The Five Things Every Electric Utility Should Be Doing Now

Transcription

6/23/2016
Counting Down to 2020:
The Five Things Every Electric Utility Should Be
Doing Now
South Carolina Association of Municipal Power Systems 2016 Annual Meeting
Lisa M. Vedder, MPA, CIA, CCSA
Principal Consultant
June 20, 2016
About Willdan
Willdan Financial
Services is one of
four operating units of
Willdan Group Inc.
Counting Down to 2020
The Five Things Every Electric Utility Should be Doing Now
2
Timeline of the US Electric Power Industry
2020
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1879
1882
Thomas Edison
demonstrates the electric
light bulb and generator &
First commercial power
station opens in SF
Edison Pearl Street
station, the first modern
electricity generation
station
2020
4
1895
First successful longdistance transmission of
electricity in the south in
Anderson SC—The
Electric City
1934
South Carolina Public
Service Authority
(Santee Cooper) created
2020
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2020
2020
What should we expect as
the industry turns 140?
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Top 10 Electric Utility Trends for 2020
1. Decline of Coal Power
2. Natural Gas Power
Expansion
3. Renewables Reaching
Grid Parity
4. Growing Utility Load
Defection
5. Utilities Entering the
Solar Game
6. Rate Reforms
7. Grid Modernization
8. Expansion of Storage
9. Customer Focus
10. Evolving Utility
Business Model
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1. Decline of Coal Power
• Driven by:
• Mercury and Air
Toxics Standards
(MATS)
• Natural Gas
Prices
• 2015 Clean
Power Plan
Source: 2016 EIA/Sierra Club
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2. Natural Gas Power Expansion
Source: NERC April 2015
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3. Renewables Reaching Grid Parity
Source: EIA
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3. Renewables Reaching Grid Parity—Solar Projections
• 20 states in 2016
• 42 states by 2020 under business-as-usual conditions
Year 1 Bill Impact from Solar
(2016)
Source: GTMResearch February 2016
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3. Renewables Reaching Grid Parity—Wind Projections
Source: DOE/Lawrence Berkely National Laboratory August 2015
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4. Growing Utility Load Defection
• Rocky Mountain Institute (RMI) study:
• Competitive grid-connected solar-plus-battery systems 10–15 years
• By 2030, $15.4 billion per year Northeast residential defection
• “Other” Death Spiral—Bypass
• 60 INSTITUTIONAL Wind Buyers:
Microsoft, Walmart, Yahoo,
Amazon Web Services,
U.S. General Services
Administration, Cornell University,
Google, Apple, Oklahoma State
University, Ohio State University,
and the U.S. Air Force
• Corporate Solar Purchases of
nearly 570 MW (2014):
Walmart, Apple, Kohls,
IKEA, Costco
Source: Rocky Mountain Institute Study, April 2015
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4. Growing Utility Load Defection
• SolarCity small- and medium-size business initiative
• Apple June 6 FERC application to sell excess solar at
market-based rates
• Amazon Web Services NC
contract for 208 MW
Iberdrola Renewables
wind project
• Hewlett Packard contract
for 112 MW SunEdison wind
for Texas data center
• Almost 100 million
households worldwide may be
powered by solar panels by 2020
Source: Techonomy and the World Bank 2016
(Boomberg New Energy Finance)
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5. Utilities Entering the Solar Game
• Georgia Power offering rooftop solar through an
unregulated subsidiary
• Arizona Public Service and Tucson Electric Power have
pilot programs for
utility-owned solar
• CPS Energy solar
hosting program
• Community Solar
Source: GTMResearch, April 2016
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6. Rate Reforms
Source: GTMResearch February 2016
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7. Grid Modernization
• Current infrastructure aged over useful life
• 7,000 miles of transmission lines to comply with the
Clean Power Plan (NERC estimate)
• Deployment of smart
grid technologies
required to support
future grid
(IEA estimates $2.1T
investment by 2035)
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8. Expansion of Storage
• Game changer
• Stem and PG&E aggregation of customer-sited storage systems
and bid them into the real-time energy market in the CAISO
• Kauai Island Utility Cooperative’s 52 MWh SolarCity battery deal
• Duke Energy’s nearly 15% percent
of the US grid-connected,
battery-based energy storage
• $100/MWH cost goal by 2020
• Tesla Power Wall
• New market entrants
• SolarCity turnkey battery
backup service includes Tesla
Powerwall
Source: GTMResearch
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9. Customer Focus
• Only one in five public
power customers under
the age of
55 know that they get
their
electricity from a public
power utility
• Customers think more
about their utility
when the power is OFF
than when it is ON.
(Michael Vigeant, CEO,
Great Blue Research)
Source: APPA 2016 National
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9. Customer Focus
• Technology driven changes
to the traditional
relationship
• Competition is not just other
energy service providers
• Marketing and Branding
• Two-way communication
• New channels of
communication
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10. Evolving Utility Business Model
• Led by states with high electricity prices and large
amounts of distributed generation—Hawaii,
California, Arizona, Texas
• Southern Company via unregulated subs
• Increasing investments in utility-scale renewables
• Entering the rooftop solar industry in Georgia
• NRG/Comcast Energy Rewards program in
Pennsylvania—free HBO
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10. Evolving Utility Business Model
Source: Rocky Mountain Institute Study, April 2015
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2016
2010
2020
What should we be doing
today?
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Number 1: Kick the Tires
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Kick the tires—Assess Your Infrastructure
• Current Inventory of Assets
• Enterprise Asset Management
• Optimize asset utilization
• Increase operational efficiency
• Achieve sustainable performance
improvements
• Reduce operating costs
• Increase flexibility and
responsiveness
• Update Capital Improvement
Plan (CIP)
• 5, 10, 20 year planning horizons
• Incorporate resiliency considerations
• Evaluate Potential for Storm Impacts/Emergency Response
• Coordination and Communication
• GIS
• Staffing
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Number 2: Transition Your Workforce
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Transition Your Workforce—Succession Plan
Employees are your most important assets!
• 78 million baby boomers in the US
• 28% of the US population
• 68% of the existing work force
• 40 % of work force at America’s electric and natural gas
utilities eligible for retirement in the next five years
about 20% eligible now
• The challenges associated with replacing the technical
and institutional knowledge of these professionals will
be significant
• Hard decisions must be made soon to preserve
intellectual property for the future
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Transition Your Workforce—Succession Plan
• Consider creating
a Heat Map
• Rethink approach
to retention & recruitment
• Steps to reduce
increasing turnover
of newer and high
performers
• Document,
document, document
to avoid “brain drain”
• Keep in touch with
retired workers
• Consider internships
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Number 3: Formulate Your Financial Plan
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Formulate Your Financial Plan—COS/Rates/CIP
Update your financial plan
• Forward looking numerical representation of a utility’s business
plan and corporate strategy
• Identifies and forecasts key drivers impacting financial
performance
• Integrates with other utility planning tools:
•
•
•
•
•
•
•
•
•
•
Load Research Study
Smart Grid (AMI) Data
Feeder Data
System Losses Study
Resource Planning Study
Distributed Generation Data
Minimum System Study
Lighting Study
Accounting for Direct Assignment
Load Forecasting
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STEP 1
Establish Revenue
Requirement
STEP 2
Allocate Costs
Conduct a
Cost of
Service Study
& Review
Rate Design
• Functionally Unbundle
Production, Transmission,
Distribution, Customer
• Classify
Fixed, Variable, Customer
Step 3
Design
Rates
• Allocate to Customer
Classes
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CSS/RD Methodology
Properly
designed
rates will
generate
sufficient
revenues to
equal the
revenue
requirement
Customer Accounts
Usage/Consumption
Billing Frequency & Revenue Reconciliation Analysis
Revenues Under
Existing Rates
Other
Revenues
Rate Design
Total Revenue
Requirements
Operation and
Maintenance
Expense
Debt Service
Capital & Other
Expenditures
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Number 4: Engage Your Stakeholders
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Engage Your Stakeholders—Two-way
Communication
Utilize new tools
• Customer Journey Maps
• diagram customer interactions with utility
• prioritize competing needs
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Engage Your Stakeholders—Two-way
Communication
• Short attention spans
• Visuals are important
• Be proactive, consistent, and clear
• Speak their
language
• Use multiple
media
• Cover the
breadth of
your client
base
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Number 5: Set Your Strategic Course
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Set Your Strategic Course—Prepare/Update Strategic
Business Plan
• A Strategic Business Plan is created through an
interactive, stakeholder process
• Prioritizes resources & challenges/opportunities
•
•
•
•
•
•
•
Markets
Succession
Environmental
Sustainability
Security
Stakeholders
Workforce
• Creates a roadmap for success
• Milestones
• Resources
• Owner
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Set Your Strategic Course—Prepare/Update Strategic
Business Plan
• New solutions are constantly emerging
SUMMARY OF UTILITY KEY ACCOUNT OFFERING EXAMPLES
EXAMPLE
UTILITY
SUPPLY
SITING
CONTRACT PROGRAMS
SOLAR AGGREGATION
PILOT PROJECT
Orlando Utilities
Commission (FL)
PPA between OUC and PV
developers on participating
commercial customer sites
PPA with WAPA to purchase
the unbundled solar electricity.
Xcel Energy purchases the RECs
APS would own and operate 14
MW PV system on Luke AFB
Participating
customers
FORT CARLSON SOLAR
ARRAY
LUKE AIR FORCE BASE
RATE PROGRAMS
COMMUNITY SOLAR
PROGRAM
Western Area Power
Administration, Colorado
Springs Utility (CO)
Arizona Public Service (AZ)
Salt River Project (AZ)
BRIGHT TUCSON
COMMUNITY SOLAR
PROGRAM
GREEN SOURCE RIDER
Tucson Electric Power (AZ)
RATE SCHEDULE RG
Dominion Virginia Power
(VA)
Contract between OUC and
participating commercial
customers for PV supply
Customer (Fort Contract between Colorado
Carson)
Springs and Fort Carson for solar
electricity sales
Customer
Contract between APS and Luke
(Luke AFB)
AFB for output
PPA between SRP and PV
Third Party
developer for 20 MW PV
system
PPAs between TEP and various Third Party
PV installations
Duke Energy Carolinas (NC) Any
SALES
Various
PPA between Dominion and
Third Party
renewable energy installations
on behalf of participating
customers
Optional green tariff for business,
industrial and education
institutions
Customer purchase energy
blocks with fixed-rate 20-year
contracts
Customer pays for the renewable
energy and receives a credit form
Duke at its avoided cost rate
Optional Rate Schedule RG for
participating customers
Source: SEPA
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Counting Down to 2020—The Five Things Every
Electric Utility Should be Doing Now
Keeping The Flow of Energy Stable
• Kick the tires—Assess your infrastructure
• Transition your workforce—Succession
plan
• Formulate your financial plan—
COS/Rates/CIP
• Engage your stakeholders—Two-way
Communication
• Set your strategic course—
Prepare/Update Strategic Business Plan
40
One Last Thought
One of the advantages of being disorderly is that one
is constantly making exciting discoveries.
—A. A. Milne
41
Contact Information
Lisa M. Vedder, MPA, CIA, CCSA
200 S. Orange Ave. | Suite 1550 | Orlando, FL 32801
o: 407-982-2756 | c: 407.793.7036
e-mail: [email protected]
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The Five Things Every Electric Utility Should Be Doing Now

Transcription

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