Docstoc

Duke Technical Conference Presen

Document Sample
Duke Technical Conference Presen Powered By Docstoc
					Electric Security Plan
Technical Conference
August 21, 2008
    Agenda
     • Electric Security Plan Goals
     • Price Structure
     • Projected Price Impact
     • Energy Efficiency
     • Competitive Market Option
     • Conclusion
     • Next Steps




2
    Electric Security Plan (ESP) Goals
    • Provide Reliable Electric Generation Service
       • Dedicate efficient generating assets, including commodity positions
       • Address short capacity position
    • Maintain Competitive, Reasonably Stable Prices
       • Simplified, transparent pricing
       • Deferral of non-residential increase mitigates price volatility
       • Infrastructure tracker smoothes impact of future distribution investments and costs
       • Electronic Bulletin Board provides greater access to competitive market
    • Increase Renewable Resources and Energy Efficiency
    • Support Community
       • Economic development & low-income assistance



3
    Price Structure
    • Avoidable Generation
       • Price to Compare (PTC)
    • Unavoidable Generation
       • System Resource Adequacy (SRA)
       • Regulatory Transition Charge
    • Transmission (TCR)
    • Distribution
       • Infrastructure Modernization (DR-IM)
       • Energy Efficiency (DR-SAW)
       • Economic Competitiveness Fund (DR-ECF)




4
    Price to Compare (PTC)
    • Base Generation (PTC-BG)
       • Initial Increase
       • Transfer base fuel, purchased power & EAs to Rider FPP
       • Inflation Adjustment (PTC-IA)
          • 3% increase, compounded annually
    • Fuel & Purchased Power (PTC-FPP)
       • Existing tracker
       • Recovers 100% of fuel, purchased power & EAs (with transfer)
    • Annually Adjusted Component (PTC-AAC)
       • Environmental, homeland security, change in tax law
       • Existing tracker
       • Routine annual rate update proposed in this proceeding


5
    Price to Compare – Base Generation (PTC-BG)
    • Support Increase
       • Unbundled base generation inflation 1993-2008 ($10/MWh)
       • Post-2008 market commodity purchases prior to SB221 ($8/MWh)
       • Market compensation for dedicated capacity ($5/MWh)
       • Total supported increase = $23/MWh
    • Balance Consumer & Shareholder Interests
       • Propose $9/MWh
    • Mitigate Price Volatility
       • Defer $1/MWh for non-residential consumers



6
    System Resource Adequacy (SRA)
    • Market Capacity Purchases (SRA-SRT)
       • Existing tracker
       • Propose to purchase capacity more than 12 months ahead
    • Capacity Dedication (SRA-CD)
       • Existing charge (Infrastructure Maintenance Fund)
    • Newly Dedicated Capacity (SRA-NDC)
    • Government Aggregation
       • 5% credit for avoiding Standby Service (credit excludes SRA-NDC)




7
    Newly Dedicated Capacity (SRA-NDC)
    •   Certificate of Public Convenience and Necessity
         • Integrated Resource Plan identified need for 1,200 MW
         • Peaking and intermediate capacity
    •   Renewable Energy
         • RFP issued for renewables to meet short-term targets
    •   Traditional Supply
         • RFP issued for peaking and intermediate capacity (up to 1,400 MW)
         • Resources Dedicated for Life of Asset
            • Capacity cost unavoidable for all consumers for the life of the asset
            • Energy cost is avoidable (recoverable via Rider PTC-FPP)
    •   Corporate Separation
         • Generation asset transfer



8
    Integrated Resource Plan (IRP)
                                                         Capacity vs. Peak Load (+ 15% Reserve Margin)



       6,000                                                                     1-600 CT
                                                                                 1-600 CC

       5,000
                                    Short Capacity
                     Contracted Capacity                               New Capacity
       4,000


       3,000
                                                              Proposed Initial ESP
                                                              Expiration
       2,000                    Owned Capacity


       1,000


               0
                   2008     2009       2010      2011      2012       2013     2014       2015         2016   2017       2018

               Owned Capacity             New Capacity            Renewables          Contracted Capacity            Short Capacity




9
     Distribution (DR)
     • Direct Cost Rate Design
     • Infrastructure Modernization (DR-IM)
        • Direct investment and O&M, net of savings
        • SmartGrid
        • Electronic Bulletin Board
           • Support development of competitive market
     • Energy Efficiency (DR-SAW)
        • Save-A-Watt (SAW)
        • Low-income pilot program ($1.5 million)
           • $4/month credit
           • Up to 10,000 eligible consumers
     • Economic Competitiveness Fund (DR-ECF)

10
     Projected Price Impact (typical bill)

                                               2009              2010            2011
        Residential                            4.3%              0.7%            0.7%
        Commercial                             9.3%              1.8%            (6.0%)
        Industrial                             9.5%              1.8%            (5.6%)
          Total Average Price                  6.2%              1.8%            (2.1%)



         Note: Projected price impacts exclude changes in cost-based trackers.




11
     Energy Efficiency (Save-A-Watt)
 •    Aggressive mandated standards established by SB221 (22% by 2025)
 •    Duke Energy recognized industry leader

 •    ESP Provides Integrated Plan to Maximize Energy Efficiency
       • Additional research investment and infrastructure needed
       • Market potential study underway
       • Incentives to make new investments and develop new programs
       • Increase home energy and weatherization (to $1 million annually)
       • SmartGrid enables advanced energy efficiency offerings



12
     Competitive Market Option (CMO)
     Key Inputs
     • Wholesale Power Price – Published forward on-peak and off-peak price
     • Consumer Load Shapes – Expected consumer demands over time
     • Tailoring Consumer Price – Formulas to account for load uncertainty

     Price Components
     • Market Index of Electricity Prices
           • Energy Cost Adjustments
                • Ask Adder – 4%
                • Covariance Adjustment
     • Supply Management Fee – 5%
     • Operating Risk Adjustment – 18.1%
     • Credit Fees – 1.1%
     • Energy Losses and Adjustments – 7%

13
     Comparison of ESP and CMO (¢/kWh)

                                                                           Difference
                                                              Difference
                                                   CMO Non-                 ESP vs.
           Year           ESP       CMO Block1                 ESP vs.
                                                    Block1                 CMO Non-
                                                              CMO Block
                                                                             Block

           2009           6.25             10.90     8.76       -4.65        -2.51

           2010           6.73             11.79     9.68       -5.06        -2.95

           2011           7.15             11.19     9.08       -4.04        -1.93

         Average          6.71             11.29     9.17       -4.58        -2.44
     1   Includes MISO capacity charges.


14
     Conclusion
     In the aggregate, Duke Energy’s Electric Security Plan:
        •   Addresses Long-term Issues
             • Reliable Generation Supply
                • Dedicated efficient assets, including commodities
                • New capacity available through competitive bid process
             • Competitive and Reasonably Stable Prices
                • Lower price than Market Rate Option
                • Transparent pricing
                • Electronic Bulletin Board provides access to competitive market
             • Renewable Energy and Energy Efficiency
             • Sustainable Communities
        •   Balances the Needs of Duke Energy and our Consumers
             • ESP benefits exceed Market Rate Option
15
     Next Steps
     • Procedural Schedule
       • Technical Conference                      August 21st
       • Intervenor Testimony Due                  October 3rd
       • PUCO Staff Testimony Due                  October 10th
       • Hearings Begin                            October 20th

     • Settlement Discussions
       • Next Week
     • Supplemental Testimony (early to mid September)
       •   Integrated Resource Plan
       •   RFP Capacity
            • Renewable Resources and Traditional Supply (peaking and intermediate)
       •   Save-A-Watt Analytics

16
     Discussion and Questions




17
     Appendix




18
     Price Structure
     • Avoidable Generation
        • Price to Compare (PTC)
             • Base Generation (PTC-BG)
             • Inflation Adjustment (PTC-IA)
             • Fuel & Purchased Power (PTC-FPP)
             • Annually Adjusted Component (PTC-AAC)
     • Unavoidable Generation
        • System Resource Adequacy (SRA)
             • Market Purchases (SRA-SRT)
             • Capacity Dedication (SRA-CD)
             • Newly Dedicated Capacity (SRA-NDC)
        • Regulatory Transition Charge
     • Transmission (TCR)
     • Distribution
        • Infrastructure Modernization (DR-IM)
        • Energy Efficiency (DR-SAW)
        • Economic Competitiveness Fund (DR-ECF)
19
                                      Duke Energy Ohio
                           Price Structure Transition From RSP to ESP


     RSP Structure                                                            ESP Structure


                                                                                Rider PTC-AAC


         Rider AAC                                                               Rider PTC-FPP
                                                                          (includes Base Fuel, PP, EAs)

         Rider FPP
                                                                                 Rider PTC-IA
     Base Fuel, PP, Eas

      Base Generation                                                            Rider PTC-BG


         Rider TCR                                                                 Rider TCR
                                           Avoidable

                                   Residential = Unavoidable
                          Non-Residential = Avoidable (with commitment)
         Rider SRT


            IMF




                                          Unavoidable                            SRA (POLR)
                                                                                Rider SRA-SRT
                                                                                Rider SRA-CD
                                                                                Rider SRA-NDC

           RTC
                                                                                      RTC

        Rider DSM                                                                Rider DR-SAW
                                                                                 Rider DR-ECF
        Distribution                                                              Rider DR-IM

                                                                                   Distribution


                                                                                                          = New Component

20
     ESP Prices - Customer Weighted Average ($/MWh)

                                                 Projected
                               Acronym
                                           2009    2010      2011
     Base Generation             PTC-BG    33.00   34.00     35.00
     Inflation Adjustment         PTC-IA    0.00   0.70      1.40
     Fuel & Purchased Power      PTC-FPP   23.80   27.10     30.10
     Annually Adjusted Component PTC-AAC    5.70   5.50      5.00
     Total Price-to-Compare                62.50   67.30     71.50




21