responses from six entities (seven different proposals)
• Responses were creative, unique and detailed
• Considerable range in proposals
• Moved forward and negotiated with four entities
• Selected the options that would give us the best combination
• f storage, pricing, interim water, and beneficial partnerships

‒ Town of Erie ‒ Little Thompson Water District ‒ City of Lafayette ‒ City of Fort Lupton

Platte River’s Request for Proposal – Windy Gap

Results of Request for Proposal (RFP)

• Negotiations resulted in:
• 90 AF of additional firming project capacity

‒ 1,444 AF  1,534 AF

• Selling two additional units, while removing future options

‒ 21 units plus future options on 10 units  to 23 units in total

• $8,701,500 additional revenue

‒ $30,288,500  $38,990,000 ‒ Sale of 2 additional units, and negotiated price increases on unit transactions

• Additional C-BT lease water

Transaction Goals and Outcomes

Increase firming level participation to at least 14,000 AF (up to 16,000 AF) Sell up to 60 units, while maintaining a minimum of 100 Windy Gap units Generate revenue to help off-set the project costs associated with increasing participation Secure some short-term leased water as an interim solution Develop water partnerships, project benefits

• Current participation level of

14,136 AF (increase of 2,136 AF)

• 1,534 from transactions
• 602 from unsubscribed allocation
• Sale of 23 units; current Windy

Gap allocation is 137 units

• Revenue of $39M
• Acquired short-term leased water
• ptions as an interim solution
• Partnered with four entities,

project now fully subscribed

Goals: Final Outcomes:

Windy Gap Firming Project Allocations

July 2017

Windy Gap Firming Project Participation Levels

Requested Units Storage Participant Owned Volume (af) Broomfield 56 26,464 PRPA 137 14,136 Longmont 80 10,000 Loveland 40 9,451 Greeley 52 9,189 Erie 20 6,000 Little Thompson WD 17 4,850 Superior 15 4,726 Louisville 6 2,835 Fort Lupton 13 1,103 Lafayette 3 900 CWCWD/Frederick 1 346 TOTAL 440 90,000

Permitted Design = 90,000 AF Cost per AF of Storage = $4,600 (2017 Estimate)

14,136

Broomfield PRPA Longmont Loveland Greeley Erie Little Thompson WD Superior Louisville Fort Lupton Lafayette CWCWD/Frederick

Status and Next Steps

• Three of the four transactions are successfully closed
• Fourth transaction closing is expected in September
• Continue to monitor market for opportunities to increase

Firming Project participation up to 16,000 AF

• Consider additional requests for Windy Gap unit sales for

additional revenue to help off-set costs

Questions/Discussion?

Board of Directors Meeting

July 27, 2017

Strategic Planning Update

Board of Directors July 2017

History of Planning – Strategy Level

• Organic Contract
• Power Supply

Agreements

• Bond Resolution
• Tariffs / Budgets

1970’s 2000’s 1990’s 1980’s 2010’s

Foundational Planning Financial Planning

• Debt Issuance

& Management

• Rate Changes
• Corporate Model
• Financial Plan

(SFP) Resource Planning

• Demand Side

Integration

• City Staff

Collaboration

• Integrated

Resource Plan Business Planning

• Deregulation
• Convergence
• Retail Customer

Collaboration

• Business Plans

Visioning

• Joint Services
• Key Accounts
• Collaboration
• Markets
• Visioning Plan

+ MULTIPLE POLICIES

• Legislative &

Regulatory

• Water Resources
• Energy Efficiency
• Others

Risk Management

• Y2K / Cyber
• PSCo Contract

Ending

• Summer Loads
• Risk Plan

– Vision – Mission – Strategic Objectives

Climate Action Plan

• Climate Science
• Legislation / Regulation
• Customer Interest

History of Planning – Strategy Level

‒ Vision ‒ Mission ‒ SFP ‒ IRP ‒ CAP ‒ Risk Mgmt. ‒ Policies

. . .

2014

• Updated Vision

& Mission

• Added Values
• New Initiatives

& Goals

• Updated SWOT

Analysis

• Integrated

Past Plans & Policies

2015 2017 2016

Updated:

• Initiatives

& Goals

• SWOT

Analysis

• Format
• Employee

Engagement Updated:

• Values
• Initiatives
• SWOT
• Goals
• Format

Updated:

• Goals
• Format
• Web version

added

Historical Planning Efforts & Documents

Where do we go from here?

Suggested Changes

Calls with Consultants Review of Peer Plans Senior Manager Input

Gathered Input & Insights

Suggestions for Next Plan

• Multi-year SP document is typical  vs. annual

– Longer term view – Flexible / update as significant changes occur

• Reduce detail  focus on higher level (strategic) perspective
• Align annual goals directly with the budget process
• Confirm / coordinate / combine “Values” and “Initiatives”
• Integrate recent priorities into strategic initiatives

– Board work session, renewables, employee engagement, etc.

• Pull out key documents and include overviews vs. detail

– Risk Plan, Integrated Resource Plan, Strategic Financial Plan, etc.

• Reorganize document for simplicity / readability
• Expand communications  internally & externally

Keep / Update (clean up Values & Initiatives) Integrate into Budget Document (remove from SP) Provide overviews on key topics + update current list (e.g. – remove IRP Action Plan) (e.g. – new section on evolving markets) Eliminate summary write-ups – provide direct links to municipality documents Covered in 2016-2021 IRP (and above) Remove & make separate document Remove & make separate document Combined “Issues and Positions” & include in “Overview” section Remove details – include simple summary

Next Strategic Plan

Not “10-year” leave flexible

Table of contents from most recent plan

Annual Report & Financials Strategic Financial Plan Annual Budget Integrated Resource Plan

Strategic Plan

Key Public Documents – Future

Every Year Flexible Timing

Suggested Next Steps

• Integrate “Key Operational Goals & Activities”

into 2018 Budget

‒ Focus on annual items – update annually

• Update Strategic Initiatives & Values

‒ Multi-year focus ‒ Integrate Board work session items ‒ Board review in August

• Restructure document content & format

‒ Follow suggestions outlined earlier ‒ Consider additional enhancements

• Gather Board input as the plan evolves

‒ August & September  review key changes ‒ October  draft document for Board consideration ‒ December  anticipate seeking final Board approval

QUESTIONS / DISCUSSION

Board of Directors Meeting

July 27, 2017

Customized Resource Plan

Progress Update and Next Steps

July 27, 2017

Customized Resource Plan Connections

Governor’s Order

35% 5% CO2 reduction duction by 203 030

Cle lean an Pow

• wer

er Pla lan

Unce cert rtai ain n future ture impa pact ct

20 2017 17 Win ind d RFP

50 50-75 75 MW

Mu Muni nicipal ipal Goa

• als

ls

• Estes

es Park

• Fort

rt Collins

• Lovel

eland and

• Longmo

gmont nt

Net et Car arbo bon-Free Free Scena cenario io

 The CRP process is taking place concurrently with other major efforts that can reshape Platte River’s future resources

• Portfolio with a high penetration of

renewables, full allocations of hydro resources, full coal retirements, and inclusion

• f natural gas peaking for reserve and

balancing needs.

• Any CO2 produced for balancing and reserves

would be offset by excess output from renewables marketed as surplus sales.

CRP Phases

Pha Phase se 2 2 - 2018 2018

• Develop a broad

understanding of a CRP Environment

• Develop basic cost

impacts at the Platte River system level

• Refine risk/benefit

modeling (with potential Pace support)

• Refine cost impacts
• Develop a

specific CRP administration structure

Deployment

Pha Phase se 1 1 - 2017 2017

CRP Timeline

2016 Q2 The charter was signed 2016 Q3 The project kicked off on August 4 2016 Q4 Individual city meetings took place Model structure development occurred 2017 Q1 The first modeling runs of solar and wind options were run 2017 Q2 Individual options were presented to municipalities on July 10 2017 Q3 The development of a “carbon-free” scenario will take place Input from cities will be provided 2017 Q4 Revisions/additional modeling will be made where requested 2018 Program development will take place

Phase 1 - Models

 Platte River has developed cost estimates for a wide range of renewable energy portfolios  Individual portfolios are roughly additive

25 25 50 50 100 100 200 200 25 25 50 50 100 100 200 200 100 100 200 200

50 50 100 100 150 150 200 200 250 250 300 300 350 350 Win ind Win ind Win ind Win ind Sol

• lar

ar Sol

• lar

ar Sol

• lar

ar Sol

• lar

ar Ble lend nd

MW MW

88 GWh 175 GWh 350 GWh 701 GWh 44 GWh 88 GWh 175 GWh 350 GWh 701 GWh

Two Paths for Generation Portfolios

Customized stomized Resource

• urce Plan

Consolidated nsolidated Resource

• urce Plan

Pros

• Elective options
• Control of individual portfolio segment
• Satisfaction of individual member goals
• RTO may help facilitate implementation
• Economies of scale
• Uniform governance
• Financing power

Cons ns

• Reduced economies of scale
• Potential financing limitations
• Cost increases
• Operational impacts
• Additional administration/staffing
• Without RTO, base assumptions may be

inexact

• Less capability for individual options

 The potential for pursuing joint goals was discussed at the July 10 CRP meeting  The decision to pursue a “carbon-free” scenario was made by all four utility directors

“Carbon-Free Scenario”

 Platte River and the Utility Directors met on July 14 to discuss an additional “carbon-free” scenario

• The model will be constructed at the system level

with all four cities participating

• The analysis will use a CO2 “netting” methodology
• The scenario will model a high penetration of

wind/solar resources to replace carbon-producing baseload generation

• The assumption will be that all coal resources will be

retired by the year 2030

• The assumption will be that natural gas resources

will be held for reserve capacity

• Hydro resources will help produce a low-carbon

footprint

• RTO versus No RTO scenarios will be produced
• Pace Global will be engaged to provide

communications and modeling support

Pr Proj

• jec

ect res esul ults s ar are e ex expe pected ted

• n
• n Oc

Octob

• ber

er 31 31

CRP Process Next Steps

 Platte River has delivered preliminary packets of system-level CRP options to the owner-municipalities, concluding Phase 1

• bjectives

 Ongoing discussions will be held with the four cities to determine if any individual options will be pursued  If the cities make individual elections, Platte River will prepare a joint system model which will include those elections in order to begin to determine additional system cost impacts  Platte River will continue with the carbon-free scenario, with support from Pace Global  No additional CRP modeling will take place until the carbon-free scenario is complete

Questions/Comments?

Board of Directors Meeting

July 27, 2017

Draft Board Governance Document

July 27, 2017

Topics for Discussion

• Materials provided during the April and May meetings
• Board packet draft includes both yellow and green

highlighting

• Yellow highlighting denotes material that may not require

additional Board input

• Green highlighting displays areas that require Board

direction

Summary of Material in Yellow

• Standard order of the agenda
• Leadership Team
• Minutes
• Rulings of the Chair
• Conduct of public hearings
• Representation of Platte River
• Authority to Approve Contracts
• Notice for Special Meetings

• 2. Standard Order of the Agenda. The standard order of the

agenda is as follows:

• Call to Order;
• Consent Agenda, including approval of minutes;
• fications to the Agenda;
• Public Comment;
• Board Action Items;
• Management Presentations;
• Management Reports;
• Monthly Informational Reports;
• Strategic Discussions
• Adjournment

Modifications to the Agenda As a general process, issues will be introduced in the “Management Reports” section of the agenda and may be expanded upon at later meetings during the “Management Presentations” section of the agenda, and as a final step issues may appear as “Board Action Items” if formal action is required.

The Leadership Team shall be composed of the Chair and Vice Chair. Prior to Board meetings the Leadership Team will coordinate with the General Manager/CEO to review the agenda and provide any direction concerning the pending and future agendas. Bearing in mind the requirements of the open meetings statutes, members of the Leadership Team should reach out to Board members prior to meetings to discuss any issues that may be pertinent to the agenda. The Leadership Team may perform other responsibilities as directed by the Board. Leadership Team

Minutes

• 1. Minutes of any public meeting at which the adoption of

any proposed policy, position, resolution or formal action occurs or could occur shall be taken, including Regular, Annual and Special Meetings of the Board as well as study sessions or Board retreats.

2. Chair as Parliamentarian. The Chair is the meeting parliamentarian and shall decide all questions of process and procedure. The Chair may consult with the General Counsel or administrative staff to assist in rendering decisions regarding the application of the rules of order. Rulings of the Chair are subject to appeal by Board action.

Conduct of Public Hearings When conducting a public hearing the Chair will describe the purpose of the public hearing and state any procedural rules concerning identification of witnesses and length of comments. The Chair will open the record and accept public comment. The Chair may exercise control of the hearing and may rule comments out of order and/or make other rulings to ensure the regular conduct of the hearing. Once members of the public have been allowed to comment the Chair will close the record and move to other business.

Representation of Platte River - As necessary, the General Manager shall appoint employees of Platte River to represent the interests of the Platte River in membership

• rganizations or related business organizations.

Authority to Approve Contracts - Unless authorization and/or execution of an agreement requires Board approval, the General Manager is authorized to approve all contracts entered in the normal course of business.

• 7. Special Meetings. Special meetings of the Board may be

called by the Chairperson or any Director. The Secretary shall provide notice of such meeting to each Director not less than seven (7), nor more than thirty-five (35) days, before the date fixed for the special meeting. Special meetings shall be held at such time and place (within Colorado) as shall be determined by the Chairperson or the Director calling the

• meeting. See Section 2.3.9 of the Organic Contract.

Note that by statute notice periods may be as short as 24 hours. Occasionally special meetings may be scheduled on notice shorter than seven (7), and this is typical of special meetings associated with bond issuances.

Summary of Material in Green

• Appointments to ad hoc committees
• Limitations on Chair/Vice Chair
• Necessity of ethics review committee
• Change in management

• 3. Ad Hoc Committees. Ad hoc committees may be formed

as necessary by action of the Board for the purpose of advising the Board on any matter within the area of assigned responsibility. Alternative A: Members of an ad hoc committee will be appointed by the Chair. Alternative B: Members of an ad hoc committee will be appointed by action of the Board.

Pursuant to the Organic Contract, the Chair is elected at the Annual Meeting and serves until the next Annual Meeting. As described in the whitepaper distributed at the April meeting, past Chairs have had widely varying tenures and there are no formal term limits. Neither is there any formalized rotation of the Chair position among the member municipalities although there is an informal rotation. Finally there is no requirement that an elected official from a member municipality serve as Chair or Vice Chair, but some elected officials have served as Vice Chair. Option A: If the Board is comfortable with this process going forward no additional language on this topic needs to be included in this document. Option B: If the Board favors term limits, formal rotation or some specific format for Board representation, staff can take that direction and include language for the final iteration of this document. Limitations on Chair/Vice Chair

Participation on Multiple Governing Bodies - A Board member’s participation

• r

membership

• n
• ther

governing bodies or boards does create per se a conflict

• f interest for such Board member. Accordingly, a Board

member serving on multiple governing bodies or boards shall not generally be required to refrain from participating in any matter before the Board which may affect the interests of a member municipality or another

• board. In the event that individual Board members may,

from time to time, determine on a case-by-case basis, that a particular circumstance does create a conflict of interest under the then current provisions of law, such Board member may, in their discretion, choose to abstain from any such decision. 2.

Change in Management In the event of the resignation or retirement of the General Manager/CEO, it is the responsibility of the Chair to 1) communicate individually with each of the Board members to ensure they are fully informed of the situation and to ascertain any thoughts or direction concerning the process for replacing the General Manager/CEO, and 2) place an agenda item on the next available Board meeting agenda, including a Special Meeting if necessary, to determine a replacement process. If there will exist a period during which the position of General Manager/CEO will be vacant an interim General Manager will be appointed by the Board pursuant to Section 2.4.3 (v) of the Organic

• Contract. During any vacancy that occurs prior to the identification
• f an interim General Manager, the Deputy General Manager will

function as General Manager/CEO.

Questions/Comments?

Board of Directors Meeting

July 27, 2017

May and June Operational Results

Variance Key: Favorable:  >2% | Near budget:  +/- 2% | Unfavorable:  <-2%

Category May Variance June Variance YTD Variance Municipal Demand (1.4%)  4.3% l (0.5%)  Municipal Energy 1.1%  0.0%  (1.3%)  Baseload Generation (0.1%)  (1.2%)  (3.0%)  Wind Generation 4.3% l (11.2%)  (2.6%)  Solar Generation (7.0%)  (3.1%)  (10.4%)  Surplus Sales Volume 44.9% l 0.8%  5.7% l Surplus Sales Price 6.2% l (5.0%)  (9.6%)  Dispatch Cost (2.5%) l 2.3%  (1.7%) 

Board of Directors Meeting

July 27, 2017

Category May Variance from Budget

($ in millions)

June Variance from Budget

($ in millions)

Year to Date Variance from Budget

($ in millions)

Net Income $1.2 l $0.7 l $4.8 l Debt Coverage .35x l .40x l .29x l Revenues $0.8 l $0.3

$(1.3)

Operating Expenses $0.1

$0.4 l $5.7 l Capital Additions $0.2 l $2.3 l $11.4 l

Financial Summary

> 2% l Favorable | 2% to -2%  At or Near Budget | < -2%  Unfavorable

Board of Directors Meeting

July 27, 2017