Pasadena Water and Power 2018 Power Integrated Resource

Pasadena Water and Power 2018 Power Integrated Resource Plan City Council December 10, 2018 Item #12 Key Stakeholders Pasadena Water and Power Stakeholder Technical Advisory Group (STAG) Community > Great participation, comments, improvements PWP and City Management PWP Power Resource Planning Staff Consultant 2 EAC and MSC Recommendation Pasadena Water and Power 11/13/2018: The EAC unanimously supported the staff recommendation to adopt 2018 IRP 11/27/18: The MSC recommended that the City Council approve the 2018 Power IRP > 3 votes in favor and one abstention > Directed staff to present the item to City Council on December 10, 2018, due to the large volume of the report

3 Pasadena Water and Power POWER INTEGRATED RESOURCES PLAN 2018 IRP BACKGROUND & GOALS 4 What is an IRP? Pasadena Water and Power IRP Details > The IRP serves as a blueprint for PWP to deliver reliable, environmentally responsible electricity service at competitive rates over a 20 year planning period > Recent Past IRPs City Council adopted 2009 IRP 3/16/2009 City Council adopted 2012 IRP 3/5/2012 City Council adopted 2015 IRP 6/22/2015 IRP Development > IRPs are evolving documents IRP will be updated every 3-5 years > Resources not considered or picked up today might be picked up in future IRPs 5 IRP Objectives Pasadena Water and Power Need to find a balance between:

Environmen tal Feasible Viable Cost Effective Economic > Reliability > Cost > Environment Sus ta Reliability 6 ina b le 2018 IRP vs. Previous IRPs Pasadena Water and Power Previous IRPs Not mandated by State and used to develop to plan for future energy needs Developed with Community

Input No strict timeline Updated every two-three years Final product was either a detailed presentation or a report 2018 IRP SB 350 Mandate with prescriptive requirements Developed with Community Input Due by January 1, 2019 Mandatory five-year update Mandatory detailed report, specific considerations, and prescribed tables 7 Key Issues for 2018 IRP Pasadena Water and Power SB 350 compliance > > > > GHG emission reduction goals/alternatives RPS goals/alternatives Impact of transportation electrification Impact on Disadvantaged Communities Meet reliability requirements

Determine whether PWP remains part IPP Renewal > City Council approved termination of the IPP Natural Gas Renewal Contract on 10/29/18 Delivery Constraints Review of cost effective energy storage, demand response, energy efficiency, etc. 8 Timeline Pasadena Water and Power 9 Pasadena Water and Power POWER INTEGRATED RESOURCES PLAN COMMUNITY OUTREACH EFFORTS 10 History of Meetings Pasadena Water and Power Meeting MSC EAC STAG Meeting #1 Date 9/12/17 2/13/18 4/11/18 STAG Meeting #2

5/31/18 STAG Meeting #3 EAC/MSC Community Meeting #1 Community Meting #2 STAG meeting #4 STAG Meeting #5 STAG Meeting #6 6/21/18 7/10/18 7/18/18 Community Meeting #3 10/30/18 8/23/18 9/13/18 9/20/18 10/8/18 Details Provide an Update on the 2015 IRP Provide an Update on the 2018 IRP Process Discussion of IRP, Energy Market and Roles and Responsibilities of STAG, Staff and Consultant Discussion of the modeling approach and data assumption Discussion of the preliminary base case

Update on 2018 IRP Progress Overview of the IRP Process Discussion of Discussion of Discussion of Discussion of Next Steps Discussion of 11 IRP Scenarios all Scenarios Scorecard and Results Final IRP Recommendations and Final IRP Recommendations IRP Survey Highlights Pasadena Water and Power Responders indicate a willingness to pay an additional 5-10% in their overall bill to achieve greater sustainability and reliability; A majority ranked electric reliability and affordable electric rates as top priorities, with minimizing adverse environmental impacts very close behind; Over one-third of respondents favor keeping the RPS at 50% by 2030; and, About one-third of respondents favor increasing the RPS to at least 75% by 2030 12 Pasadena Water and Power

POWER INTEGRATED RESOURCES PLAN SCENARIOS 13 Scenarios Description Pasadena Water and Power Scenario # Name Details Status 1 Base Case (BC) SB 350 Compliance Complete 2 Social Cost of Carbon (SCC) BC+ Higher cost of carbon as a dispatch penalty for incremental natural gas resources Complete

3 SB 100 + BC BC+ RPS of 60% post 2030 Complete 4 Preferred/ Recommended SB 100 + SCC SCC+ RPS of 60% post 2030 Complete 5 (PWP developed using Scenario #3) SB 100 + SCC+Sell IPP Scenario #3, and selling IPP at $0 and replacing with Renewable and receiving a carbon credit Complete 6 SB 100 + SCC + Diversification

Diversification of resource types, location and duration + RPS of 60% post 2030 + SCC Complete 7 (PWP developed using Scenario #6) SB 100 + SCC+ Diversification + Biogas Scenario #6, biogas at Magnolia and Glenarm starting 2030 and selling IPP at $0 and replacing with Renewable and receiving a carbon credit Complete 8 (PWP developed using Scenario #6) SB 100 + SCC Diversification + Biogas + Sell IPP Scenario #6, biogas at Magnolia and Glenarm starting 2030 and selling IPP at $0 and replacing with Renewable and receiving a carbon credit Complete

14 Pasadena Water and Power PWP IRP UPDATE SCORECARD & RESULTS 15 Overall Results Pasadena Water and Power All Future Long Term Resource Commitments Renewable Reliability requirements will met through Capacity Markets and Glenarm Units No New Long Term Fossil Fuel Commitments Intermountain Power Plant not selected as supply after 2027 (no participation in the gas repower option) 90%+ GHG Reduction (2030): Exceed CARB GHG Planning target of 75% reduction 60%+ RPS (2030): meeting SB 100 requirements 16 Scorecard Pasadena Water and Power Item Details Weight

Cost and Ratepayer Impacts Compliance Customer cost impacts of overall portfolio, as compared to the base case Reliability and SB 100 Compliance 40% Environmenta l Stewardship Resource Diversity Meeting and exceeding state mandates for carbon reductions Type of resource, length/contract term of resources, type of technologies, location of resources 20% 17 35% 5% Scorecard Results

Pasadena Water and Power HIGH SCORE AVERAGE SCORE LOW SCORE 18 Summary Comparison (SB 100 cases only) Pasadena Water and Power Scenarios BC + SB 100 SCC + SB 100 SCC + SB 100 + Sell IPP Diversif y 200 200 255 250

250 305 50 75 75 55 55 55 Avg. GHG Reduction vs 1990 78% 83% 96% 83% 84% 96% Bill Impact

2.2% 2.7% 5.7% 4.5% 7.1% 10.1% Bill Impact $ (on 500 KWh bill) $2.01 $2.52 $5.34 $4.23 $6.67 $9.53 New Renewable MW by 2039 New Renewable Resources in 2023 19

Diversif Diversif y+ y+ Biogas Biogas +Sell IPP SCC+SB 100 Estimated Emissions Metric Tons (tonnes) CO2 Equivalent Pasadena Water and Power 1,000,000 800,000 600,000 400,000 226,000 200,000 0 Market Purchases 2030 Target 20 PWP Resources 1990 Levels Potential Bill Impact (Due to Energy Charge Impact Only) Pasadena Water and Power 15% PREFERRED SCENARIO

10% 5% 0% 10.1% Do not meet SB 100 2.1% 1.6% 2.2% Case rbon a e s C a f B to l Cos a i c So 5.7% 2.7% ; 7.1% 4.5%

SCC ; S CC ; ; This analysis assumes average summer rates, as posted online. All impacts are an estimate only, based on assumptions of the IRP. 21 ; SCC+SB 100 Rate Impacts by Customer Type & Usage Pasadena Water and Power Customer Type Residential 500 $94.19 New Bill with IRP $96.71 Residential 1,000

$214.24 $219.28 $5.04 2.35% Commercial 5,000 $888.02 $912.78 $24.76 2.79% Commercial 10,000 $1,825.60 $1,877.49 $51.89 2.84% Commercial 50,000

$8,229.90 $8,489.33 $259.43 3.15% Commercial 100,000 $18,042.41 $18,603.59 $561.18 3.11% Commercial 300,000 $48,986.40 $50,669.95 $1,683.55 3.44%

Usage (KWh) Summer Bill Difference % Increase $2.52 2.68% This analysis assumes average rates (2018 summer rates), as posted online. All impacts are an estimate only. 2018 Summer bill rates are before taxes and surcharges. Based on Energy Charge impacts only. 22 Estimated Energy Charge Cost Breakdown by kWh FY 19 Pasadena Water and Power Public Benefits Charge $.0072 $0.2000 Other 3.3% $.0036 O&M and Other Costs 43.3% $.0474 $0.0252

$0.1500 $/kWh $0.0604 IRP Related Costs 56.7% $.0620 $0.1000 $0.0500 $0.1094 $- 23 Energy Charge The results of the IRP impact the Energy Charge portion of the PWP bill, which makes up >50% of the bill Pasadena Water and Power POWER INTEGRATED RESOURCES PLAN NEXT STEPS 24

Schedule Pasadena Water and Power City Council 12/10/18 Seek to Recommend Approval of IRP Report and Preferred Scenario Approval of IRP Report and Preferred Scenario MSC 11/27/18 IRP Final Report IRP Supplemental Documents CEC Submittal 25 Recommendation Pasadena Water and Power CEQA exemption pursuant to CEQA Guidelines sections 15262 and 15271 Approve and Adopt: >2018 Power Integrated Resource Plan >Revised RPS Procurement Plan >Revised RPS Enforcement Program 26 Pasadena Water and Power POWER INTEGRATED RESOURCES PLAN

BACK-UP SLIDES 27 Pasadena Water and Power POWER INTEGRATED RESOURCES PLAN ADDITIONAL INFORMATION 28 IRP Assumptions Pasadena Water and Power Were developed with the input of the STAG in April and May 2018 > Assumes RPS and ES prices go down over time > Biogas > Solar vs. Wind More solar picked up due to location being within CA (regulatory certainty and lower costs) Wind is outside CA and there are additional fees to bring it in (even if you have transmission rights) Cost go down over time > Other 29 RPS Costs SB 100+SCC Pasadena Water and Power Cost for Renewables decline over time, overall > $33-$35/MWh in 2028 > $31/MWh in 2031

> Wind (picked up due to timing of when the wind blows, rather than solar) $49-$50 in 2031 $47 in 2037 30 CCAs Pasadena Water and Power Community Choice Aggregators > AB 117 (Migden), in 2002 allowed formation of CCAs, for jurisdictions under IOU territory (cities, counties, or a combination thereof), so there is local control over ratesetting and the types of energy products contracted For community control (which PWP is) > Automatically opted in (unless customer specifically requests to opt out) > Are not utilities- are contract providers of electricity (reliability handled by the IOU) > T/D still handled through the IOU 31 CCAs Pasadena Water and Power Can Pasadena go CCA? > No > Only an option for cities and counties that are served by IOUS > Regulatory and Reliability requirements are slowly catching up- but in the interim, IOUs provide these services 32

Retail Rate Analysis Pasadena Water and Power Only looked at the energy charge portion of the bill > holding all other charges like the customer charge, distribution charge and transmission charge constant Assumptions include use of a project stabilization fund credits (approx. $3m, annually) Compared against the FY 2019 budget 33 Costs of SB 100+SCC Case Pasadena Water and Power Cost per Year (000s) $90,000.00 $80,000.00 Reduced or NO IPP $70,000.00 FY 2019 Budget $70 million $60,000.00 $50,000.00 Based on assumptions and data available in 2018 34 2039

2038 2037 2036 2035 2034 2033 2032 2031 2030 2029 2028 2027 2026 2025 2024 2023 $- 2022

$10,000.00 2021 $20,000.00 2020 $30,000.00 More expensive wind, market prices increase (need more energy per load increase due to TE) IPP Coal $ Increase, buying Renewables for RPS (overprocure) 2019 $40,000.00 Annual Costs with Credits Pasadena Water and Power Total Annual Costs (2019$) $120,000.00 $110,000.00 $100,000.00 $90,000.00

$80,000.00 $70,000.00 $60,000.00 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033

2034 2035 2036 FY 2019 Budget Base Case Social Cost of Carbon Diversification (SCC+SB100) Diversification+Biogas Diversification+Biogas+Leave IPP Energy in Utah 2037 2038 2039 Based on assumptions of : FY 2019 budget excluding credits for PS fund, gas credits and NTS credits. Total Costs for scenarios includes credits for IPP defeasance account and use of stranded investment fund 35 Historical Electric Rate Adjustment Pasadena Water and Power Fiscal

Year Energy Charge System Average % Distribution & Customer Charge per kWh System Average % 2018 0.5 3.0% 2017 0.4 per kWh Transmission Charge per kWh System Average % 2.5%

0.28 1.7% 0.2 1.2% Public Benefits Charge per kWh System Average % 0.1 0.7% 2019 2016 (0.7) (4.2)% 0.4 2.5% 2015 0.68

4.6% 0.4 2.7% 0.3 2.1% 2014 2013 2012 2011 0.5 3.5% 2010 (0.25) (1.8)% STAG Members Pasadena Water and Power Name Sector Advocacy Group/Organization Gurcharan Bawa

Cary Belling Bernard Chu Ana Espanola Julie Gutierrez Rollin Homer Justin Jones Paul Little Margaret McAustin John ODell John Onderdonk Tom Romeyn Felicia Williams Morey Wolfson City Public Public City City Public Public Public Public Public Public Public Public Public Pasadena Water and Power Resident, Neighborhood Church Playhouse District Planning Department City Managers Office Art Center

Resident Chamber of Commerce Municipal Services Committee Resident, Transition Pasadena Caltech Huntington Hospital Resident, Planning Commission Resident, Environmental Advisory Commission 37 STAG Members Pasadena Water and Power Participant Cary Belling Carla Boykin Bernard Chu Ana Espanola* Julie Gutierrez* Rollin Homer Justin Jones Paul Little Participant Margaret McAustin John ODell John Onderdonk Tom Romeyn Felicia Williams Morey Wolfson Gurcharan Bawa* * City Staff Member 38

Survey and Outreach Pasadena Water and Power PWP Customer Relations Group conducted a myriad of outreach on the IRP and Community Meetings > PWP IRP Website updated often (weekly) > Bill inserts, print media, social media, etc. IRP Survey > Posted online May 31, 2018-August 30, 2018 > 296 Responses > Advertised heavily 39 Ratepayer Costs Over Study Period Pasadena Water and Power Total PWP Ratepayer Costs (PWP Ratepayers) $2.10 $1.60 $ Billions $1.10 Do not meet SB $2.00 $1.83 $1.77 $1.69 100 $1.55 $1.58 $1.57 $1.60 $0.60 $0.10

se a B se Ca os C l ia c So fC o t a on rb ; SC 40 C ; SC

C ; ; ; Ratepayer Cost+ Social Cost Pasadena Water and Power TOTAL COSTS OVER STUDY PERIOD (RATEPAYER COSTS AND SCC*) $2.00 $0.24 $ BILLIONS $1.75 $0.37 $0.26 $0.37 $0.26 $0.05 $0.08 $0.26 $1.50 Do not meet SB $2.00 100 $1.77 $1.69 $1.83 $1.60 $1.25 $1.55 $1.58 $1.57 $1.00

; on Case Carb f Base o st al Co S oc i Total Emission Cost S CC ; SCC ; Total PWP Ratepayer Costs *Social Cost of Carbon is not a rate impact, but the potential costs to society. 41 ; ; Historical Electric Rate Adjustments

Pasadena Water and Power Fiscal Year Energy Charge Distribution & Customer Charge Transmission Charge Public Benefits Charge Total Fiscal Year Change 2019 2018 3.0% 2017 2.5% 1.7% 4.2% 1.2%

(0.5)% 2016 (4.2)% 2.5% 2015 4.6% 2.7% 3.0% 0.7% 8.0% 2014 2013 2.1% 2.1% 2012 2011 3.5% 3.5% 2010

(1.8)% (1.8)%

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