Nov 4 John Hewa Pedernales
Utility Business Model SEPA Fact Finding Mission San Antonio, TX November 2015
John D. Hewa, P.E. Chief Executive Officer
RURAL ROOTS SUBURBAN GROWTH •
Cooperative Established in 1938 with help from then-congressman Lyndon B. Johnson
•
In 1938, REA granted PEC a loan to build nearly 1,800 miles of line to serve 3,000 Families and Rural Ranches
•
Today Serving Some of the Fastest Growing Counties in the US
•
250+ Subdivisions Underway
•
Heavy Commercial Growth
•
Rapidly Evolving Expectations
PEC BY THE NUMBERS 273,215 Active Accounts 700 Employees
8,100 Square Miles
24 Counties
44 Franchise Cities
$102 Million 2015 CIP Budget
10,000 Meters Est. 2015 Growth
$622,489,456 Revenue in 2014
5,338,807,639 kWh Sold in 2014
An Industry in Change…
Core Business The Co-op Difference
Grid Tech
Energy Future
Regulatory & Technical Restructuring
Business Services Responsive Immediate Approach
More Information Control to Members
ENERGY IN TEXAS
• Texas leads the nation in energy consumption, accounting for 12% of the nation’s energy use and is one of the largest energy consumers in the world • Demand for electricity has increased >20% since 2000
• PEC transmission cost has increased 89% since 2010
BACKGROUND - ERCOT OVERVIEW Consumers: 24 Million Peak Demand: Nearly 70 GW Generation Capacity: 74,000 MW from 550 generating units Market Participants: 1,100+ that generate, move, buy, sell or use Advanced meters: 6.6 Million with 97 percent of ERCOT load in competitive areas settled on a 15-minute interval basis • More than 2,100MW in demand response resources • • • • •
ERCOT serves the public by ensuring a reliable grid, efficient electricity markets, open access and retail choice.
ENERGY --- FREQUENCY REGULATION --- EMERGENCY RESPONSE
NAVIGATING THE TEXAS MARKET $9,000
Texas Energy Only Market Design Allows Scarcity Pricing of Energy to Escalate 200-300 Times Normal Utilities must Increasingly Employ Sophisticated Technologies and Communications to Manage Costs
$42 Average 2014 Price (MWh)
2015 Market Cap (MWh)
PEC POWER SUPPLY Junction 0.5%
Available LCRA Load Release 12%
Available Wholesale Load Release Options Market Purchases, Wind, Solar, Fueled Generation
IPPG - AEPEP 50MW Wind 3% Constellation 5%
LCRA Contract Minimum 65%
Load Release Elections
AEPEP 10%
Calpine 5%
60 Day Notice Requirement for Intermittent Progressive Power
INTEGRATED RESOURCES PLAN
• • • •
50 -100 MW Wind and/or Solar Explore Viable Business Models DSM & DER Continue EE Programs Enhance Energy Portfolio Modeling/Management
Renewable & Distributed Energy Shaping energy options such as community solar and on-bill financing for individual members to make solar options more cost effective Launching On-Bill Financing Negotiating Community Solar Negotiating Commercial Member Solar Developing Advanced Rate Designs
PEC – MEMBER SOLAR BY THE NUMBERS • • • •
857 Interconnections Typical size residential: 7kW Avg. cost per watt: $2.85 Levelized cost of electricity estimated $0.12 for 7 kW system over 25 years
ON-BILL FINANCING FOR MEMBER SOLAR PROJECTS • Less Controversial and more Beneficial than Rebates • Integrated with member’s existing bill • Encourages participation in other efficiency programs • PEC has access to lower interest rates
• Members may save nearly $3,000 over the course of 10 year loan
OBF - Terms & Conditions • Maximum loan amount will not exceed $20,000 • Term of the loan will be up to 10 years • There will be no penalty for loans that are paid in full before the 10 years • Program will be offered to PEC residential & Commercial accounts • Interest rate will not exceed 10% • PEC will include an 1% adder to the interest rate as a Loan Administration Fee • Loan is contingent upon approval and verification of the installation by PEC
OBF - Vendor Requirements PEC will provide a list of qualified solar vendors for members to choose. Vendors must meet the following criteria: All Solar Components must have 10 year warranty Workmanship warranty minimum of 10 years Vendor must be NABCEP certified. Solar vendors will need to be informed about PEC’s interconnection Policy and the On-Bill Financing program. PEC will have the authority to add or remove vendors to and from the list.
OBF - Loan Fees
Credit check $25.00 Application Fee $70.00 Filing Fees $55.00 Loan Administration Fee • One percent (1.0%) will be added as interest collected on the loan • Late Fee • May be assessed after 10 days of payment due date; greater of five Percent (5%) on amount du or $7.50 • • • •
On-Bill Financing Program PEC Board Resolution, Tariff, and Loan Policy and Underwriting Guidelines
Program Manual
PEC COMMUNITY SOLAR SOLAR • • • • •
• • • • •
Only 22-27% of rooftops are suitable Opportunity for all to Participate Members will get the benefits of scale Commitment Fee + Energy Rate Virtual Net Meter Arrangement (energy only)
Low-cost, solar benefits to members without subsidy for those who cannot or choose not to host on-site SOLAR RFI In Progress Multiple Sites 15MW Aggregate Capacity Standard Design PPA Emphasis
2015 PEC Hill Country Solar Tour Installer Fair/Exhibits • • • • •
370 Attendees Local Installers PEC Energy Advisors Solar Car Workshop Texas Solar Energy Society
Home Exhibits
• Four Home Sites • Homeowner, solar installer and PEC Staff at each location • 263 member visits to homes
John D. Hewa, P.E. Chief Executive Officer
RURAL ROOTS SUBURBAN GROWTH •
Cooperative Established in 1938 with help from then-congressman Lyndon B. Johnson
•
In 1938, REA granted PEC a loan to build nearly 1,800 miles of line to serve 3,000 Families and Rural Ranches
•
Today Serving Some of the Fastest Growing Counties in the US
•
250+ Subdivisions Underway
•
Heavy Commercial Growth
•
Rapidly Evolving Expectations
PEC BY THE NUMBERS 273,215 Active Accounts 700 Employees
8,100 Square Miles
24 Counties
44 Franchise Cities
$102 Million 2015 CIP Budget
10,000 Meters Est. 2015 Growth
$622,489,456 Revenue in 2014
5,338,807,639 kWh Sold in 2014
An Industry in Change…
Core Business The Co-op Difference
Grid Tech
Energy Future
Regulatory & Technical Restructuring
Business Services Responsive Immediate Approach
More Information Control to Members
ENERGY IN TEXAS
• Texas leads the nation in energy consumption, accounting for 12% of the nation’s energy use and is one of the largest energy consumers in the world • Demand for electricity has increased >20% since 2000
• PEC transmission cost has increased 89% since 2010
BACKGROUND - ERCOT OVERVIEW Consumers: 24 Million Peak Demand: Nearly 70 GW Generation Capacity: 74,000 MW from 550 generating units Market Participants: 1,100+ that generate, move, buy, sell or use Advanced meters: 6.6 Million with 97 percent of ERCOT load in competitive areas settled on a 15-minute interval basis • More than 2,100MW in demand response resources • • • • •
ERCOT serves the public by ensuring a reliable grid, efficient electricity markets, open access and retail choice.
ENERGY --- FREQUENCY REGULATION --- EMERGENCY RESPONSE
NAVIGATING THE TEXAS MARKET $9,000
Texas Energy Only Market Design Allows Scarcity Pricing of Energy to Escalate 200-300 Times Normal Utilities must Increasingly Employ Sophisticated Technologies and Communications to Manage Costs
$42 Average 2014 Price (MWh)
2015 Market Cap (MWh)
PEC POWER SUPPLY Junction 0.5%
Available LCRA Load Release 12%
Available Wholesale Load Release Options Market Purchases, Wind, Solar, Fueled Generation
IPPG - AEPEP 50MW Wind 3% Constellation 5%
LCRA Contract Minimum 65%
Load Release Elections
AEPEP 10%
Calpine 5%
60 Day Notice Requirement for Intermittent Progressive Power
INTEGRATED RESOURCES PLAN
• • • •
50 -100 MW Wind and/or Solar Explore Viable Business Models DSM & DER Continue EE Programs Enhance Energy Portfolio Modeling/Management
Renewable & Distributed Energy Shaping energy options such as community solar and on-bill financing for individual members to make solar options more cost effective Launching On-Bill Financing Negotiating Community Solar Negotiating Commercial Member Solar Developing Advanced Rate Designs
PEC – MEMBER SOLAR BY THE NUMBERS • • • •
857 Interconnections Typical size residential: 7kW Avg. cost per watt: $2.85 Levelized cost of electricity estimated $0.12 for 7 kW system over 25 years
ON-BILL FINANCING FOR MEMBER SOLAR PROJECTS • Less Controversial and more Beneficial than Rebates • Integrated with member’s existing bill • Encourages participation in other efficiency programs • PEC has access to lower interest rates
• Members may save nearly $3,000 over the course of 10 year loan
OBF - Terms & Conditions • Maximum loan amount will not exceed $20,000 • Term of the loan will be up to 10 years • There will be no penalty for loans that are paid in full before the 10 years • Program will be offered to PEC residential & Commercial accounts • Interest rate will not exceed 10% • PEC will include an 1% adder to the interest rate as a Loan Administration Fee • Loan is contingent upon approval and verification of the installation by PEC
OBF - Vendor Requirements PEC will provide a list of qualified solar vendors for members to choose. Vendors must meet the following criteria: All Solar Components must have 10 year warranty Workmanship warranty minimum of 10 years Vendor must be NABCEP certified. Solar vendors will need to be informed about PEC’s interconnection Policy and the On-Bill Financing program. PEC will have the authority to add or remove vendors to and from the list.
OBF - Loan Fees
Credit check $25.00 Application Fee $70.00 Filing Fees $55.00 Loan Administration Fee • One percent (1.0%) will be added as interest collected on the loan • Late Fee • May be assessed after 10 days of payment due date; greater of five Percent (5%) on amount du or $7.50 • • • •
On-Bill Financing Program PEC Board Resolution, Tariff, and Loan Policy and Underwriting Guidelines
Program Manual
PEC COMMUNITY SOLAR SOLAR • • • • •
• • • • •
Only 22-27% of rooftops are suitable Opportunity for all to Participate Members will get the benefits of scale Commitment Fee + Energy Rate Virtual Net Meter Arrangement (energy only)
Low-cost, solar benefits to members without subsidy for those who cannot or choose not to host on-site SOLAR RFI In Progress Multiple Sites 15MW Aggregate Capacity Standard Design PPA Emphasis
2015 PEC Hill Country Solar Tour Installer Fair/Exhibits • • • • •
370 Attendees Local Installers PEC Energy Advisors Solar Car Workshop Texas Solar Energy Society
Home Exhibits
• Four Home Sites • Homeowner, solar installer and PEC Staff at each location • 263 member visits to homes
