Direct Access Electricity Administration/Finance Issues Cte May 16, - PowerPoint PPT Presentation

Direct Access Electricity Administration/Finance Issues Cte May 16, 2013

Approved Direct Access (DA) Service Providers Contracts in place for two 1. major DA Service Providers They will both offer pricing, 2. with the award going to the best offer

Upcoming DA Procurement ► Power purchase for term beginning July 1, 2013 ► Term length & structure is at the District’s option ► Length of term depends on District’s assessment of electricity price trends � Rising prices favors long-term fixed � Falling prices favors short-term fixed or index ► Typical Structure is combination of fixed block and index pricing

5-Year Historic Trend ► Price has risen for past year ► Natural gas has increased in price do to unusually cold spring ► SONGS effect on Southern CA pricing

Last Year’s Natural Gas ► Gas price has risen do to unusually cold spring

10 Years  Past Five Years – Actual  SCE bundled rates will increase 16.4 % on 6-1-13, with additional increases TBD (5-9-13 SCE energy outlook presentation)  Transition from Bundled into DA  Next Five Years - Projected

Past Five Years ► Wholesale Price of Generation Fell 39% ► SCE Price of Generation Increased by 36%

January Transition to DA ► January Transition Month ► SCE’s Transitional Bundled Service Month was high

Next Five Years ► Transmission & Distribution (T&D) is set by SCE and applies somewhat equally to both bundled & DA ► 5-year DA generation indicative price is almost the same as the one year price ► 3-year DA generation indicative price is lower than the one year price ► SCE future generation pricing is unknown, but likely to increase due to renewable generation (RPS) mandates & SONGS problems ► On site natural gas generation option still under consideration. Implementation could be scheduled to follow the end of a 5- year DA term.

Structure of Purchase (monthly snapshot of 2012)  Blend of Block & Index  Block is fixed while index is based on hourly market conditions Block of DA Power  Imbalance Charges

Load is Flat (daily snapshot from 5-7-13)  Daytime peak is higher than night time off-peak  Selling power is always preferred in the daytime, especially during Block of DA Power summer

Index Price Varies by the Hour (single day snapshot from 3-5-13) Imbalance charges can  be positive or negative depending on the time of day & outside temperature During the day, the  index will be higher than the block During the night, the  Block of DA Power index will be lower than the block Armed with this  knowledge operators can schedule shutdowns accordingly

Recommendations ► Adopt Amendment #1 to Shell Energy North America Energy Sales Agreement which removes the District’s option to self-procure renewable energy; ► Solicit 5-year fixed block pricing proposals from Shell Energy North America and Constellation NewEnergy; and ► Authorize execution of Agreement for direct access electricity with the low bidder

End of Presentation Questions?