ELECTRICITY AND OUR FUTURE INTEGRATED RESOURCE PLAN UPDATE Public - - PowerPoint PPT Presentation

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ELECTRICITY AND OUR FUTURE INTEGRATED RESOURCE PLAN UPDATE Public Utilities Committee Meeting December 11, 2019 1 Agenda Mission Why An IRP TEA IRP Recommendations Public Comments Reliability, Financial & Environmental

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SLIDE 1

ELECTRICITY AND OUR FUTURE

INTEGRATED RESOURCE PLAN UPDATE

Public Utilities Committee Meeting December 11, 2019

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SLIDE 2

Agenda

  • Mission
  • Why An IRP
  • TEA IRP Recommendations
  • Public Comments
  • Reliability, Financial & Environmental

Considerations

  • Options & Next Steps
  • ScottMadden, Inc.

2

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SLIDE 3

Core Mission

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Value

  • Affordable &

Reliable Services

Service

  • High Quality
  • Responsive to

Customer Needs

Community

  • Local Control
  • Local Operations

“Small Enough to Care”

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SLIDE 4

Why an IRP?

  • Load Decreasing

– 16% decrease since 2006

  • Units are not competitive

– 31, 32, & 33 operating 30% less this year

  • Opportunity For Lower Cost Options

– Natural Gas prices have lowered Electric Energy Prices significantly

  • Significant capital expenditures for

environmental compliance & major maintenance

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SLIDE 5

Recommendations

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SLIDE 6

Unit Recommendations

  • Retire Dallman Units 31, 32 & 33
  • Retain Unit 4 & Combustion Turbines
  • Next IRP in 3-5 years

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SLIDE 7

Other Recommendations

  • Issue Renewable Request For Proposal (RFP)
  • Purchase Power Agreement (PPA) for Energy &

Capacity

  • Expand Energy Efficiency Efforts

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SLIDE 8

Public Comments

IRP Results

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SLIDE 9

Public Comments Resource Preferences

  • Follow TEA plan to close Dallman 31, 32 & 33
  • Increase renewables
  • Reduce reliance on fossil fuels
  • Keep Dallman 33 as long as possible
  • Keep Unit 4
  • Mix of generation resources is good

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SLIDE 10

Public Comments Objective Preferences

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Environmental Impact Health Impact Lowest Cost Coal Job Retention Clean Energy Job Creation Risk of Renewables Risk of Coal Plants

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SLIDE 11

Public Comments Reviewed by TEA

  • Consider Different Inputs

No viable inputs missed

  • Consider All Coal or All Renewables

Utilizing a diversified fuel mix is prudent industry practice and lowers risk

  • Gas Turbine Cost
  • Consider New Technologies
  • Consider New Fuel Prices

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SLIDE 12

Public Comments Reviewed by TEA

Jiangnan Environmental Technology Inc. (JET) Ammonia Desulfurization System

Success Dependent On Revenues From Fertilizer Sales No Capital Cost Recovery for installation Doesn’t avoid need for dry ash conversion  No Operating Projects in the United States No Guarantee Can Meet Emissions Requirements

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SLIDE 13

Reliability, Financial & Environmental Considerations

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SLIDE 14

Current CWLP Generation

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DALLMAN 31 COAL 61 MW 1968 DALLMAN 32 COAL 61 MW 1972 DALLMAN 33 COAL 172 MW 1978 UNIT 4 COAL 207 MW 2009 REYNOLDS FUEL OIL 14 MW 1970 FACTORY FUEL OIL 17 MW 1973 INTERSTATE FUEL OIL & NATURAL GAS 110 MW 1997

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SLIDE 15

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Unit 4 207 MW Market Purchases

OR

CWLP Load 350 MW

CWLP Avg. Load = 195 MW

Combustion Turbines, 141 MW

CWLP Load only over 350MW 0.5% of the year

Transmission upgrades will improve ability to import power thus increasing reliability

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SLIDE 16

Financial Considerations Wholesale Revenues

  • FY20 to October – Sales Revenues down $2M
  • Units are running 30% less than expected
  • Energy & Capacity Prices keep decreasing

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NET INCOME FROM ENERGY SALES NET INCOME FROM CAPACITY SALES TOTAL SALES INCOME FY19 $5,651,107 $2,800,350 $8,451,457 FY18 $7,807,930 $6,835,201 $14,643,131

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SLIDE 17

Financial Considerations

Dallman 31, 32 & 33

  • Operating Costs + Low Market Prices =

Dallman 31, 32, & 33 Not In the $$$

31/32 – Approx $10-12M/year loss vs Market* 33 – Approx $13-16M/year loss vs Market*

  • Lost Savings to CWLP and our customers
  • Some Costs Shift

As units retire, shared costs are redistributed to remaining units

*Excludes additional capital costs for environmental compliance and major repairs.

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SLIDE 18

Financial Considerations

Dallman 31, 32 & 33

  • Revenues highly dependent upon energy and

capacity prices

  • In order to be viable:

Energy prices would have to double* Capacity prices would have to triple*

*Excludes additional capital costs for environmental compliance and major repairs.

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SLIDE 19

Demolition Considerations

  • Lakeside Power Station (retired in 2009) has no

current use and would be first priority.

  • Dallman complex not recommended for near-term

demolition if units retire.

 Offices and Inventory  Common Equipment for Unit 4  Land can not be used for economic development

  • Demolition costs

 Sunk cost so separate from decommissioning costs  Achieved with savings from retiring plants  $7.5M-$10M to demo complex for Dallman 31, 32 and 33

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SLIDE 20

Environmental Compliance At A Glance For Units Remaining in Operation

February Dry Fly Ash Engineering (ordinance) April new FGD Waste Stream Treatment Engineering (ordinance) May 2020 deadline to certify retirement of Unit 31, 32 & 33 to

  • btain final closure extension for Ash

Ponds to October 2028.

November 2020 must cease sending water to Ash Ponds if no extension (to October 2023) granted

2020 2021

September 2021 Dry Fly Ash system constructed and

  • perational for Units 31, 32 and

33 Begin construction of Filter

Press for WWTP, FGD WWTP

sludge handling and landfill leachate collection

316a, 316b and Biomonitoring

studies once new NPDES permit issued 2022-2024 ACE Rule for Heat Rate Improvements Complete construction of new

Lime Ponds.

Exhaust bank of seasonal NOx allowances if all Units running, Initiate purchase of additional allowances.

CCR alternatives analysis and

permitting expected under State rules

2022 2024

& Beyond

Summer 2023 complete construction

  • f FGD treatment system for ELG

PSES rule as proposed October 2023 (if extension granted) complete Dry Bottom Ash system, WWTP sludge handling, FGD WWTP filter press and leachate relocation. Begin Closure of Ash Ponds if extension granted

2023

Future CO2 Limits

CEJA (if adopted) would

require all coal units shuttered by 2030. Complete closure of Ash

Ponds by October 2028 if

retirements option invoked in 2020

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SLIDE 21

Environmental Compliance for Dallman 31, 32, & 33

  • CCR and ELG Rules revised in November

 Dry Fly Ash by September 2021  Dry Bottom Ash by October 2023  Ash Ponds will stop receiving water by 2023

If retirement dates are set by May 2020, then ash pond closure date is extended to 2028

  • Illinois Senate Bill #9 – Ash Ponds
  • 316a and 316b (Intake and Discharge) with renewed NPDES
  • permit. Cooling Tower may be required.
  • Clean Energy Jobs Act CEJA
  • Future CO2 limits

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SLIDE 22

Effluent Limitation Guideline (ELG) FGD (Scrubber) Blowdown

  • Rule revised in November
  • If 31, 32 or 33 are retained, ~ $45M

new treatment facility by June 2023

  • If only Unit 4 remains:

 Closer to meeting water concentration limits  Possible can meet limits with new chemical and avoid building a smaller facility

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Upcoming slides do not include this project cost since rule just revised.

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SLIDE 23

Options & Next Steps

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SLIDE 24

Retain Unit 4 & Combustion Turbines

  • Cover Base Load
  • Unit 4

 Most efficient and economical  Lowers Risk – Fuel Diversity

  • Combustion Turbines

 Factory, Reynolds & Interstate  Cover Peak if needed  Adds Capacity at low cost

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SLIDE 25

Retire Dallman 31 & 32

  • Avoid $40M in Costs in next 5 years

 Dry Ash Conversion  Boiler Repairs  Turbine Overhauls  Major Maintenance  Excludes $ for ELG FGD Blowdown

  • Avoid $10-12M/year loss vs Market
  • Decommissioning cost $700k

– Lube Oil, Cleaning, and Building Heat

  • 25 positions eliminated, but 15

employees need transitioned

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SLIDE 26

Retain Dallman 33

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  • Incur $29M in Costs over next

5 years

Coal Ash Regulations Boiler Repairs Major Maintenance Excludes $ for ELG FGD Blowdown

  • $13-16M/year loss vs Market
  • Retain Jobs
  • Start Dry Fly Ash Engineering
  • Start New ELG /FGD Blowdown

Treatment Facility Engineering

  • Provides backup to Unit 4 but at higher cost
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SLIDE 27

Retire Dallman 33

  • Avoid $ 29M in Costs in next 5 years

 Dry Ash Conversion  Boiler Repairs  Major Maintenance  Excludes $ for ELG FGD Blowdown

  • Avoid $13-16M/year loss vs Market
  • Decommissioning cost $2M

 Transmission Upgrades, Lube Oil, Cleaning

  • 50 employees currently in positions

that would be transitioned

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SLIDE 28

Employee Transition Options

Minimize Impacts to Employees

  • Working with HR, Legal, and Unions
  • Job Restructuring
  • Training and/or transition to other open jobs
  • Options for severance
  • Options for retirements

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SLIDE 29

Expand Energy & Capacity Purchases

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  • Lowest Cost is the Market
  • Types of Purchases

 Purchase Power Agreements  Bi-lateral Transactions  Real Time/Day Ahead

  • Develop Hedging Strategy

 Covers difference vs our generation  Quantity of Power needed varies throughout the year

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SLIDE 30

Natural Gas Forward Curve

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As of 11/13/19 Cal 20: $2.50 Cal 21: $2.47 Cal 22: $2.48 Cal 23: $2.53 Cal 24: $2.58 Cal 25: $2.62 Cal 26: $2.66 Cal 27: $2.75 Cal 28: $2.84 Cal 29: $2.94 Cal 30: $3.05 Cal 31: $3.16

The 2023-2031 strips hit new all- time lows earlier this week

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SLIDE 31

Energy Services Office (ESO)

Expand Customer Energy Efficiency Programs

  • 1. Update 2008 Market Assessment Study of

residential and commercial properties

  • 2. Re-issue Customer Preference Survey

(priorities, program needs, customer satisfaction)

  • 3. Develop Program Options and Funding

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SLIDE 32

Next Steps & Important Dates

  • Lock in dates and decisions for Plant Retirements by

end of January 2020

  • Retire Dallman 31/32
  • If Retaining Dallman Unit 33

February 2020 - Dry Ash Handling Engineering Ordinance April 2020 - New FGD Waste Stream Treatment Facility Engineering Ordinance

  • If Retiring Dallman 33

No sooner than Fall of 2021 No later than Fall of 2023

  • Must Certify closure of 31, 32 & 33 by May 2020 to obtain

extension of ash pond closure date to 2028.

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SLIDE 33

Questions?

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www.cwlp.com/IRP

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SLIDE 34

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