QUARTERLY BUSINESS REVIEW JULY 31, 2018 INTRODUCTION Scott Simms, - - PowerPoint PPT Presentation

QUARTERLY BUSINESS REVIEW

JULY 31, 2018

INTRODUCTION

Scott Simms, DIRECTOR OF COMMUNICATIONS

S L I D E 2 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | S C O T T S I M M S

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

AGENDA

Time Presentation Speaker

9:00 – 9:02 Introductions Scott Simms Director of Communications 9:02 – 9:15 State of the business:

• Integrated Program Review
• BP-20 rate preview

Dan James Deputy administrator 9:15 – 9:25 Finance update Mary Hawken Acting chief financial officer 9:25 – 9:35 Power Services update Joel Cook Senior VP of Power Services 9:35 – 9:45 Transmission Services update Richard Shaheen Senior VP of Transmission Services 9:45 – 9:47 Upcoming involvement opportunities Scott Simms 9:47 – 10:00 Question and answer session

S L I D E 3 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | S C O T T S I M M S

STATE OF THE BUSINESS

Dan James, DEPUTY ADMINISTRATOR

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S S L I D E 4

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

SAFETY

S L I D E 5 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S

0.4 0.9 1 1 1 1.1 1.3 1.3 1.3 1.2 0.5 1 1.5 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Incident frequency rate

Number of injuries and illnesses per 200,000 hours worked

2018 Ceiling

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

INTEGRATED PROGRAM REVIEW

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S S L I D E 6

Improve cost-management discipline Hold program costs at or below the rate of inflation

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

BENDING THE COST CURVE

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S S L I D E 7

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

• New external webpages available on

www.bpa.gov under “Projects & Initiatives” tab.

GRID MODERNIZATION

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S S L I D E 8

EIM implementation Mission critical IT improvements Improvements to core business Commercial modernization Operational modernization Grid Modernization Key Strategic Initiative focus areas

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

• On July 25, BPA shared a rate preview based on

best available information to date.

• Power rates anticipated to increase less than

5 percent:

– Reduced net secondary revenues (+ $89 million) – End of the rate-impact mitigation to transition Energy Efficiency from capital to expense (+ $61 million) – Lower capital-related costs (depreciation, principal and interest) (- $54 million)

BP-20 RATE PREVIEW

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S S L I D E 9

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

• Transmission rates anticipated to increase

approximately 10 percent:

– Depreciation study update (+ $46 million) – Net interest expense growth (continued investment) (+ $28 million) – I-5 Corridor Reinforcement Project study cost write off (+ $26 million)

BP-20 RATE PREVIEW (CONT.)

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S S L I D E 1 0

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

• Comment period closes Aug. 2.
• Additional cost-management actions will be

incorporated into final decisions in August.

• Closeout report will be issued late

September/early October.

IPR NEXT STEPS

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | D A N J A M E S S L I D E 1 1

FINANCE

Mary Hawken, ACTING CHIEF FINANCIAL OFFICER

S L I D E 1 2 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | M A R Y H A W K E N

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

AGENCY NET REVENUES

S L I D E 1 3 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | M A R Y H A W K E N

$26 $423

100 200 300 400 500

FCRPS net revenues

In millions of dollars

BP-18 Rate Case Q3 Forecast

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

AGENCY FINANCIAL HEALTH

S L I D E 1 4 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | M A R Y H A W K E N

$3,627 $3,653 $3,262 $3,685

3100 3250 3400 3550 3700 Total expense Total revenue

Federal Columbia River Power System

Total revenue and expense in millions of dollars

BP-18 Rate Case Q3 Forecast

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

• Cash generated from Regional Cooperation

Debt transactions in FY 2014 and 2015.

• Non-Slice customers scheduled to get a one-

time credit in the BP-18 Rate Case.

• In FY 2017, moved the cash to reserves not for

risk in order to get a more accurate cost recovery adjustment clause calculation.

• Changes in how the $70 million was modeled at

the start of FY 2018 led to this discrepancy.

$70 MILLION INCREASE TO RESERVES

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | M A R Y H A W K E N S L I D E 1 5

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

DAYS CASH ON HAND

S L I D E 1 6

BP-18 Rate Case FY 2018 EOY forecast

Power Trans. Agency Power Trans. Agency EOY Reserves 170 468 638 340 567 907 Reserves not for risk 149 63 212 175 95 270 Reserves available for risk 21 405 426 165 472 637 Days cash on hand 4 237 62 33 276 96

*Reserves in millions of dollars

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | M A R Y H A W K E N

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

CRAC AND RDC PROBABILITY

S L I D E 1 7 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | M A R Y H A W K E N

• The probability of a power rates CRAC is 0

percent.

• The probability of a transmission rates reserves

distribution clause is 80 percent.

252 352 452 552 652 758 1164 1264

RDC

100 200 300 400 500 606 700 800 Accumulated calibrated net revenue Reserves for risk Q3 RFR: $637 million Q3 ACNR: $782 million

POWER SERVICES

Joel Cook, SENIOR VICE PRESIDENT OF POWER SERVICES

S L I D E 1 8 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

166 208 211 213 192 201 197 196 192 50 100 150 200 250 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Power total expense

Total expenses in millions of dollars

BP-18 Rate Case Actuals

POWER SERVICES EXPENSE

S L I D E 1 9

Total expense (in millions of dollars) BP-18 Rate Case Q3 EOY forecast BP-18 year-to-date Actuals year-to-date 2,629 2,447 1,931 1,775

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

211 221 242 286 269 262 251 209 224 50 100 150 200 250 300 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Power total revenues

Total revenues in millions of dollars

BP-18 Rate Case Actuals

POWER SERVICES REVENUES

S L I D E 2 0 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

Total revenues (in millions of dollars) BP-18 Rate Case Q3 EOY forecast BP-18 year-to-date Actuals year-to-date 2,827 2,850 2,148 2,174

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

WATER SUPPLY

S L I D E 2 1 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

200 400 600 800 1000 1200 1400 1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1

The Dalles historical distribution with 2018

• bserved flow data (January - July)

Flow in thousands of cubic feet per second

10%-Max 25%-10% 50%-25% 75%-50% 90%-75% Min-90% Unregulated Flow Regulated Flow

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

HENRY HUB PRICES

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K S L I D E 2 2

2.88 3.01 2.82 3.69 2.67 2.69 2.8 2.8 2.97 2.0 2.5 3.0 3.5 4.0 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Henry Hub prices

In dollars per one million British thermal units

Actuals June 30th NYMEX Average BP-18 Rate Case BP-18 avg.: $3.12 6/30 avg.: $2.90

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

MID-C PRICES

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K S L I D E 2 3

26.53 26.06 27.44 22.51 21.42 20.53 17.45 12.78 16.65 10 15 20 25 30 35 40 45 50 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Mid-C heavy load hour prices

In dollars per megawatt hour

Actuals Forward market (ICE) BP-18 Rate Case BP-18 avg.: $25.23 6/30 avg.: $24.78

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

POWER SERVICES CAPITAL

S L I D E 2 4 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

Note: capital expenditure KPI includes only direct-funded federal hydropower capital.

10 15 27 34 10 15 23 $43 $92 $137 $244 10 20 30 40 50 50 100 150 200 250 Q1 Q2 Q3 Q4 $ millions

Capital expenditure and work completed

Tracks capital expenditure and percent of workplan completed

Planned assets Completed assets Actual $ millions FYTD Rate Case $ millions Asset

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

FEDERAL HYDROPOWER RELIABILITY

S L I D E 2 5 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

Good

3.6 4.6 4.5 5.9 3 4 5 6 7 Q1 Q2 Q3 Q4

Federal hydropower forced outage factor

Percentage of hours fed hydro projects are offline due to unplanned outages

FY 2018 Target

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

COLUMBIA GENERATING STATION RELIABILITY

S L I D E 2 6 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

Good

93.5 95.6 95.3 94 92 93 94 95 96 Q1 Q2 Q3 Q4

Columbia Generating Station availability factor

Percentage of time Columbia is available to serve demand

FY 2018 Target

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

ENGAGE WITH POWER

S L I D E 2 7 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | J O E L C O O K

• Aug. 8 BP-20 Rate Case workshops.

– Gas and electricity forecast. – Loads and resources. – Rate mechanisms for Financial Reserves Policy.

• Rate Period High Water Mark comment period
• pen.

TRANSMISSION SERVICES

Richard Shaheen, SENIOR VICE PRESIDENT OF TRANSMISSION SERVICES

S L I D E 2 8 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | R I C H A R D S H A H E E N

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

78 78 77 83 77 91 86 93 82 20 40 60 80 100 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Transmission total expense

Total expense in millions of dollars

BP-18 Rate Case Actuals

TRANSMISSION SERVICES EXPENSE

S L I D E 2 9 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | R I C H A R D S H A H E E N

Total expense (in millions of dollars) BP-18 Rate Case Q3 EOY forecast BP-18 year-to-date Actuals year-to-date 1,043 1,050 782 746

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

TRANSMISSION SERVICES REVENUES

S L I D E 3 0 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | R I C H A R D S H A H E E N

Total revenues (in millions of dollars) BP-18 Rate Case Q3 EOY forecast BP-18 year-to-date Actuals year-to-date 1,052 1,078 794 828

85 88 89 91 92 99 88 102 94 20 40 60 80 100 120 Oct. Nov. Dec. Jan. Feb. March April May June July Aug. Sept.

Transmission total revenues

Total revenues in millions of dollars

BP-18 Rate Case Actuals

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

TRANSMISSION SERVICES CAPITAL

S L I D E 3 1 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | R I C H A R D S H A H E E N

124 220 349 537 125 208 466 $103 $182 $279 $511 100 200 300 400 500 600 100 200 300 400 500 600 Q1 Q2 Q3 Q4 $ millions

Capital expenditure and work completed

Tracks capital expenditure and percent of workplan completed

Planned assets Completed assets Actual $ millions FYTD Rate Case $ millions Asset

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

TRANSMISSION RELIABILITY - SAIFI

S L I D E 3 2 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | R I C H A R D S H A H E E N

0.74 0.56 0.47 0.27 0.22 0.22 0.66 0.68 0.2 0.4 0.6 0.8 Q1 Q2 Q3 Q4

System average interruption frequency index

Tracks frequency of unplanned outages

Low voltage (< 200kV) High voltage (>= 200kV) Low voltage warning level High voltage warning level

Good

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

TRANSMISSION RELIABILITY - SAIDI

S L I D E 3 3 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | R I C H A R D S H A H E E N

150 99 122 129 76 83 430 260 50 150 250 350 450 Q1 Q2 Q3 Q4

System average interruption duration index

Tracks duration of unplanned outages

Low voltage (< 200kV) High voltage (>= 200kV) Low voltage warning level High voltage warning level

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

ENGAGE WITH TRANSMISSION

S L I D E 3 4

• Reliability coordinator services.
• TC-20 schedule and settlement discussions.
• 2019 Cluster Study.
• Montana Renewables Development Action Plan

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | R I C H A R D S H A H E E N

PUBLIC PROCESSES

Scott Simms, DIRECTOR OF COMMUNICATIONS

S L I D E 3 5 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | S C O T T S I M M S

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

PUBLIC PROCESSES

S L I D E 3 6 B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | S C O T T S I M M S

• Aug. 2 – Reliability coordinator services

workshop.

• Aug. 8 – BP-20 Rate Case workshops.
• Aug. 21, Sept. 25 – TC-20 workshops.
• Sept. 6 – Columbia River Treaty Town Hall.
• September – TC-20 settlement discussions.
• Oct. 11 – BPA EIM stakeholder meeting.

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

COMMENT PERIODS

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 | S C O T T S I M M S S L I D E 3 7

• Aug. 2 – Integrated Program Review.
• Aug. 2 – Financial Reserves and Leverage policies.
• Aug. 2 – Capital financing.
• Aug. 8 – FY 2020-2021 Rate Period High Water

Mark

• Aug. 9 – Spar Canyon-Round Valley service road

project and right-of-way amendment

QUESTION AND ANSWER

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 S L I D E 3 8

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N

The next QBR is scheduled for

• Nov. 6, 2018.

Strategic plan is available at www.bpa.gov/StrategicPlan. Didn’t get your question answered? Email Communications@bpa.gov. Answers will be posted to www.bpa.gov/goto/QBR.

THANK YOU

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 S L I D E 3 9

This information was publicly available on July 30, 2018, and contains information not sourced directly from BPA financial statements.

FINANCIAL DISCLOSURE

B O N N E V I L L E P O W E R A D M I N I S T R A T I O N | Q B R J U L Y 2 0 1 8 S L I D E 4 0